Tyler Cowen's celebrated Kindle publication "The Great Stagnation" has received a lot of attention from the Web community. The New York Times David Leonhardt gets the author to sit for an e-interview on his e-book and asks a good first question: If our innovation motor is broken, what should we do know?
Cowen responds that we should double down on science...
The N.I.H. has done a very good job in promoting medical innovation and this is in large part because it allocates funds on a relatively meritocratic basis; Congress doesn't control particular grants and on many important fronts the N.I.H. has autonomy. It is one reason why the United States is the world leader in medical research and development and I would expand its funding, provided it retains this autonomy. Basic research is often what economists call a "public good" and it offers economic and health returns for many years to come.
... and get realistic about clean energy.
"Clean energy" is a very important issue, for reasons of climate change, but it won't be a job creator in a useful sense. In terms of energy production, fossil fuels are quite powerful. With green energy, at this point, we are simply looking to break even, namely to receive some of our current power but without the negative environmental consequences which accrue from carbon. That's a worthy goal, but we shouldn't start thinking about green energy as speeding up economic growth or creating jobs. It's more like a necessary burden we will have to bear and the fact that these costs lie in front of us - from both the climate change and from the technological adjustments -- is a sobering thought.
These are smart thoughts from a very smart guy. But let's think about NIH funding from a jobs perspective. If the government increases science funding and this results in more pharmaceutical drugs coming online, that's a great thing for the pharmaceutical industry. But new drugs, like any new technology, can be disruptive. For example, a drug to ease the side-effects of end-of-life diseases might replace the need for home health aides, which are projected to be one of the fastest growing jobs in the country for low-skilled workers. That's not a reason not to develop a totally useful rug! But it throws a wrench into a claim (one that I've often made, too) that innovations in biosciences are pure job-creators.
At the same time, I wonder about the claim that clean energy "won't be a job creator in a useful sense." Today President Obama announced a plan to increase funding for retrofitting commercial buildings. The reluctance among offices to invest in energy efficiency is a classic example of hyperbolic discounting, where owners discount the value of future savings to avoid incurring costs. But as a McKinsey survey showed, there are billions of dollars in future savings from these upgrades. If upfront government money can get commercial buildings to see that, it could create demand for thousands of retrofitting jobs.
It's also worth thinking about a low carbon economy as a horizontal, rather than vertical, industry. Retrofitted buildings might want IT to track their energy usage. Is a new energy monitoring firm an IT company or a green tech company? It's both. If waste-to-energy breakthroughs come from direct bioscience funding, are the jobs in the new plant "clean energy" jobs or biotech job? Does it matter? The low carbon economy, if and when it comes, will be more than an industry. It will be an economy of interlaced industries. Why shouldn't we think of that future as "speeding up economic growth or creating jobs"?