Last week I joined a Roundtable on Australian innovation policy organised by the Grattan Institute. It was Chatham House rules but that won’t prevent me from talking about what I said.
My theme was how to make a case for innovation policy. For decades many people, myself well and truly included, have argued that Australian needed science and innovation policy to develop the expertise for future growth because we could not surely continue to rely on primary commodities as we had in the past. There were many hard-line economists who pushed back on that argument. They noted the theory that local innovation was not the source of productivity growth for smaller countries — true although Australia wasn’t small in some sectors (like mining and agriculture). But they often supported it with poorly constructed empirical analysis that was easier to pick apart. However, just because that was so didn’t mean that the theory wasn’t true empirically.
Fast forward now two decades since I, at least, was making that argument and what have we got. Australia has had steady growth for almost 25 years. The growth has been spurred by productivity improvements in non-traded sectors (based mainly on overseas technological change) and export-focussed sectors (the traditional primary industries). In other words, the pattern is surely more consistent with the hard-line economic view than with the innovation theory view. I asked the Roundtable, “at what point do we have to admit that the innovation theory view is not true?” I think that point has passed.
What then of the case for science and innovation policy? The problem with “arguing on economic terms” for such policies is that we have got just that. Perhaps more so than many other places, Australian scientists and innovators are forced to make strong cost-benefit cases based on short to medium-term productivity improvements for funding. That is hard to do; so hard that the private sector and certainly the philanthropic sector doesn’t use those “metrics.” What that has meant is that what gets funded are things that have political benefits rather than economic; because the economic case is hard to make.
I want to argue here that the case for science and innovation policy is exactly the one that scientists, prior to being “educated” in economics, made: Knowledge production is a global public good that costs money. Australia is a rich country. Australia should contribute its fair share.
In other words, I am advocating for a moral case for science and innovation funding. It is the same argument that is made for funding culture and the arts although a little weaker as there is little that is uniquely Australian about science and innovation (although the astronomers and marine biologists make great counter-cases).
To be sure, funds need to be rationed. But the rationing mechanism should shy away from hard economic numbers. Instead, we should move to cases more akin to what the great US foundations: the Gates, Mellon and Sloan foundations do: Qualitative cases. I urged the Grattan Institute to study their mechanisms more closely.
I’ll admit my earlier complicity in moving the debate to economic terms. As it turns out, the theory and now the evidence are against that justification. My point here is that there is another justification. It is non-economic but surely one many people can understand and be comfortable in making.