The Rational Optimist (P.S.)

by Matt Ridley

Of course, there are some things, like large hadron colliders and moon missions, that no private company would be allowed by its shareholders to provide, but are we so sure that even these would not catch the fancy of a Buffett, a Gates or Mittal if they were not already being paid for by taxpayers? Can you doubt that if NASA had not existed some rich man would by now have spent his fortune on a man-on-the-moon programme for the prestige alone? Public funding crowds out the possibility of knowing an answer to that question. A large study by the Organisation for Economic Co-operation and Development concluded that government spending on R&D has no observable effect on economic growth, despite what governments fondly believe. Indeed it ‘crowds out resources that could be alternatively used by the private sector, including private R&D’. This rather astonishing conclusion has been almost completely ignored by governments.