Malcolm Turnbull has a vision for the Australian economy:
The Australia of the future has to be a nation that is agile, that is innovative, that is creative. We can’t be defensive, we can’t future-proof ourselves.
We have to recognise that the disruption that we see driven by technology, the volatility in change is our friend if we are agile and smart enough to take advantage of it.
Excellent. As Adam Smith suggested “peace, easy taxes and a tolerable administration of justice” will suffice. But it seems the new PM has a somewhat different game plan:
We have to be – and we will be – a country that invests in science and puts it right at the centre of our national agenda.
We have to recognise the central role of science and the work of scientists and people that follow the scientific method.
Hopefully he will have read this weekend essay by Matt Ridley:
Politicians believe that innovation can be turned on and off like a tap: You start with pure scientific insights, which then get translated into applied science, which in turn become useful technology. So what you must do, as a patriotic legislator, is to ensure that there is a ready supply of money to scientists on the top floor of their ivory towers, and lo and behold, technology will come clanking out of the pipe at the bottom of the tower.
To be fair to Malcolm Turnbull many people have subscribed to the so-called linear model for a long, long time.
This linear model of how science drives innovation and prosperity goes right back to Francis Bacon, the early 17th-century philosopher and statesman who urged England to catch up with the Portuguese in their use of science to drive discovery and commercial gain. Supposedly Prince Henry the Navigator in the 15th century had invested heavily in mapmaking, nautical skills and navigation, which resulted in the exploration of Africa and great gains from trade. That is what Bacon wanted to copy.
Yet recent scholarship has exposed this tale as a myth, or rather a piece of Prince Henry’s propaganda. Like most innovation, Portugal’s navigational advances came about by trial and error among sailors, not by speculation among astronomers and cartographers. If anything, the scientists were driven by the needs of the explorers rather than the other way around.
It follows that there is less need for government to fund science: Industry will do this itself. Having made innovations, it will then pay for research into the principles behind them. Having invented the steam engine, it will pay for thermodynamics. This conclusion of Mr. Kealey’s is so heretical as to be incomprehensible to most economists, to say nothing of scientists themselves.
For more than a half century, it has been an article of faith that science would not get funded if government did not do it, and economic growth would not happen if science did not get funded by the taxpayer. It was the economist Robert Solow who demonstrated in 1957 that innovation in technology was the source of most economic growth—at least in societies that were not expanding their territory or growing their populations. It was his colleagues Richard Nelson and Kenneth Arrow who explained in 1959 and 1962, respectively, that government funding of science was necessary, because it is cheaper to copy others than to do original research.
“The problem with the papers of Nelson and Arrow,” writes Mr. Kealey, “was that they were theoretical, and one or two troublesome souls, on peering out of their economists’ aeries, noted that in the real world, there did seem to be some privately funded research happening.” He argues that there is still no empirical demonstration of the need for public funding of research and that the historical record suggests the opposite.
If prime minister Turnbull wants a disruptive economy he is going to have to first disrupt Canberra by cutting regulation and cutting taxation. To be sure strengthening Canberra will disrupt the economy too, but not in the value-adding way that he is envisaging.