In its March 25th edition, the New York Times estimated that more than 1.7 million people were given a cancer diagnosis last year. Think about that for a minute.
Think about the agony that fathers and mothers suffered in hearing the bad news, not to mention how excruciating it must have been for some who had to relay the bad news to worshipful children. All of this leaves out the brutality of being sick in the first place, the sleepless nights, the physical pain, the emotions, etc.
So let’s ask a simple question. What if Chinese scientists come up with a cure for cancer? Will Americans shun the cure for it somehow signaling “the fading of American pre-eminence on the world stage”? The previous question is rhetorical, but the words are real. They’re the musings of University of Pennsylvania academics Ezekiel Emanuel, Amy Gadsden and Scott Moore.
The Penn trio view “China” as a threat in consideration of the “research areas that will determine military and economic superiority in the coming decades.” That those who can predict the source of future economic growth are generally billionaires in the investment world doesn’t seem to concern these rather self-serious professor types, but that’s a digression. For now, their so-called solution so that the U.S. “can compete and win in the century ahead” is for the U.S. to “meet strength with strength, and the best way to do that is to renew a longstanding American advantage: innovation.” As readers can probably imagine, the financial fix for the alleged Chinese threat is more government spending on technology research. They believe $66.5 billion isn’t enough; that the feds need to increase the previous number by many multiples.
Actually, the federal budget for technology research is $66.5 billion too high, but that too is a digression. For now, let’s first consider this needless fear of “China” causing the U.S. to fade. It’s a laugh line.
Again, would anyone at death’s door due to cancer really care where the cure came from, and in particular with the U.S.’s future prominence in mind? Let’s be serious. To quote Deng Xiaoping, “it doesn’t matter whether the cat is black or white, so long as it catches mice.”
The simple truth is that the origin of an innovation doesn’t matter one bit. What matters is the advance, along with the profit motive that would precede an advance. No one developing that which will make us more productive (5G) or healthier (a dreamed for cancer cure) would limit its use. Nor could anyone. Particularly with products, there’s no accounting for their final destination. Assuming yet again a cancer cure developed in China, short of its creators literally hiding the advance from all would-be buyers, it would eventually reach desperate Americans. And save lives.
Would such a development cause the U.S. to fade? Certainly not. Humans are the drivers of progress, so imagine if cancer deaths kept more humans on this earth? And in a country like the United States where free minds so often prosper. With one global problem having been solved, the living Americans could focus their live minds on new problems to fix, or technologies to improve on. Chinese achievement won’t push the U.S. down as much as the U.S. isn’t nearly as prosperous as it should be precisely because the Chinese weren’t innovating for so long.
Interesting here is that billionaire Patrick Soon-Shiong became a billionaire largely due to his development of a drug (Abraxane) that gives those suffering from Pancreatic cancer a fighting chance. Soon-Shiong is an American citizen based in Los Angeles, he was born in South Africa, but he’s the son of Chinese parents. Are we Americans shrunken because someone of Chinese origin developed Abraxane? Would the American users of it cease doing so if it had been created in Shanghai?
Implicit in the economically illiterate notion that location of innovation matters is that we’re somehow weakened when it doesn’t happen near us. But when trade is free, it’s as though all giant leaps take place next door, regardless of where they’re conceived. Most of us don’t live in Seattle or Cupertino, but we benefit from the genius of Amazon and Apple as though we do. Why would progress made in China make any difference?
As for the call for more federal spending by Ezekiel, Gadsden and Moore on “innovation,” can they really be so naïve? Missed by them is that there’s no such thing as federal investment. Figure that the wealth which enables federal largess was first created in the private sector (if anyone doubts this, just consider why Haiti’s national budget is so small relative to the U.S.’s $4.7 trillion annual outlays), and all researchers in federal employ (or reliant on federal funds) who seek answers used to not be in government.
The crucial difference between “federal” or “public” investment and private investment is that market signals govern the latter, and don’t the former. Basically bad ideas on the federal level can sometimes last forever in the figurative sense, while in the private sector bad ideas are quickly realized as profit-motivated investors cut off funds. Good. Failure that’s realized doesn’t suffocate progress as much as it’s a necessary ingredient of it.
Failure brings answers without which there can be no innovation. And what’s apparent is that the best and brightest of American companies are spending with abandon on tomorrow’s ideas despite being aware that many ideas will be expensive duds. As Andy Kessler recently put it in the same newspaper (Wall Street Journal) in which Emanuel, Gadsden and Moore placed their own monument to trite thinking, companies like Apple “spend more than $10 billion a year on research and development.”
The difference with Apple, along with relentless experimenters like Amazon, Facebook, Alphabet and Microsoft, is that they’re not so foolish as to presume to know what the future looks like. They’re not certain about the “research areas that will determine military and economic superiority in the coming decades,” and that’s why they’re spending tens of billions each year on new concepts. They experiment, and they learn from countless mistakes. Logic says to trust them, rather than academics eager to siphon precious resources out of the market-disciplined private sector, and into a public sector that isn’t required to abide the market truths so essential for progress.
So while history very much suggests that Ezekiel, Gadsden and Moore are naively parroting the same things said about “Japan” 20-30 years ago, that’s really not the point. The bigger one is that they’re not calling for innovation with their plea for more federal spending; rather they’re unwittingly seeking to hamstring it through waste of the resources without which there can be no innovation.
John Tamny is editor of RealClearMarkets, and Director of the Center for Economic Freedom at FreedomWorks.