Adam Smith tells us about the private financing of science

The New York Times has one of those very New York Times pieces about the funding of science. They note that the usual cast of billionaires are upping their spending upon scientific research. The problem with this is that, according to the New York Times at least, this means that people get to fund the sort of research they like to fund rather than fund research that meets the approval of the sort of people who run government and the New York Times.

Imagine that, people being able to do what they wish with their own money and without the wise council of the NYT? Horrors, eh?

They do note that the initial effect of the influx of money is good. Then they start to worry about the following:

The issues are considered social as well as intellectual, and so, in their own grant-making decisions, federal agencies strive to ensure that their money does not flow just to established stars at elite institutions. They consider gender and race, income and geography.

That's actually an excellent example of why we should welcome this private funding of science. For as Adam Smith pointed out:

Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.

Which means that we want to get the most and the best science done for our cash regardless of gender, race, income or geography. And then there's an even larger mistake:

The official reticence about private science may reflect, in part, a fear that conservatives will try to use it to further a small-government agenda. Indeed, some of the donors themselves worry that too much focus on private giving could diminish public support for federal science. “It’s always been a major worry,” said Robert W. Conn, president of the Kavli Foundation, which has committed nearly a quarter of a billion dollars to science and is part of the private effort to increase financing for basic research. “Philanthropy is no substitute for government funding. You can’t say that loud enough.”

But it is exactly a substitute. For the basic problem here is that scientific research, or at least the results from it, is a public good. It's non-rivalrous and non-excludeable meaning that it's very difficult indeed to make a profit from it. Thus there will be too little private investment in this sphere. This is the argument in favour of government funding of science, that scientific results are a public good. But if we can gain private finance, despite the public good problem, then we've solved that public good problem, haven't we? And therefore private funding, to the extent that it happens, is indeed entirely and actually a substitute for government funding.

To the extent that science is getting private funding this is indeed the perfect argument in favour of cutting public funding. And given the increased efficiency coming from not having to worry about race and gender perhaps cutting by more than is donated.