–You never will know what you have lost. Part III

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Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Today’s Washington Post published an excellent article that bears on the idiocy of the “small government” beliefs, as expressed by the Tea Party and adopted by the Republicans (and to a lesser extent by the Democrats).

I urge you to read the full article, but here are a few excerpts,

It’s time to get serious about science
By Jim Cooper and and Alan I. Leshner, Published: September 9, 2012
Jim Cooper, a Democrat, represents Tennessee’s Fifth Congressional District in the U.S. House. Alan I. Leshner is chief executive of the American Association for the Advancement of Science and executive publisher of the journal Science.

Some policymakers, including certain senators and members of Congress, cannot resist ridiculing any research project with an unusual title. The United States may now risk falling behind in scientific discoveries as other countries increase their science funding. It’s time for researchers to fight back, to return a comeback for every punch line.

Toward that end, we are announcing this week the winners of the first Golden Goose Awards, which recognize the often-surprising benefits of science to society. Charles H. Townes, for example, is hailed as a primary architect of laser technology. Early in his career, though, he was reportedly warned not to waste resources on an obscure technique for amplifying radiation waves into an intense, continuous stream.

Similarly, research on jellyfish nervous systems by Osamu Shimomura, Martin Chalfie and Roger Y. Tsien unexpectedly led to advances in cancer diagnosis and treatment, increased understanding of brain diseases such as Alzheimer’s, and improved detection of poisons in drinking water. The late Jon Weber as well as Eugene White, Rodney White and Della Roy developed special ceramics based on coral’s microstructure that is now used in bone grafts and prosthetic eyes.

It is human nature to chuckle at a study titled “Acoustic Trauma in the Guinea Pig,” yet this research led to a treatment for hearing loss in infants. Similar examples abound. Transformative technologies such as the Internet, fiber optics, the Global Positioning System, magnetic resonance imaging (MRI), computer touch-screens and lithium-ion batteries were all products of federally funded research.

Yes, “the sex life of the screwworm” sounds funny. But a $250,000 study of this pest, which is lethal to livestock, has, over time, saved the U.S. cattle industry more than $20 billion. Remember: The United States itself is the product of serendipity: Columbus’s voyage was government-funded. Remember, too, that basic science, the seed corn of innovation, is primarily supported by the federal government — not industry, which is typically more interested in applied research and development.

Federal investments in R&D have fueled half of the nation’s economic growth since World War II. Federal support for basic science is at risk: We are already investing a smaller share of our economy in science as compared with seven other countries, including Japan, Taiwan and South Korea.

Since 1999, the United States has increased R&D funding, as a percentage of the economy, by 10 percent. Over the same period, the share of R&D in the economies of Finland, Germany and Israel have grown about twice as fast. In Taiwan, it has grown five times as fast; in South Korea, six times as fast; in China; 10 times.

In the United States, meanwhile, additional budget cuts have been proposed to R&D spending for non-defense areas. If budget-control negotiations fail, drastic across-the-board cuts will take effect in January that could decimate entire scientific fields.

Last year, I wrote two posts on this subject: “You never will know what you have lost.” and “You never will know what you have lost. Part II”

The earlier post ends with this comment:

The lame who might have walked. The blind who might have seen. The children who might have given to America. The tornados and hurricanes and earthquakes that might have been foreseen or stopped. The money that investors might have saved. The inventions never invented. The recessions and depressions that might have been avoided. The wars that might have been won or prevented. The life-saving drugs that might have been developed. The people who might not have died too soon. The beauty never created. The ideas lost. The better world that might have been. You never will know.

And we trade all this potential for the reality of a meaner, uglier, less elegant life, especially for the lower classes, who will be affected most by deficit reduction, though we all will be affected. What a waste, given the tools we’ve been given, that we intentionally should deprive ourselves and our children and our grandchildren of the benefits a society can offer, and instead retreat toward the days of hardscrabble anarchy.

What have we lost? What will we lose tomorrow? You never will know.

And that is the invisible cost of “smaller government and deficit reduction — all unnecessary in a Monetarily Sovereign nation.

Rodger Malcolm Mitchell
Monetary Sovereignty

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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

#MONETARY SOVEREIGNTY

Published by Rodger Malcolm Mitchell

MBA Northwestern, business turnaround expert, economist

Published

13 thoughts on “–You never will know what you have lost. Part III”

    1. Not sure what “coordination of all innovation efforts” means. If you’re talking about research results crossing discipline boundaries, to make serendipitous discoveries more possible, I believe the Internet, with the help of Google (et al) has begun to provide that.

      Or, if you’re talking about a central computer, which would catalog every discovery according to the almost infinite issues the discoveries touch on, again, I think the Internet has begun to provide that.

      However, if you’re talking about some central agency deciding which research should be pursued and which should not, the government already does that, much to our disadvantage. It eliminates research in areas the “decider” cannot visualize having a benefit.

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      1. None of the above. Think of the compounding effect of combined firepower in military situations.

        Coordinated innovation efforts implies return on coordination. That concept carries implied dynamic value for coordination efforts themselves. For example, the utility of advanced metallurgy methods are compounded by advances in mining, foundry, milling, toolmaking and CNC – and vice versa for all. If one area gets too far ahead, most of it’s potential can’t be fulfilled anyway.

        The only way to keep things in balance is to maintain in every discipline a balance of furthering pure research with where it’s most fruitful applications lie.

        That’s how complex systems are tuned – it’s not about how awesome a piston becomes, but how efficient the whole engine or application is (i.e. car, truck, locomotive or marine transport ship).

        Success follows the quality of distributed decision-making. The more complex and more diverse the system, the more “quality” and “utility” of any discipline are defined by the spectrum of feedback from other disciplines, NOT just by local metrics.

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        1. So, how do we coordinate innovation?

          “. . . furthering pure research with where it’s most fruitful applications lie”is no longer pure research. The whole point of this post is: No one wants to pay for pure research , because no one can think of fruitful applications.

          It’s only later, after the research is done — sometimes many years after — that anyone can think of a practical application.

          And that’s where the Internet comes in. It is the world’s biggest computer database, containing all the research that ever has been published. Other than the Internet, how would you connect research with “most fruitful applications”?

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  2. My point is that most researchers are far too isolated. Pure research is “researcher driven” through grant applications. IF they had more interactions with people in other disciplines, most researchers would make different choices about what “pure research” was most interesting. Many do radically change their research interests as they mature & gain more perspective.

    Without wider interactions, there is no situational awareness. Without situational awareness, what looks interesting is just a random race to get tenure. That’s precise how we end up with so many research economists whose research results are entirely divorced from real life operations. The same separation between theory, practice & initial “researcher interests” happens to different degrees in every discipline.

    Few would argue that more basic research is always potentially useful. I’m just saying that many if not most actual researchers eventually wish they’d had more situational awareness earlier in their careers – awareness which could only arise with wider, not narrower interactions. Deeper situational awareness would make all basic research endeavors even better.

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      1. ?? Already said so, above. More interdisciplinary interactions, to build & maintain more group-wide situational awareness.

        That’s a subtle, easily accomplished aspect of any manager’s mission. It’s baked into the culture, not something new to tack on.

        Data is meaningless without context, so make more people aware of more context – so they can make better decisions about what research data would excite them. Doh! This ain’t rocket science.

        Our DoD considers unit cohesion & situational awareness as absolutely critical in any theater of operations. Yet we over train both scientists & all citizens to be isolates with lagging cohesion and situational awareness.

        What part of social species, teamwork and return on coordination don’t American’s understand anymore? And why do our schools actively teach them to NOT understand that anymore?

        Unless they’re on some performing arts team, like football or dance, or drama, or orchestra.

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        2. RMM asks: “How do you suggest accomplishing “more interdisciplinary interactions”? What is the plan of action?”

          As stated above, that task is entirely context dependent, but easily accessible to good management. In fact, that’s all management is supposed to do, keep optimizing teamwork to minimize the COST OF COORDINATION and continuously improve the RETURN ON COORDINATION. You can google both terms.

          Although the operational details vary, the general concept is captured in various places, e.g., “Total Soccer” as invented by the Dutch a few decades back. It boils down to practicing whatever it takes to continuously improve net group-agility. Best overall guide I’ve seen, for most human workgroups, is “Outcomes Based Training.” You can google that term too.

          Try these too

          Super-Sizing Public Knowledge and Situational Awareness
          http://mikenormaneconomics.blogspot.com/2012/09/super-sizing-public-knowledge-and.html

          Return on Coordination
          http://mikenormaneconomics.blogspot.com/2012/08/return-on-coordination.html

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  4. πure nonsense. Big or Small Governments produce nothing. They both need the private sector to invest, build and produce everything all governments purchase. When governments get big, like the US, then they reduce the private sectors ability to produce new products, mainly because government spending. That spending reduces available currency to borrow. Plus the government doesn’t buy everything produced by the private sector like consumers do, so they might 10 costly airplanes, they don’t buy the R&D to build a new model. Apple doesn’t invest in the government. It invest in people, who in turn freely buy their products. Apple has no debt, but has grown. They create real jobs that require people to work really hard. Just the opposite of government who don’t create jobs and don’t require anyone to work hard, if at all.

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