BMS Reports: DWIH Tokyo

"(T)here is nothing which can better deserve your patronage, than the promotion of Science and Literature. Knowledge is in every country the surest basis of public happiness"

George Washington, the 1st President of the United States

"In today´s knowledge based economy, what you earn depends on what you learn"

Bill Clinton, the 42nd President of the United States

peter seeberger, tokyo DWIHOn February 25, 2014, Prof. Peter H. Seeberger held a lecture entitled “Basic Science as Driver for Economy and Society” at The German Research and Innovation Forum - Tokyo, Japan.  Some forty representatives of Japanese and German research institutes, universities, companies and governmental institutions gathered to exchange views on economics of science. What science is really worth? What is the value of health and life? How does one measure investment and return? Who is funding scientific research and to whose benefit? No simple questions, even for the prepared minds. ...

Seeberger emphasized facts: the Land of Berlin invests yearly some €720 million in science. In 2010, €132 million came from the Land, €332 million from the German federation, €131 million were third party funding and some €125 million were revenues. Thereby, Berlin invests around 3.6 % of its GDP in Research & Development (R&D) – slightly more than average for a German state (2.9%) and significantly more than its neighbor Brandenburg (1.7%).  In its newest Research and Innovation program, Horizon 2020, European Commission sets a target at 3% of the national GDP to be re-invested in science until 2020. Germany is one of the rare European countries balancing on the threshold (competitive are Switzerland and Scandinavian countries). On the State level the numbers are dizzying: R&D in Germany swallows up around €89 billion per year, 70 % of investment coming from the private sector and 30 % from the State. It is estimated that 20 % flows directly back to the industry through subventions and projects funding. The rest dwells in a noble-minded realm of inventions and innovations protected by the private and public R&D walls.

peter seeberger, dwih tokyoThe biggest beneficiary is the German automobile industry - together with optics and electronics, it receives almost 50% of the total R&D investment. Around 30% goes to the chemical and pharmaceutical industry. The rest is distributed over less “attractive” industry branches hoping for their own big bang and five minutes of investment fame. Still, the innovations are not steadily popping out, even by the R&D giants, like Pfizer or Bayer Schering. One might argue that Germans prefer their cars to their health, but current investment and innovation crisis in the pharmaceutical sector might be hiding a bigger trouble, discusses Seeberger in his latest article “A recipe for new medicines”. Once dubbed “Apotheke der Welt” Germany is neglecting its private medical research, mostly due to its heavy expenses and fuzzy findings. Instead of developing new medicines, big pharma pragmatically spins its business model around exploiting several blockbuster drugs (e.g. Prevnar) before the patents expire. And the whole innovation hype? It seems that innovation is "more of a process, less of an ideology", as an argumentative article in Stanford Social Innovation Review, Innovation Is Not the Holy Grail , reveals. Every process requires investments, so, there we go: no money no drugs. But, maybe you could drive my car.

No one really knows the scope of Return on Investment (ROI) in R&D. Most of the accepted calculations rely more on “CEO´s estimates” than methodological economic observations (see What science is really worth? Nature 465, 682-684 (2010)).  Even the most ambitious studies estimate that “the time lag between research expenditure and eventual health benefits is around 17 years”. In seventeen years I will be closer to the end of my life then to its beginning and my health will be deteriorated by natural process if not by disease. So why should I invest my tax money into scientific research instead of sipping my last cocktails on the Bahamas? Here, I would like to refer you to an inspired presidential address of William H. Press to the AAAS What´s so special about science (And How Much Should We Spent on It?), where he muses about the willingness of an American tax payer to invest in a “curiosity-driven research … without having a direct economic benefit”. As a strong believer in science-driven progress, US invest around $40 billion tax payer´s money a year in science, comparing to $320 million a year allotted to arts and humanities. Plus, the private investment of about $65 billion. If we fix a cocktail price at  US $4, US $40 billion could get you quite a lot of booze, so, cheers to the US choice.

How the technology leaders like Germany or US defend its billions thrown into the R&D testing of their most daring ideas, from defying gravity to curing cancer? I recall once reading that a US scientist claimed for cancer research to be the most expensive barren investment after the moon landing. Still, luckily for us working in and for science, the money flows in regularly and, even if never superfluous, we comfort ourselves with thoughts of pushing the edges of human knowledge. Thereby, we enter the realm of extra-financial impact on a society defined as a Social Return on Investment (sROI). sROI is based on the economic idea of empowering a country by building up its social, cultural and human capital. Of all three classic factors of production - land, labor and capital – capital has a unique possibility of exponential growth (as Press argues, you cannot exponentially multiply land or labor). Hence, human capital, as a verbal and conceptual derivation of financial capital or wealth, presents our collective intellectual property, knowledge and motivation for further development. It has an enormous potential on economic growth and “palpable” return on investment of a land.  It also bubbles and spills over, not only between individuals, but also between private and public sector and nations. Hence the economic terms "knowledge spill over" and "spillover effect". Sooner or later, it is all about the booze.

Science, economy and society are driven by our behavior. Our personal growth and a sense of achievement are tightly coupled to exploring new possibilities enabled, again, by healthy economies and diversified job market. Anyone that ever had a chance (or an accident, as I remember it) to live in a stagnating country deeply cherishes the value of choice and technological progress. Yet again, they depend on investment, education and the capacity for innovation.

Therefore, even if ROI of R&D is not easily or quickly measurable, even if the suggested numbers are based on a dubious statistical data, even if the call for scaling up the investment in basic research is more political advocacy and less economic reality, we need to invest in scientific research. Not only for feeding our natural curiosity or intellectual ego. As Press argues, the scientific discovery is heavy-tailed: it might take some time before we win the jackpot, but when we win, we are going to win it big (think of Penicillin discovery or development of modern electronics).

The truth is, more often than not, we will invest in the idealistic concepts of curing the curiosity, human capital and future discoveries even if not certain what the future holds for us. We might do it while we psychologically function by the principle of reciprocity and live with a strong intergenerational feeling that others have been investing in us and now it is our time to pay it back. I like this altruistic perspective - it feeds my trust in humanity. But, maybe, we are just natural gamblers. If you sip your cocktail in the Bahamas, there is a strong certainty that you will finish just “around the corner”. But, if you invest in the scientific research there is a vague possibility that your kids will live up to be healthy at hundred and travel to Mars. So, let me ask you, where would you put your money to?

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