Phi Beta Cons

Economic Driver or Boondoggle?

University officials and politicians often claim that targeted government subsidization of industry research is a win-win for campus communities and regional economies. Such are the claims being made by supporters of the Department of Energy’s new Smart Manufacturing Innovation Institute (SMII), an $800 million project intended to help high-tech manufacturers reduce energy costs.

In today’s Pope Center feature, Amy Morris, a senior at NC State University, home to one of SMII’s five regional hubs, says her fellow students and taxpayers should be skeptical. She argues that the track record of related public-private partnerships is not very good, and that hundreds of millions of tax dollars have been wasted over the years.

Besides, Morris says, the Department of Energy, which is leading this project, hasn’t been very successful when taking on the role of venture capitalist. Its failed foray into the solar panel manufacturing industry, which has cost taxpayers more than $535 million, should give pause to SMII’s cheerleaders.

And why should the government subsidize corporate research and development? Private sector R&D expenditures, including those made by companies involved in the SMII project, vastly outstrip those made by federal and state governments. The private sector seems to be doing well without subsidies.

But that brings up another important point: “The reason why private enterprise spends so much on research in the first place is that the vast majority of new products and advancements fail, regardless of how enthusiastic researchers or government officials may be about them,” writes Morris.

“As a soon-to-be NC State graduate and taxpayer, I would hope that in the future my school seriously considers the potential negative ramifications of such projects, and avoids devoting resources to them for the sake of prestige,” she writes.

Read the full article here.

Jesse SaffronJesse Saffron is a writer and editor for the John W. Pope Center for Higher Education Policy, a North Carolina-based think tank dedicated to improving higher education in the Tar ...

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