Edward Younkins is professor of accountancy and business administration at Wheeling Jesuit University in Wheeling, West Virginia.
Technology represents man’s attempt to make life easier. Technological advances improve people’s standard of living, increase leisure time, help eliminate poverty, and lead to a greater variety of products. Progress allows people more time to spend on higher level concerns such as character development, love, religion, and the perfection of one’s soul.
If people resisted technological change, they would be expressing their satisfaction with existing levels of disease, hunger, and privation. In addition, without experimentation and change, human existence would be boring; human fulfillment is dependent on novelty, surprise, and creativity.
An innovative idea from one man not only contributes to the progress of others, but also creates conditions permitting people to advance even further. Ideas interact in unexpected ways, and innovations are frequently used in unforeseen applications. Technological progress involves a series of stages consisting of experimentation, competition, errors, and feedback.
Innovations do not simply replace other products. Rather, they develop new and expanded markets of their own. New technology does not cause a net increase in unemployment or make labor obsolete. While technology eliminates some jobs, it is a net creator of jobs because resulting higher profits are reinvested. New technology may require the development of new skills and the need to relocate, but it does not cause greater overall unemployment. As technological improvements increase productivity, the demand for labor will tend to rise, creating more job opportunities and raising wages. The increase in labor productivity also raises the potential of some unemployed workers, whose marginal costs previously exceeded their marginal productivity. Finally, as consumers, wage earners will gain from the decrease in product prices that tends to result from the increase in productivity and output.
Freedom Promotes Technological Progress
There is a reciprocal relationship between technology and freedom. A free market unhampered by government intervention is the most fertile environment for technological and economic progress. Freedom is a prerequisite for progress in an unpredictable and risky world. It encourages profit-seeking and innovation, which in turn result in greater productivity and employment. Technology furthers a free society by providing new opportunities to communicate, work, compete, and deal with others across social and physical barriers. In the past, the wheel and the steam engine enhanced and complemented human physical powers. Today, innovations such as the microprocessor amplify human intellectual capabilities. The electric motor, internal combustion engine, fluorescent and incandescent lighting, and the Internet have had enormous effects on the way we live and work. Emerging technologies such as cryogenics, photovoltaics, aerogels, fuel cells, and radio-wave lighting may do the same in the future.
When legislators pass laws that restrict or forbid the use of technology, they grant a privilege to stagnant firms and their workers at the expense of the firms that would have used the new technology and the workers who would have had different, often better jobs. Resources remain in inefficient protected technological processes, creating waste and impeding progress.
Calls for protectionism come from firms that have not modernized their production processes and thus are unable to compete with more efficient, lower-cost companies. Both mandated compensation to displaced laborers and restrictions on the use of technology will reduce the profits of the firms affected, thereby reducing capital accumulation and its re-investment that would have led to an eventual increase in the level of employment.
Friends and Enemies of Progress
Virginia Postrel’s 1998 book, The Future and Its Enemies, defies conventional political boundaries of left and right and liberal and conservative to divide the world into dynamists and stasists. The book’s thesis is that the most useful and pertinent intellectual concept is about those who welcome the future and those who want to stop, turn back, or regulate change.
According to Postrel, dynamists prefer an open-ended society where creativity and enterprise, operating under general and predictable rules, generate progress in unpredictable ways. Dynamists appreciate evolutionary processes such as market competition, playful experimentation, scientific inquiry, and technological innovation. They work creatively across barriers and obstacles and in areas once thought to be disparate to construct combinations based on the free play of imagination and discovery. Further, they seek progress, rather than perfection, through trial and error, feedback loops, incremental improvement, diversity, and choice. They are learners, experimenters, risk takers, and entrepreneurs who understand the importance of local knowledge and evolved solutions to complex problems. Not surprisingly, dynamists are frequently attracted to biological metaphors as symbols of unpredictable change and growth, variety, experimentation, feedback, and adaptation.
Stasists have an aversion to change and either abhor progress or want to control it according to their own vision. They include those who long for the good old days, technophobes, technocrats, supporters of big government programs, and individuals whose investments or jobs are in jeopardy due to some innovation. They may come from the “left” (unionists, environmentalists, Luddites) or from the “right” (traditionalists, nativists). Stasists on the left want to regulate the market and the development of technology. Those on the right loathe change and have protectionist economic leanings.
Of course, not all change is for the good. The desirability of a given change is subject to rational assessment. What is required is a libertarian institutional framework that guarantees man the freedom to seek his material and moral well-being as long as he does not infringe the equivalent rights of others. Only then will a person be able to use his rationality and free will to choose, create, and integrate all the values, virtues, and goods that can lead to individual well-being. This naturally includes the rational evaluation, choice, and use of technology and innovations.
Privatizing Federal Research and Development
Science and technology fare better under free markets than under central planning. The individual is better than the government at gaining knowledge, and the system of private property and private enterprise is able to reward human ingenuity. There is no evidence that innovations come from government bureaucracies, but entrepreneurs can often accomplish what government planners say can’t be done.
Since the engine of innovation and productivity is investment in the private sector, it follows that we should favor an economic climate that rewards private investment in research and development and promotes the effective and innovative use of technology by private firms.
We need to reallocate the responsibility for technological innovation away from the state and into the hands of private technology makers and consumers. Currently, some 700 scientific and technological research labs are owned or supported by the federal government. Recently, they have expanded their scope beyond basic R & D to provide services that compete with private-sector scientific, testing, and energy firms. Privatization would end subsidies to major industries (such as petroleum and aerospace). It would also free labs from the constraints of the federal budget process, cumbersome procurement and civil service rules, and the inability to sell their services at market prices.
Advocates of federal research funding argue that the private sector will do too little because of market failures resulting from firms’ free riding on others’ research. Consequently, the argument goes, there will be an underinvestment in R & D.
There is no evidence that government will triumph or that markets will fail. In the public sector, research funds are awarded on political grounds; it’s a form of pork-barrel spending. Politicians, facing the impossible job of assigning priorities to a myriad of research projects, tend to choose those with the greatest number of supporters or those helping their local constituencies. On the other hand, private- sector scientists and entrepreneurs are guided by price signals and choose research projects that, if successful, would be the most profitable and the most likely to meet human needs. Markets and price signals permit superior targeting of research projects and resources, and private firms can earn large rewards by solving important problems. In addition, the private sector’s superior ability to select and use R & D resources will increase technological progress over the years.
Privatization is overdue for federal research facilities. The task of linking research with human needs is not suitable for a political bureaucracy. That’s why the private sector hasn’t been much interested in what the federal labs create.
Reducing Federal Technology Transfer Activities
With the passage of the Stevenson-Wydler Innovation Act of 1980 and the Federal Technology Transfer Act of 1986, all Federal labs were required to develop programs for transferring technology to the private sector and to state and local governments. President Reagan supported the second act because he believed that investments in R & D for federal programs were not returning sufficient dividends to taxpayers in terms of new products, processes, and jobs. This legislation was amended in 1996 by Public Law 104-113, which created incentives and encouraged the commercialization of technology created in federal labs. A National Technology Transfer Center (NTTC) was established in 1989 by Congress to provide American firms and individuals with access to federal R & D to better enable them to compete in the international marketplace. In addition, the government, rather redundantly, has six Regional Technology Transfer Centers (RTTC’s) to help U.S. firms improve their competitiveness by assisting them in the location, assessment, acquisition, and utilization of technologies and scientific and engineering expertise within the federal government.
The use of federal R & D results has been meager; studies indicate that only about 10 percent of federally owned patents have ever been used. This is unsurprising. Since R & D in federal labs is undertaken to meet an agency’s mission, decisions reflect political rather than commercial needs.
Ultimately, the privatization of federal labs will transfer resources out of the hands of stasist government bureaucrats, technology transfer agents, and scientists and into the hands of private-sector dynamists who are more likely to foster economic prosperity, technological progress, and cultural innovation.