Has <a href="http://volokh.com/2003_10_26_volokh_archive.html#106774750562758557">Randy Barnett</a> been reading Catallarchy?

I have always been skeptical that the spin-offs of war technology, or the space program for that matter, yielded better technology for civilian uses than direct R & D on civilian uses. I do not deny that military research sometimes ends up with very useful civilian applications. But apart from the huge amounts of tax money available for the former, it always seemed to me that you would be more likely to invent something useful for civilian use if that is what you were trying to invent, rather than trying to invent a better weapon and then eventually getting a spin off. Seems to me that claims to the contrary partake of the phenomenon of "the seen vs. the unseen." We see the military/space spin offs; we do not see the opportunities lost due to the military R & D--not to mention the destruction caused by war itself.

That Which is Seen and That Which is Not Seen, indeed.

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a few points. First, in

a few points.

First, in my experience most of DoD R&D is not focused on making actual weapons but rather improving infrastructure and making better materials.

Second, although civilian R&D entities exist in agencies such as NIH and the EPA, their incentive structure is not as aggressive since their immediate use does not affect the lives of American soldiers and therefore do not provide the same high profile results.

Third, the very nature of R&D is wasteful. You may be lucky if 1 out of 10 projects produce something useful. Regardless, I would imagine the DoD applications have more uses in the civilian population than one would think, especially for law enforcement and emergency personnel.

Spoonie, Can you for certain

Spoonie,

Can you for certain say that the dollars used for govt R&D would not be better used in the hands of the people who used to own them?

Spoonie Luv, I also think

Spoonie Luv,

I also think that the civilian spinoffs of military R&D involved multiple-use technologies on which entirely new forms of production were based (cybernetic control systems in the machine tools industry, for example). Seymour Melman has done some good work on this.

Jonathan,

Of course they would be better used in the hands of the people who owned them, by definition. The only Pareto optimal use of any resource is when all the transactions involving it are voluntary.

But such a circumstance would probably result in lower-tech forms of production.

The key feature of military R&D is that it's involuntarily taxpayer-funded. That means that it's used more intensively than it would be in a free market economy, because the people consuming it don't pay the cost of providing it. Without the military-industrial-R&D complex, I believe the economy would be a lot less capital intensive.

Why do you think the US

Why do you think the US would be more labor-intensive without Military-Industrial R&D?

Entrepreneurialism in the US means that there are constant new entries willing to take chances on technology, and new entrants tend to be capital-intensive to get a productivity boost on the small scale (to compete with the economies of scale of larger firms).

What would tend to keep things labor-intensive would be a politically powerful labor lobby that would work against capital-intensive projects (or else mandate certain minimum labor requirements for production). Absent that, of course, union-forced wage hikes would increase the desire for labor-saving capital improvements. It may be that right-to-work states (where union power is curtailed) would have the most capital-friendly environments.

The irony is that more capital = more employment as well as a better standard of living. Its just that in the short term it may seem like blue collar workers are getting replaced by machinery and so machines=bad (in their "non-regulated" form).

But in 200 years we've gone from around 96% farm employment to 2% farm employment due to increased mechanization of farming and increased productivity, but I doubt people really think that we're better off with a 1798 standard of living and economy... (and indeed, the 94% of the workforce kicked off the farm are, for the most part, employed in other jobs)

Brian Doss, There would be

Brian Doss,

There would be less because the current level of capital-intensiveness came about in a state of affairs when the government was actively subsidizing capital-intensive forms of technology, through R&D subsidies, spending on technical schooling, military procurement, etc.

Isn't it self-evident that people consume any good or service at an artificially high rate when the government keeps the price artificially low? So business relies more intensively on energy, transportation, and high-technology and skilled labor, than it would if the price of these factors reflected the actual cost of providing them. And since government subsidies to any factor of production mean it will be consumed above pareto-optimal levels, it follows that without such subsidies, people maximizing their own utilities in a free market would use less overall. (Unless you assume a 1-1 trade-off in which 100% of income that is currently taxed to subsidize high-tech investment would otherwise have been spent on high tech investment, which is extremely unlikely.) Don't these things pretty much follow from an axiomatic understanding of human action?

You're arguing after the fact that a state of affairs created by state intervention is an improvement in quality of life over what otherwise would have occurred in a free market. But I don't believe in public goods. If people aren't willing to spend their own money and effort on something they want to consume, and overcome the transaction costs without government help, then it shouldn't be done. At any given time, the state of affairs resulting from the sum total of voluntary transactions is the most efficient possible use of resources.

And BTW, the capital

And BTW, the capital intensiveness of existing larger firms, as a competitive incentive for smaller firms, is a historical result of past state capitalist intervention (for existence, the fact that the value of plant and equipment was increased about 2/3, at taxpayer expense, during WWII).

As for economy of scale, in the sense of unit production cost: it levels off at a relatively low level. The large corporations are not that big because of economy of scale, but because the state intervenes to absorb or shift the disutilities and inefficiencies of large-scale organization. Something does not become more "efficient" just because you make an unwilling party absorb all the costs.