It took a few months, but forced federal budget cuts are costing hundreds of science and medical research jobs. Nearly half of the recipients who get federal science funding say they've recently laid off or will lay off scientists and researchers, because federal grants are tougher to win, according to a survey by the American Society for Biochemistry and Molecular Biology and 15 other scientific societies.
There is no economic justification/reason for these cuts. None. The very irrationality of these cuts exposes the absence of economics in American life. But because they are irrational in economic terms does not mean they are irrational in other terms and social modes. These cuts find their reason only in what replaced economics forty years ago and became a zombie after the crash of 2008.
[T]he US government, through the NIH, and by extension via the US taxpayer, ‘has long been the nation’s (and the world’s) most important investor in knowledge creation in the medical fields’. This knowledge base was ‘indispensable’ and without it, venture capital and public equity funds would not have poured into the industry. They have ‘surfed the wave’ rather than created it.
National Institute of Health (NIH) labs, responsible for 75 per cent of the most radical new drugs, performs applied research. In both the cases of basic and applied research, what the government does is what the private sector is not willing to do. State funding makes things happen. The $10 billion pumped into the NIH by the ARRA is, according to Michael Grunwald, ‘driving some exciting breakthroughs in cancer research, Alzheimer’s, genomics, and much more’ (Andersen 2012). So the assumption that one can leave applied research to the business sector, and that this will spur innovation, is one with little evidence to support it...
While the State-funded labs have invested in the riskiest phase, the big pharmaceutical companies have preferred to invest in the less risky variations of existing drugs (a drug that simply has a different dosage than a previous version of the same drug).
So what is the private sector really up to?
[P]harma companies are spending a decreasing amount of funds on R&D at the same time that the State is spending more – all while increasing the amount they spend on share buybacks...
What are buybacks about?
[B]uyback schemes boost stock prices, benefitting senior executives, managers and investors that hold the majority of company stock. Boosting share prices does not create value (the point of innovation), but facilitates its extraction. Shareholders and executives are thus ‘rewarded’ for riding the innovation wave the State created.