Short Term Thinking in a Long Term World

Eduardo Porter, business columnist for the NY Times (and always worth reading) tells us the deferred gratification discipline that made modern capitalism such a force is falling apart.

… talk to a scientist in a research lab almost anywhere and you are likely to hear that the edifice of American innovation rests on an increasingly rickety foundation.

Investment in research and development has flatlined over the last several years as a share of the economy, stabilizing at about 2.9 percent of the nation’s gross domestic product in 2012, according to the National Science Foundation.
That may not be far from the overall peak. But other countries are now leaving the United States behind.

And even more critically, investment in basic research — the fundamental building block for innovation and economic advancement — steadily shrank as a share of the economy in the decade to 2012, the last year for which there are comprehensive statistics.

The trend poses two big challenges. The first concerns government budgets for basic research, the biggest source of financing for scientific inquiry. It fell in 2013 to substantially below its level 10 years earlier and, as one of the most politically vulnerable elements in an increasingly straitened federal budget, looks likely to shrink further.

Of course this would have been made clearer by removing the passive voice.  It didn’t just fall.  It was deliberately and consciously cut by a  determined sector of congress, almost entirely Republicans…”

The second, equally important, challenge regards the future of corporate research. Evidence suggests that American corporations, constantly pressured to increase the next quarter’s profits in the face of powerful foreign competition, are walking away from basic science, too.

And again pressured by whom? Actual pressure, or imputed pressure?  The following is more specific:

Corporate executives, their compensation tied overwhelmingly to short-term gains in the market value of their companies, may be responding accordingly.

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