Industrial Policy and the God Particle

Jonathan B. Wight

The European Organization for Nuclear Research (CERN) has come up with a doozie. They announced this week that they might have discovered the fundamental building block of the universe, the Higgs Boson or the "God particle."

This is exciting on many levels and leads researchers into areas that could fundamentally change our world. But the news is also deeply disappointing from the view of America's hegemony in science.

Nobel prize winner Steven Weinberg unravels the sorry state of America's nuclear collider project in The New York Times, "The Crisis of Big Science":

In the early 1980s the US began plans for the Superconducting Super Collider, or SSC, which would accelerate protons to 20 TeV, three times the maximum energy that will be available at the CERN Large Hadron Collider. After a decade of work, the design was completed, a site was selected in Texas, land bought, and construction begun on a tunnel and on magnets to steer the protons.

Then in 1992 the House of Representatives canceled funding for the SSC. Funding was restored by a House–Senate conference committee, but the next year the same happened again, and this time the House would not go along with the recommendation of the conference committee. After the expenditure of almost two billion dollars and thousands of man-years, the SSC was dead.

One thing that killed the SSC was an undeserved reputation for over-spending. There was even nonsense in the press about spending on potted plants for the corridors of the administration building. Projected costs did increase, but the main reason was that, year by year, Congress never supplied sufficient funds to keep to the planned rate of spending. This stretched out the time and hence the cost to complete the project. Even so, the SSC met all technical challenges, and could have been completed for about what has been spent on the LHC, and completed a decade earlier.

Spending for the SSC had become a target for a new class of congressmen elected in 1992. They were eager to show that they could cut what they saw as Texas pork, and they didn't feel that much was at stake. The cold war was over, and discoveries at the SSC were not going to produce anything of immediate practical importance. Physicists can point to technological spin-offs from high-energy physics, ranging from synchotron radiation to the World Wide Web. For promoting invention, big science in this sense is the technological equivalent of war, and it doesn't kill anyone. But spin-offs can't be promised in advance….

Before the Texas site was chosen, a senator told me that at that time there were a hundred senators in favor of the SSC, but that once the site was chosen the number would drop to two. He wasn't far wrong. We saw several members of Congress change their stand on the SSC after their states were eliminated as possible sites.

Industrial policy, we know, can be a really bad idea because government never has enough information to pick winners. But we also know that failing to run in the race will guarantee you will lose. Government has no information about the technology spill-overs and potential economic from research into pure science. In fact, no one does. But the excitement this week coming out of Switzerland shows that government investments can have generational effects on human capital. The Chinese are going into outer space and the Koreans are going into stem cells, areas that require them to develop their human capital. The spill-overs generated from Airbus and Embraer and CERN will be interesting PhD dissertations one day.

Comments

[Jonas Feit]

'Industrial policy, we know, can be a really bad idea because government never has enough information to pick winners.'

This is curious. Are you sure 'never' is the word you're looking for here? It reminds me of one of George Carlin's popular myths. The myth is the common statement, 'You never know,' to which Carlin says, 'No, sometimes you know.'

Your statement contains a lot less dissonance if you mean 'industrial policy' in the sense that Greg Mankiw uses the term, which is to say, any unsuccessful government investment undertaken by Democrats. If, on the other hand, you mean a more generally accepted objective definition, I'd suggest the following correction: 'Industrial policy, we know, is risky because government has the same information constraints as private actors.'

[Jonathan B. Wight]

Hi Jonas,
Thanks for your keen observation. I would say government and the private sector have the same information constraints, which is that no one can predict the future. So government (and the private sector) never have enough information to pick winners. That is why capitalism requires risk and constant failure. Dani Rodrik has some good advice for how governments can minimize the risk and support industrial policies. Have you seen One Economics, Many Recipes: Globalization, Institutions, and Economic Growth?

Thanks again for an insightful comment.
Best, JW