As President Obama signs the sequester cuts into the budget, amid dire predictions of global economic melt-down and howls of protest at the impending reduction of the science budget, there is at least one UK scientist who wishes the same were happening here.

DrugBaron would cut the science budget in the UK overnight by 10% – along with all other government spending

The US sequester, then, is the perfect policy.  Maybe its only fault is that it doesn’t go far enough.  It’s a once-only measure.  Spending has become so bloated over several decades that an annual reduction across the board would be justified for quite a number of years.

Not surprisingly, spending cuts get a bad press.  There is a mismatch in the coverage given to those who squeal because they lose out than to those who benefit from the reduced cost burden.  This mismatch arises due to gearing: cuts affect a smaller number of people to a bigger extent than the savings spread over the whole population.

Those who lose out then marshall all kinds of “but its bad for all of us” arguments to support their case.  In the case of the science budget, the superficially strong-sounding argument is usually one of growth – knowledge is the foundation of economic prosperity, so how can it make sense to cut the science budget?

Simply because the link between input cost and output value is not only imperfect, but completely illusory.  It is one of the most pervasive, and most dangerous, fallacies of the 21st Century world: that input equals output – that spending is a measure of production.

“There is no selective pressure in abundance” Kevin Johnson, Index Ventures

Trouble is, its simply not true – in science or anywhere else.  Recessions and cuts are not just beneficial, they are essential.  Only in the face of cuts are weaklings weeded out, and efficiency maintained.  The general public, investors and governments are addicted to an unachievable, and undesirable, fantasy of steady, monotonic economic growth.  Its time to learn to love cuts – like DrugBaron.

The argument for spending more on science goes something along these lines: economic growth stems from efficiency; efficiency depends on knowledge; science generates knowledge so spending more on science will automatically yield more knowledge, efficiency and hence economic growth.

The first two links in this chain of argument are solid enough.  Real economic growth (as opposed to what we measure using unhelpful tools like gross domestic product (GDP), which muddies the waters by double-counting a lot of activity) is entirely dependent on efficiency gains – ultimately in primary productivity (meaning food, energy and other essentials).  Its also easy to believe, if quite difficult to prove, that efficiency gains require knowledge.

It’s the last link that is highly suspect: spending more on science yielding more useful knowledge depends absolutely on availability of money being the limiting factor for science productivity.

In the complete absence of public-funded science this may well be the case.  Our brightest people would be unable to engage in knowledge-generation at all, instead being forced to earn a living closer to primary production (as they were in the middle ages).  More money to support them generating knowledge would translate efficiently into economic growth.  In this world (which is nothing like the world we live in today) money is the rate limiting step in a chain of chemical reactions.

But once you have a very substantial public (and indeed private) funded science community, the balance begins to shift.  Finding another really smart person to support becomes the challenge.

Assuming there is a degree of rationality in deciding who to support (that science funding isn’t handed out purely by lottery – which we fervently hope is not true, although at least in the UK the allocation system is deeply flawed if not yet a complete lottery), then the next person to be funded by any increase in the funding pool will be just a bit less talented than their predecessors.  Eventually, you are funding people who have little hope of contributing any knowledge useful for productivity gains at all.

Western countries passed this point decades ago

The reality is that academic science (and probably most global private R&D organizations like pharmaceutical companies) are stuffed to the gunnels with also-rans (in addition to a much smaller core of really talented individuals).

The fundamental problem with science is that those on the outside (the public who are funding it) understand – for the vast majority – less about science than those on the inside (the scientists).  They have no way to judge the quality of the people they employ, nor the usefulness of the knowledge they generate.  Its frankly impossible for the keeper of the purse-strings to know when the line is being crossed between a lack of money and a lack of smart enough people to support.

And faced with howls of protest from those on the inside whenever a cut in funding is mooted (driven entirely by self interest) and a vague belief among the electorate as a whole that more funding leads to more knowledge, more knowledge to greater efficiency and that in turn to economic growth, it takes a brave politician to wield the axe.

DrugBaron sees it differently.  Cutting fully half the science budget would have no discernable effect on the productivity of UK plc over the long term.  Of course, it would damage the ludicrous measure of GDP in the short term as thousands of scientists were thrown out of work, cutting their spending power – but since the C-grade scientists were producing little of value anyway, this short-term loss would be entirely illusory.  In the longer term, the productivity of the science sector would be massively boosted, since almost the same output would be generated at half the cost.

This contentious claim needs (at least) two caveats.  Firstly, DrugBaron’s measure of output differs from those typically used as metrics to assess the production of science – published papers and perhaps patents filed.  Neither of these are a measure of either quality or usefulness, being a measure more of heat than light.  In the same way that the number of scientists employed or the total spend on science are proxy measures of effort and aspiration rather than of utility, so too are publication metrics.  Clearly, then, harsh cuts to the science budget would lead to declines in these “effort-based” metrics even if the real loss of utility was negligible.

Secondly, and more trickily, it assumes that the axe fell on the C-graders

That is harder to engineer than it might be imagined – and ironically is harder to bring about with a gentle squeeze on spending than big cuts.  Human nature tends to spread the pain, and faced with a small cut in spending the natural reaction is to reduce the amount that everyone is getting.  That is highly inefficient, since the small fraction of the total pool who are doing the useful stuff are hampered as much as those who are spinning their wheels.

Only once the cuts become large enough that they are impossible to meet through tinkering at the edges, when radical action, such as losing whole departments, becomes necessary do the managers make a real effort to distinguish the winners from the losers.

This, then, is the wonderful healing power of recession – not just in science but across the economy as a whole.  Recession and cuts weed out the less productive elements in any industry – elements that survived perfectly fine during the growth phase.  Without this periodic cleansing, living in the modern fantasy of monotonically increasing growth, efficiency declines and declines, until the correction comes.  And the longer its held off, the more painful it eventually must be.

Kevin Johnson, Partner at Index Ventures, uses a neat gardening analogy: “Apply enough fertilizer and water to your garden, and everything will grow – weeds and all.  There is no selectivity in abundance.  Only when the water and nutrients are limiting do the strongest plants survive (even if only just) while the weaklings wilt and die.”

DrugBaron has spent long enough in academic science, sitting on grant awarding bodies for the government and medical charities, to know for a fact that there are a lot of C-grade scientists in the UK (just as there are, of course, very many excellent ones).  A period of drought may be the only way to weed them out with anything approaching precision.

Intellectually robust as this analysis may be, there is little possibility of it coming about

Well-rehearsed squeals of protest from the scientists themselves (the good ones, fearing the axe will be applied ‘equally’ as so often it has been in the past, as well as the C-graders that make up the majority) will be joined by the usual commentators who mistake quantity for quality.

This same “coalition of self-interest and ignorance” often seems to dominate the argument on cuts in the wider economy too.  Recession is not just good for science, its good for all industries – the permanent loss of capacity occurs predominantly among the least efficient, and as growth returns it is replaced by stronger, better players.

Of course, for those who find themselves in that ‘relegation zone’ vulnerable to the down-turn, it is hardly surprising they argue for continued spending to prop them up.  But we should not heed them – or else there is never any pressure to reform.

If that’s the “self interest” component, the “ignorance” comes mainly in the form of apostles to Keynsian economics – a cultured form of financial hari-kari that has remained popular for more than half a century.  You know the patter: “borrow more to invest in growth for the future”.  DrugBaron christened such debt as “chocolate-flavoured poison” because it tastes good, but it kills you in the end.

Keynsian stimulus works just fine, but only with two provisos – neither of which apply now (or have applied for decades).  The two provisos are that the extra spending has to really stimulate long-term growth (and not just provide an illusory jump in GDP, that dangerous metric, that results from the actual expenditure of the stimulus no matter on what); and that you don’t already have a large amount of debt in the first place.

The example of investing in science is the perfect example of why the first proviso isn’t met: lack of money is no longer the limiting factor for the production of useful knowledge.  The limiting factor is the availability of super-smart people.  So invest in education, plead the apostles of Keynes – indeed we should, but remember that there too its no certainty that more money results in better performance.  At some point, the inherent intelligence of the population becomes limiting on educational attainment rather than the quantity (or even quality) of the education available.

The second proviso is more subtle.  The problem here is that the more debt you are taking just to service “unproductive” future liabilities (such as paying pensions), the less effective will be “further borrowing” to invest in future growth.  There are no two separate pockets for the growth stimulus and the general expenditure – there is only one economy.

The only solution is to cut discretionary spending, and cut it hard.  The current policy of stagnation falls between both stools.  Whether the economy stagnates for a decade or declines sharply for a couple of years, the impact on living standards is the same – but the gentle squeeze, however long its applied, doesn’t have the cathartic effects of deep cuts.  The weeds are struggling, but they are hanging on in there!

Its time for every taxpayer to learn to love cuts – not support the “coalition of self-interest and ignorance” that deplores them

If deep, blanket cuts are actually the right medicine for a strong economy (and a strong and efficient science base as well), it is a shame that such a policy could only be enacted by default, through paralysis and bickering, in the form of the US sequester.  For those of us in the UK, its an even bigger shame that the right medicine is only going to be administered to the US economy.

Its time for the taxpayer majority in the UK to stand up to the “other coalition” (not the current governing coalition between the Conservatives and the Liberal Democrats, but the coalition of self-interest and ignorance) and demand the deep and painful cuts that are needed to see the UK economy back on its feet and fighting on the global stage.

If a life-long scientist can call for deep cuts in the science budget, maybe the rest of the turkeys can vote for Christmas?  Those that survive the cull will be plumper for it.

The Cambridge Partnership is the only professional services company in the UK exclusively dedicated to supporting companies in the biotechnology industry. We specialize in providing a “one-stop shop” for accountancy, company secretarial, IP management and admin services. The Cambridge Partnership was founded in 2012 to fill a gap. Running a biotechnology company has little …