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The Progressive Economics Forum

How To Fund Innovation

Just over a year ago, I wrote an opinion piece about the federal government’s “innovation strategy” and its impact on the post-secondary education sector. In the piece, I argue that the strategy has resulted in significant funding increases for university R&D. But I also argue in the piece that the strategy creates winners and losers–i.e. a “world class” doctoral student might get a $50,000/yr. scholarship, while student debt for most university students has increased very substantially in Canada since the mid-1990s.

Yesterday’s Globe and Mail features an article that I believe further highlights the inequities in this strategy. I think it also calls into question whether Canadian taxpayers are in fact getting bang for their buck.

On the issue of equity, the Globe and Mail article tells the story of Anand Agarawala, a University of Calgary student who benefited from a $20,000 university fellowship for assistance in developing his business, which he’s just sold to Google for a cool $30 million. I’m happy for Mr. Agarawala’s success, and I’m guessing that our taxation system will easily recoup the $20,000 and then some in light of the recent deal. But try telling that to a student working three jobs in order to pay record tuition levels in Ontario.

The Globe and Mail article also features the following excerpt:

“About 12 per cent of 2005 Canadian PhD graduates were living in the U.S. by 2007, and 21 per cent intended to leave Canada, according to a recent Statistics Canada study. So-called knowledge workers tend to be mobile, and some, like Mr. Agarawala, will always move away.”

In light of this phenomenon (and the apparent “leakage” that it creates), I wonder if the federal government’s current innovation strategy is a wise use of tax dollars.

I think I’d prefer to see innovation funding directed towards the development of the kind of sectoral development policy advocated in the CCPA’s Alternative Federal Budget; that kind of “innovation” policy would have a clear focus on creating well-paying, secure jobs in Canada, rather than on turning our computer science students into Silicon Valley superstars.

Enjoy and share:

Comments

Comment from Paul Tulloch
Time: July 22, 2011, 11:54 am

Innovation, to me, is the largest undiscovered country in Economics.

It is such a marvel of a topic as well. I have been up down and all around it, and yet I feel as though I have barely scratched the surface. Generation after generation born into a layer of production and the social of the dead innovation, twisting and turning within its grasp striving to understand it and then deceivingly conquering it only to fill in the next few bricks on of the web of pathways towards seemingly randomly generated notions of expanding the surplus.

More capital, more bricks more production, more transformation more output more informating, more computing more dead data stored, more innovation more capital. (more to distribute hopefully, and more towards tail less normal distribution of the wealth.

(Sorry I have been in the sun today relaxing in the zero gravity chair)

Innovation- it is everything and yet it can result so easily be stupidly destructive when used for such idiotic human goals of shame. Even poetry died after WW II as there was no longer time to be for art as we had to prevent forever the scale and power of such innovative destructive capacity and that I would argue was the greatest acceleration in discovery and diffusion of innovation in all of history. Yet- I am not a fan of Schumpeter.

The marriage of economics and innovation is the key and always has been for the future of pulling the surplus producing capacity- hopefully in a direction that we can say is not rooted in evil. Even better shinny bauble production would be better goal than what the past has instrumental pushed innovation forward in the greatest capacity.

So giving the keys to Harper has been a complete and utter failure of the democratic notions of positive innovation. The surplus bulldozed into fighter aircraft, prisons, which leads to more and better killing and more an better incarceration. Every least cent of revenue put into such neolithic creative space is killing the human race- literally and figuratively. Ever cent of public money is political and points the cannons of innovation.

Paul

Comment from Donald Hughes
Time: July 22, 2011, 1:49 pm

This might sound like an odd question, but is there enough evidence out there for the CCPA’s AFB development bank scheme? As in, the AFB budgeted $1.2 billion in this fiscal year for a new bank. That would seem to suggest that the CCPA believes a large development bank could hit the ground running and that determinations of social benefits for long-term, high-risk projects would be largely unproblematic. Blunt interventions in industry selection seems like it is discounted as a policy by many economists, so it seems like a high test would be in order. Is there evidence for the specific development bank wed with sectoral development councils that beats a simple manufacturing tax credit or one-off funding and grants and so on?

Sorry if I haven’t researched this much yet.

Comment from Paul Tulloch
Time: July 27, 2011, 7:45 am

Just a more concrete point on this topic than my last post.

Innovation is the solution to our problems. Innovation however in many areas not just tech. There is plenty of tech in the system, just much of it has not permeated the monopolist corporate gate keepers of consumption.

Hence the need for private investment and strategically targeted public investment.

Having the market and hence profits being the sole direction left up to innovation within the macro innovation strategy is not the solution, otherwise we end up with bigger suvs, thousands of new perfumes and better guns.

It needs to be an innovation that makes sense given the true needs of the world.

Imagine if the needs for entertainment were as market based profitable as say the need for food. I do think the whole world would be fed and rather well.

Demand side issues, in a much wider sense, in terms of innovative thinking are the solution. So when one think of innovation, I hope we can think in a much wider sense.

Comment from Paul Tulloch
Time: July 27, 2011, 7:47 am

that should be the reverse.i.e. if food needs were as profitable as entertainment needs.

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