The Profzi Scheme This cartoon from PHD Comics describes the pyramid scheme behind graduate education.  There are two few faculty positions for all of the cheap laborers (graduate students) to rise up in this system.  Combine this with the prevailing myth that asexual reproduction is the only post-degree model for graduate education and you have an odd combination – an underproduction of scientists and engineers, but an overproduction of Ph.Ds.  If bachelors degree holders can function in a lab, then the need for bunches of Ph.D. students is in question.

Only Ph.D. Holders Count as Scientists Engineers don’t have to have a Ph.D. to be considered engineers.  Why must this be true for scientists?  Are all private sector scientists Ph.D. holders?  Some commenters on the Research for America proposal have suggested that they need intensive training for people in their labs, training bachelors degree holders don’t have.  While that may be true in very specialized circumstances, I find it difficult to believe that someone with a bachelors level education in a scientific field couldn’t be qualified to do scientific work. Certainly the numbers game played when Rising Above the Gathering Storm came out did not assume that all of the scientists and engineers it counted in other countries had Ph.Ds.  Why should it be true here?  If we focus on the requirements of the job, I think any gap in human resources could be effectively addressed by scientific masters degree programs, better integration of research into undergraduate education, and post-degree lab experience like Research for America.

Outputs and Outcomes Aren’t the Same Usually the debates over competitiveness focus on outputs – number of degrees, number enrolled, number of patents, etc.  If we value the number of Ph.D. holders we have, rather than a more qualitative notion of an environment that encourages high-class research and development, then that’s where the attention goes.  To focus on policies that try and increase outputs, without consideration of the influence on outcomes, then we get a situation where only one path to preparing a scientist or engineer is accepted.  I think engineering (and technology fields in general) avoid this problem much more than scientists, in part because of an overemphasis on a long-term credentialling process.  While it may be more difficult these days to have garage scientists than garage engineers (who would be a scientific equivalent to a Sergey Brin or Steve Wozniak today?), I think part of that is societal rather than an issue of resources.

Given the opportunity costs of graduate education, I think it’s a more rational path for many students to take a year or two in a lab to boost their B.S. experience and move on.  Certainly enough people are doing this with just the degree.  I hope we can encourage more alternatives for gaining scientific experience.

Think tanks are no stranger to this appeal to authority.  Of course, those with more ideological purposes (Heritage, Center for American Progress, Cato) are easier to spot when they make these appeals as a way to advance their particular agendas.  Those with no apparent ideological axe to grind are harder to sniff out.

Let me present today’s example, from the Information Technology and Innovation Foundation – a small think tank that usually does fine with their various economic analyses of IT and innovation related topics.  They have announced an event on September 10 in Washington titled: Is the U.S. Falling Behind in Science and Technology or Not?  The associated press release explains why they ask the question:

Over the last several years a number of reports – headlined by Ris­ing Above the Gathering Storm – have raised alarm over the deteriorating state of U.S. science and technology (S&T) competitiveness and documented how the country is falling behind in key building blocks of the S&T base.

Now bursting onto the scene is a new report from the RAND Corporation, U.S. Competitiveness in Science and Technology, that calls into question what appeared to be settled assessments of slipping U.S. S&T competitiveness. Covered widely in magazines like The Economist (What Crisis? June 12, 2008 issue), RAND’s report has been interpreted by many to suggest that worries about the United States losing its edge in S&T are actually overblown: everything’s just fine

But RAND’s report contains se­rious structural and analytic flaws that misread the fundamental position of U.S. science and technology competitiveness. In a new report, RAND’s Rose-Colored Glasses: How RAND’s Report on U.S. Competitiveness in Science and Technology Gets it Wrong, ITIF will offer a detailed critique of the RAND report showing that in contrast to RAND’s rosy assessment, America’s lead on a number of key S&T indicators is eroding rapidly, where not vanishing entirely.

I want to be careful here.  The event hasn’t happened yet, but the framing of the discussion is a great example of how a policy debate can easily be hidden away by appeals to sound science, or in the case of this particular event “settled assessments.”

And in the interest of noting where Prometheus stands, we have criticized Rising Above the Gathering Storm (RAGS) to the point where it has its own category.  Both Roger and I have noted the RAND report targeted by ITIF in a favorable light.  It lacks the heated rhetoric and dubious calculations of RAGS, and makes the point that action is necessary, regardless of the state of U.S. competitiveness (something ITIF conveniently ignores).  The notion of steady-state equilibrium in science and technology support should have been discredited once technology was incorporated into economic growth models, but that’s a post for another day, if not another blog.

Scientific consensus does not dictate particular policy actions.  Look at the climate change debates to see proof of this.  The press release is framed in such a way that this ‘bad’ RAND report must be fought, or the policy consensus over improving U.S. competitiveness (such as it is) will fail.  But ITIF won’t fight the report on it’s tone (which appears to be the main source of disagreement), but on supposed flaws in its science.  All the while, flaws in the science of reports supportive of ITIF’s position (the sky is falling, we’re doomed unless science gets more money, you know the drill) is ignored (ITIF isn’t the only one to ignore the flaws, or the related criticism).

There’s a fine line between rhetoric and, well, I’ll call it delusion (Henry Frankfurt has another name for it), and I think this falls on the wrong side.  Instead of picking apart reports read by very few people that matter in competitiveness decisions, political action is better spent persuading the right people that certain programs need full funding.

. . . if the projections are accurate: the number of undergraduate meteorology degree recipients will increasingly exceed the number of meteorology employment opportunities into the next decade. Thus, given recent trends and future projections, the growth of the U.S. undergraduate meteorology population is potentially unsustainable in terms of bachelor’s degree–level employment within meteorology.

With respect to the job market for meteorologists he finds another solid indication of a glut:

Meteorology graduates’ salaries in this national database are much closer to those in the traditionally glutted and underpaid humanities fields than to salaries for graduates with computer science, physics, geology, or mathematics degrees.

Knox indicates that this situation has developed because the atmospheric sciences community has ignored the demand side of the equation when pressing for an ever increasing supply of students, and may foreshadow a similar glut at the graduate level:

the quantitative results of this article can be construed to indicate that we have entered
a period of chronic oversupply of undergraduate meteorologists. This oversupply has arguably come about because the mechanisms that generate interest in our field (e.g., unprecedented media emphasis on weather) are mostly uncoupled to the mechanisms of demand. Media coverage of weather and climate topics can inspire throngs of students to pursue meteorology as a career; it is specifically cited by UNC Charlotte meteorologists as a reason for their program’s spectacular growth (www.charlotte.
com/274/story/103334.html). But widespread media attention does not magically create future employment opportunities for these students within meteorology. If, in turn, this situation translates into a future boom in graduate school enrollments and Ph.D. production, the current parlous state of “grantsmanship” in our science as described by the critiques of Carlson (2006) and Roulston (2006) would seem tame by comparison.

In the same issue, Jeff Rosenfield, Editor-in-Chief of BAMS editorializes (not online, at p. 773) that he was “surprised” by the data. He should not have been. In 2002 I engaged in a series of exchanges on the pages of BAMS on exactly this question in response to a paper by Vali, Anthes, et al. warning of a shortage of PhD atmospheric scientists. They argued that one solution was to boost the undergraduate ranks in the atmospheric sciences:

we as a community should seek ways to increase the number of qualified applicants. Because the number of atmospheric scientists required under any reasonable scenario is small compared to the total number of students in undergraduate education, a modest increase in the effort to recruit students from other disciplines could have a major impact in a relatively short period of time.

In response, I argued that any discussion of a shortfall in supply of atmospheric sciences professionals needed also to be accompanied by some understanding of the market demand for people trained with this expertise, something that Vali , Anthes, et al. neglected to discuss, and Knox identifies as a root factor in the present mismatch of supply and demand. I argued that the atmospheric sciences were risking committing the exact same mistake made by the NSF when it proclaimed a looming shortage of scientists in the 1990s. I concluded:

The science and technology community generally experienced loss of credibility in the 1990s when a number of prominent figures claimed a looming shortage of scientists. Leaders in the atmospheric sciences are in a position to use experience to avoid such errors in future assessments of the labor market. In particular, considerable care must be taken in raising expectations of potential students and policymakers about the future prospects for employment.

In reply, Vali and Anthes dismissed the importance of any consideration of demand, raised the “idealistic” vision of the free pursuit of knowledge, and ended with a jingoistic appeal to the need for more native U.S. scientists. To this I rejoined that there was indeed data available that portended a potential oversupply of atmospheric scientists, and this data was ignored at some risk. No one should be surprised at the current labor market situation for atmospheric scientists.

Now it turns out that the community faces an oversupply of undergraduates, depressed salaries, and a potential loss of credibility. Of course, the entirely predictable next step in this situation will be for the atmospheric sciences community to bemoan the fact that research budgets have not kept pace with the supply of trained atmospheric scientists, and call for an increase in federal R&D to create new opportunities. And in this way, the politics of science funding go round and round.

A new report out by The Rand Corporation, titled U.S. Competitiveness in Science and Technology (PDF), seeks to shed some light on this debate, asking : “So, who is right? Is U.S. leadership in S&T in jeopardy?”

The answer they come up with is “No”:

The United States continues to lead the world in science and technology. . .

Taken in concert, these statistics suggest that the United States is still a premier performer in S&T and grew faster in many measures of S&T prowess than did Japan and Europe. Developing nations such as China, India, and South Korea, though starting from a small base, showed rapid growth in S&T, and, if that growth continues, the United States should expect its share of world S&T output to diminish.

High growth in R&D expenditures, triadic patents, and S&E employment, combined with low unemployment of S&E workers, suggest that the United States has not been losing S&E positions to other countries through outsourcing and offshoring.

It is an interesting report and a valuable contribution to the debate. My view of the long series of claims that the U.S. is experiencing a competitiveness crisis reflect a flawed understanding of data and analysis in this area, a willingness to exploit jingoistic rhetoric for political gain, or a crass effort to boost R&D budgets based on an argument that sells well in Washington. The reality is probably a combination of all three.

But even if the U.S. is not experiencing a competitiveness crisis, complacency is not really an option. The Rand report makes a number of sensible suggestions:

* Establish a permanent commitment 􀁴􀀁 to a funded, chartered entity responsible for periodically monitoring, critically reviewing, and analyzing U.S. S&T performance and the condition of the S&E workforce.

* Facilitate the temporary and indefinite stay of foreigners who
graduated in S&E from U.S. universities . . .

* Facilitate the immigration of highly skilled labor, in particular
in S&E, to ensure that the benefits of expanded innovation,
including spillovers, accrue to the United States and to ensure
the United States remains competitive in research and innovation.

* Increase capacity to learn from science centers in Europe, Japan,
China, India, and other countries to benefit from scientific and
technological advances made elsewhere.

* Continue to improve K–12 􀁴􀀁 education in general and S&T education
in particular, as human capital is a main driver of economic
growth and well-being.

The Politics and Economics of Offshore Outsourcing
NBER Working Paper No. 12398
Issued in July 2006
link (free to .gov and universities that subscribe to NBER, follow link titled “Information for subscribers and others expecting no-cost downloads”)

Abstract: This paper reviews the political uproar over offshore outsourcing connected with the release of the Economic Report of the President (ERP) in February 2004, examines the differing ways in which economists and non-economists talk about offshore outsourcing, and assesses the empirical evidence on the importance of offshore outsourcing in accounting for the weak labor market from 2001 to 2004. Even with important gaps in the data, the empirical literature is able to conclude that offshore outsourcing is unlikely to have accounted for a meaningful part of the job losses in the recent downturn or contributed much to the slow labor market rebound. The empirical evidence to date, while still tentative, actually suggests that increased employment in the overseas affiliates of U.S. multinationals is associated with more employment in the U.S. parent rather than less.

Finally a few weeks ago, Science Committee Democrats were able to get the report they had been seeking, and have posted excerpts on their website. What does it contain that DOC or the Administration might want to hide? Not much.

My reading of the report finds the following two statements to be the most interesting, because they are counter to claims of a looming outsourcing crisis:

The effect of offshoring on the competitiveness of the US IT services and software sector appears to be negilible . . .

The present outsourcing and offshoring trends will increase the competitiveness of the U.S. semiconductor industry in the short term . . .

So what gives? The DOC report does provide some strong counter-evidence to the claims of an outsourcing crisis presented in the NRC report Rising Above the Gathering Storm, which has been used in support of a bipartisan push for more science and engineering funding in the name of competitiveness. Maybe the DOC report was being sat on so as not to provide a mixed message on competitiveness. After all, running on the issue of foreigners taking “our” jobs sounds pretty appealing. But I am skeptical about this explanation. After all, Democrats as well as Republicans like to run on the jobs issue and the DOC report doesn’t exactly help the Democrats cause (they clearly were looking for evidence that the Administration was hiding evidence of a mass exodus of jobs overseas). And surely there are also behind-the-scenes politics going on that may trump this explanation.

In any case, the Science Committee Democrats are to be applauded for wrestling the report that they paid for out of DOC. However, in the end it provides little help to their cause, and in fact contains data at odds to the recent bipartisan push on addressing U.S. competitiveness through more funding for research. It also suggests that the crisis in offshoring is not as bad as advertised, but this is a result not being told by either party.

Here is an excerpt from the Economist article, and after that a link and excerpt from Mr. Bhidé’s paper (PDF).

In a marvellously contrarian new paper, Amar Bhidé, of Columbia University’s business school, argues that these supposed remedies, and the worries that lie behind them, are based on a misconception of how innovation works and of how it contributes to economic growth. Mr Bhidé finds plenty of nice things to say about many of the things that most trouble critics of the American economy: consumption as opposed to thrift; a plentiful supply of consumer credit; Wal-Mart; even the marketing arms of drug companies. He thinks that good managers may be at least as valuable as science and engineering graduates (though given where he works, perhaps he is talking his own book). But he has nothing nice to say about the prophets of technological doom.

Mr Bhidé says that the doomsayers are guilty of the “techno-fetishism and techno-nationalism” described in 1995 by two economists, Sylvia Ostry and Richard Nelson. This consists, first, of paying too much attention to the upstream development of new inventions and technologies by scientists and engineers, and too little to the downstream process of turning these inventions into products that tempt people to part with their money, and, second, of the belief that national leadership in upstream activities is the same thing as leadership in generating economic value from innovation.

But nowadays innovation—a complex, gradual process, often involving many firms making incremental advances over many years—is not much constrained by national borders, argues Mr Bhidé. Indeed, the sort of upstream innovation (the big ideas of those scientists and engineers) most celebrated by those who fear its movement to China and India is the hardest to keep locked up in the domestic market.

The least internationally mobile innovation, on the other hand, is the downstream sort, where big ideas are made suitable for a local market. Mr Bhidé argues that this downstream innovation, which is far more complex and customised than the original upstream invention, is the most valuable kind and what America is best at. Moreover, perhaps the most important fact overlooked by the techno-nationalists, notes Mr Bhidé, is that most of the value of innovations accrues to their users not their creators—and stays in the country where the innovation is consumed. So if China and India do more invention, so much the better for American consumers.

The most important part of innovation may be the willingness of consumers, whether individuals or firms, to try new products and services, says Mr Bhidé. In his view, it is America’s venturesome consumers that drive the country’s leadership in innovation. Particularly important has been the venturesome consumption of new innovations by American firms. Although America has a lowish overall investment rate compared with other rich countries, it has a very high rate of adoption of information technology (IT). Contrast that with Japan (the original technology bogeyman from the East) where, despite an abundance of inventive scientists and engineers, many firms remain primitive in their use of IT.

One reason why American firms are able to be so venturesome is that they have the managers capable of adapting their organisations to embrace innovation, says Mr Bhidé. Pressure to be venturesome may have come from America’s highly competitive markets. And America’s downstream firms are arguably the world’s leaders in finding ways to encourage consumers to try new things, not least through their enormous marketing arms and by ensuring that there is a lavish supply of credit.

And here are the opening paragraphs from Amar Bhidé’s paper:

The “techno-fetishism and techno-nationalism” described by Ostry and Nelson in 1995 has apparently drawn strength over the last decade from concerns in the West about globalization. The mindset incorporates two related tendencies. One is the focus on the upstream development of new products and technologies while glossing over their downstream consumption and use. The other is the belief that national prosperity requires upstream international leadership in upstream activities – “our” scientists, engineers, entrepreneurs, and firms have to better than everyone else’s – they must write more papers, file more patents and successfully launch more products. Otherwise, competition from low-wage countries like China and India will erode living standards in the West especially as they upgrade their economies to engage in more innovative activities.

In this paper I claim that the two tendencies misapprehend the nature and role of innovation as well as the implications of globalization. I argue that the willingness and ability of individuals to acquire and use new products and technologies is as important as – and in small countries more important than – the development of such products and technologies. Moreover nations – unlike many individuals and organizations – don’t have to outperform ‘competitors’ in order to prosper. Notwithstanding the rhetoric about the competitive advantages of nations – a transplant from the domain of inter-firm rivalry that has displaced references to old-fashioned comparative advantages – countries are not locked into zero-sum trade. An innovation originating in one country does not impoverish other countries. Rather it tends to improve standards of living in all countries that have the downstream capacity to acquire and implement the innovation.

My latest column for Bridges is out and is titled, “Science Policy Without Science Policy Research.” This time the folks at the Office of Science & Technology at the Embassy of Austria in Washington, DC have also produced a podcast, which can also be heard online. See the essay, hear the podcast, and learn the answer to the question posed above here. The entire issue of Bridges is worth your attention.

The linear model holds that investments in basic research are necessary and sufficient to stimulate scientific advancements, motivate technology developments, and bring products and serves to the market, where society benefits. The linear model was championed in Vannevar Bush’s post-war science policy manifesto titled “Science: the Endless Frontier” and has been fundamental to modern science policy ever since. Here is a graphic I made up illustrating the linear model.

I am reminded almost daily at the depths to which the linear model shapes science policy, science advocacy, and science politics. Yesterday I came across an op-ed which used the linear model to argue for increased funding, at an exponential rate it seems, for health research, based on the linear model. Here is an excerpt:

In 2002, roughly one-third of the papers were from US research groups. By 2004, US groups accounted for only one-quarter of the publications. Government policy may be among the factors contributing to the gap between US and international publications in the field.

Why worry about this trend? The answer lies with our biomedical ”discovery machine,” which operates on a seven-step assembly line:

1.) An academic scientist designs an experiment to answer an important question.

2.) The scientist applies to the government to fund the research.

3.) The money pays for students and fellows who conduct the research.

4.) The results are published in journals, which advance the field.

5.) An invention may result. This may lead to a patent, which then is licensed to a start-up company.

6.) With a monopoly granted by the patent, the company attracts venture capital. If it is successful, the company grows.

7.) Years later, the discovery becomes a therapy for patients.

It takes $28.8 billion, the annual budget of the NIH, to prime this machine. Every year, the money generates an astonishing amount of fundamental knowledge and thousands of biomedical discoveries. With no initial funding, this apparatus stops at Step 1.

With no money, what do the scientists do? They choose other careers. Worse, they leave to do research in other countries.

When scientists abandon their laboratories, a field can vanish. A scientific discipline is designed to grow exponentially. A professor will train a handful of students, some of whom go on to become professors and train more students. Some PhDs enter industry, where they lead projects and hire more trained workers. Funded properly, this collection of specialists becomes a formidable force, building research centers, driving innovation, and creating business sectors. The government front-loads the process; ingenuity and free enterprise takes care of the rest.

Scientists often get quite worked up when scientific knowledge is mispresented in the media, and rightly so. However, it seems that the bar is set quite a bit lower when it comes to the (mis)representation of knowledge from science studies.

A few years ago, stories about a scary new kind of outsourcing began making the rounds. Apparently, hospitals were starting to send their radiology work to India, where doctors who make far less than American radiologists do were reading X-rays, M.R.I.’s and CT scans.

It quickly became a signature example of how globalization was moving up the food chain, threatening not just factory and call center workers but the so-called knowledge workers who were supposed to be immune. If radiologists and their $350,000 average salaries weren’t safe from the jobs exodus, who was?

On ABC, George Will said the outsourcing of radiology could make health care affordable again, to which Senator Charles E. Schumer of New York retorted that thousands of American radiologists would lose their jobs. On NPR, an economist said the pay of radiologists was already suffering. At the White House, an adviser to President Bush suggested that fewer medical students would enter the field in the future.

“We’re losing radiologists,” Representative Sherrod Brown, an Ohio Democrat, said on CNN while Lou Dobbs listened approvingly. “We’re losing all kinds of white-collar jobs, all kinds of jobs in addition to manufacturing jobs, which we’re losing by the droves in my state.”

But up in Boston, Frank Levy, an economist at the Massachusetts Institute of Technology, realized that he still had not heard or read much about actual Indian radiologists. Like the once elusive Snuffleupagus of Sesame Street, they were much discussed but rarely seen. So Mr. Levy began looking. He teamed up with two other M.I.T. researchers, Ari Goelman and Kyoung-Hee Yu, and they dug into the global radiology business.

In the end, they were able to find exactly one company in India that was reading images from American patients. It employs three radiologists. There may be other such radiologists scattered around India, but Mr. Levy says, “I think 20 is an overestimate.”
Some exodus.

Nonetheless, Leonhardt suggests that issues related to outsourcing remain:

For now, the practical effect on radiology is small. At its highest levels, the United States health care system may be the best the world has ever known. India doesn’t even have many radiologists today, let alone a large number who measure up to American standards.

But that’s going to change. Eventually, Indian doctors will be able to do the preliminary diagnoses that are a big part of radiology. Something similar will happen in accounting, architecture, education, engineering and the law, as Mr. Levy and his colleagues suggest in the coming Milken Institute Review.

These fields tend to be regulated already, giving them noble excuses — like certification, client privacy and legal accountability — to put up trade barriers. But the real reason will usually be a simple desire to protect jobs and salaries.

When factory workers have asked for that kind of protection, the country has told them no. So why does the answer change when the request comes from a wealthier, more influential group of workers?