How gloriously rich China is making us all

This is a strange thing to worry about:

China leads in 37 of 44 technologies tracked in a year-long project by thinktank the Australian Strategic Policy Institute. The fields include electric batteries, hypersonics and advanced radio-frequency communications such as 5G and 6G.

The report, published on Thursday, said the US was the leader in just the remaining seven technologies such as vaccines, quantum computing and space launch systems.

Not wholly convinced about hypersonics to be fair. One of us did work for the Americans on the subject 15 years ago. Which seems like a reasonable head start. But that’s nitpicking:

It said the findings were based on “high impact” research in critical and emerging technology fields, focusing on papers that were published in top-tier journals and were highly cited by subsequent research.

“Our research reveals that China has built the foundations to position itself as the world’s leading science and technology superpower, by establishing a sometimes stunning lead in high-impact research across the majority of critical and emerging technology domains,” the report said.

“The critical technology tracker shows that, for some technologies, all of the world’s top 10 leading research institutions are based in China and are collectively generating nine times more high-impact research papers than the second-ranked country (most often the US).”

That’s getting entirely the wrong end of the stick. Science, knowledge, technological advance, they’re public goods. That is, they’re non-rivalrous and non-excludable. Once a new piece of knowledge arrives then anyone who can read the paper containing that knowledge has that knowledge and their having it does not reduce the amount available to anyone else.

It is for this reason that such advances in knowledge are terribly, terribly, difficult to make money out of. Because there’s no scarcity nor ability to exclude which allows a significant charge to be made. Which is then the argument for public subsidy of knowledge seeking because free markets unadorned will undersupply this lovely, enriching, thing which private incentives under-stimulate.

That’s what the argument in favour of public subsidy of research is. That research is a public good therefore it must be subsidised. For research makes consumers richer but not the producers of the research.

Now the complaint is that China is doing lots of research, making all of us richer at that cost to them of the subsidy of the research. Which is absurd, of course it is. The correct response is to applaud and if we’re feeling really generous send a thank you note.

The institute also called for democracies to establish large sovereign wealth funds for research, development and innovation in critical technology that they add to each year. It suggests allocating 0.5% to 0.7% of gross national income, with co-investment from industry.

Because China is making us richer through the production of public goods we must spend more of our money producing public goods.

What?