No to ARPA: How state research spending does not stimulate innovation
The Adam Smith Institute’s latest paper, by Professor Terence Kealey of the University of Buckingham, explains makes the case against a British version of the Advanced Research Projects Agency (ARPA):
The UK Government has allocated £800 million to create a British Advanced Research Projects Agency (ARPA) in the March 2020 budget.
ARPA was originally established by the US Government in 1958 to fund especially pure, especially unrestricted research.
The supporters of ARPA assert it created the modern world by supporting key advancements in semiconductors, personal computing and the internet.
But ARPA was found by lawmakers to be a waste of money. The Mansfield amendments repurposed ARPA exclusively for defence applications and renamed it the Defense Advanced Research Projects Agency (DARPA) in 1972.
After the Mansfield amendments, key figures left ARPA to join Xerox PARC, the research and development arm of printer manufacturer Xerox. It was PARC that pioneered the likes of the mouse, laser printer and the Ethernet network. Therefore, the United States’ technological success came after ARPA’s wings were cut and the key staff had left – not because of the organisation.
ARPA, along with other state-funded research spending, is justified by claims of a “market failure” in science funding: that private companies under produce “public good” basic science research.
However, basic science is not a “public good,” it is a “contribution good,” and therefore needs no public funding. The history of technological progress since the Industrial Revolution demonstrates that private businesses invest in beneficial innovations without state assistance.
State spending on research and development, in both the United States and Britain, does not contribute to innovation or economic growth.
The industrialised East Asian countries, such as South Korea, Taiwan and Japan, have achieved substantial economic growth through business-sector led research and development spending.
It is a myth that ARPA created the modern world. It is also a myth that state research spending stimulates innovation or economic growth. The UK Government is making a mistake by creating British ARPA.