I was intrigued by this (unintentional) analogy in the online news section of Science to the Austrian Business Cycle Theory:
The [National Science Foundation] is slated to get a $3 billion temporary bump up–half its current $6 billion budget–to spend in the next 20 months on research, training, instrumentation, and infrastructure projects. If the money materializes, the challenge for NSF officials will be to avoid a boom-and-bust cycle like the one being endured by its much larger sister agency, the National Institutes of Health.
The entire NSF budget is obviously federal funds, so this is an imperfect analogy to say the least. The upcoming stimulus will create a large influx of cash with incentives for the NSF to spend it as quickly as possible (the boom). This author alludes to the idea, which Bernanke apparently subscribes to, that if you can just keep the cash flowing, you can avoid the bust. But, this is unrealistic in the long term; the money and capital goods are being misallocated to federally funded science away from private enterprises that adjust to consumer desires, and so it is unsustainable. The bust is inevitable, and, like the current credit crunch, a bust is defined as when the level of funding ceases to grow at the same rate and either levels off or grows more slowly.
Also, I expect we’ll be reading about corruption at all of these flush federal agencies in how they’ve allocated the funds. That kind of goes with the territory.
2:36 pm on January 18, 2009
