CHAPTER 21
I believe this nation should commit itself to achieving the goal, before the decade is out, of landing a man on the moon and returning him safely to Earth.
President John F. Kennedy1
Introduction
A century and a half ago, Jules Verne published Twenty Thousand Leagues Under the Sea, From the Earth to the Moon, and Around the World in 80 Days. At the time, submarines and space travel were considered to be wild fancies of the imagination, while a trip around the world in only 80 days was seen as an extremely unlikely bet. Fifty years later submarines were commonplace. One hundred years later men walked on the moon. Today, a trip around the world in 80 hours can be easily arranged by any travel agent.
Science fiction has become reality. The lesson to be drawn from this – and, more generally, from the extraordinarily rapid technological advances during the past 250 years – is that what the human imagination can envision, human ingenuity can accomplish.
The Money Revolution described throughout this book makes possible a multitrillion-dollar, government-financed Investment Revolution that would make today's science fiction real. Before us lies the opportunity to cure all the diseases, radically expand life expectancy, develop cheap and limitless clean energy, rehabilitate the environment, and solve many of the other most intractable challenges confronting humanity.
Insufficient imagination, rather than insufficient funding, is the greatest impediment to carrying out an investment program large enough to achieve these objectives.
This chapter sets out to overcome that impediment by comparing the amounts the US government invests in research and development (R&D) now with the amounts that it could afford to invest; and by emphasizing what could be accomplished if the government invested as much in R&D as it could afford to do. It begins by taking a closer look at how – and how much – the US government currently invests in R&D. It then presents estimates of how much more lavishly those initiatives could be funded if the government took full advantage of the Money Revolution to invest on a much more aggressive scale.
There is no need to wait generations for our dreams of a healthier and more prosperous future to become reality. We have the means to make those dreams come true in our lifetime. Money is no object. We must recognize that fact and invest accordingly.
Government Investment in R&D
During 2018, the US government invested $136 billion in R&D through various departments and agencies, as mentioned in Chapter 18. Here, it is worth pausing to consider that the Federal Reserve is currently creating nearly that much money every month. It creates $120 billion a month through its asset purchase program. This shows how easy it would be for the government to finance R&D investment on a very much larger scale, simply by having the Fed create more money to finance the investment.
TABLE 21.1 Federal R&D Funding by Agency: FY2019, Top Five
Source: Data from the Congressional Research Service
|
Federal R&D Funding by Agency: FY2019 |
|
|
US$ Millions |
|
|
Department of Defense |
55,832 |
|
Department of Health and Human Services |
38,647 |
|
Department of Energy |
17,793 |
|
NASA |
15,287 |
|
National Science Foundation |
6,520 |
The FY2019 R&D budgets for all the federal agencies are not yet available at the time of writing. However, those for the five most well-funded agencies, which accounted for 92% of the total in FY2018, have been made public. They are show in Table 21.1.
They are the Department of Defense ($55.8 billion), the Department of Health and Human Services ($38.6 billion), the Department of Energy ($17.8 billion), NASA ($15.3 billion), and the National Science Foundation ($6.5 billion).2
The following paragraphs will describe the types of R&D investments each of those agencies undertakes.
Department of Defense
The Department of Defense (DOD) receives the largest allocation of government R&D funding among all government agencies, 38% of the total in FY2018. The DOD's mission is to provide the military forces needed to deter war and ensure our nation's security. Its R&D funding supports the development of the nation's future military hardware and software and the science and technology base upon which those products rely.
Within the DOD, the Defense Advanced Research Projects Agency, or DARPA, is of particular interest. It was established as part of the United States' response to the Soviet Union's launch of Sputnik in 1957. Its mission is to make pivotal investments in breakthrough technologies for national security.
Since then, DARPA has produced remarkable results. Its website states:
For sixty years, DARPA has held to a singular and enduring mission: to make pivotal investments in breakthrough technologies for national security. DARPA has repeatedly delivered on that mission, transforming revolutionary concepts and even seeming impossibilities into practical capabilities. The ultimate results have included not only game-changing military capabilities such as precision weapons and stealth technology, but also such icons of modern civilian society such as the Internet, automated voice recognition and language translation, and Global Positioning System receivers small enough to embed in myriad consumer devices. DARPA explicitly reaches for transformational change instead of incremental advances.3
DARPA received $3.4 billion in funding for FY2019.4
The National Institutes of Health
The Department of Health and Human Services (HHS) receives the second largest allocation of government R&D funding after the Department of Defense. It received 27% of the total in FY2018.
The National Institutes of Health (NIH) is part of HHS and receives 97% of the total HHS R&D funding.
The National Institutes of Health is the primary agency of the federal government charged with performing and supporting biomedical and behavioral research. It also has major roles in training biomedical researchers and disseminating health information. The NIH mission is “to seek fundamental knowledge about the nature and behavior of living systems and the application of that knowledge to enhance health, lengthen life, and reduce illness and disability.”5
Table 21.2 shows the NIH received $36 billion in R&D funding in FY2019. The table also shows how that funding was distributed between NIH institutions and centers.6
TABLE 21.2 National Institutes of Health Funding: FY2019
Source: Data from the Congressional Research Service
|
National Institutes of Health Funding FY2019 |
|
|
US$ Millions |
|
|
National Cancer Institute |
6,144 |
|
Allergy/Infectious Diseases |
5,523 |
|
Heart, Lung, and Blood Institute |
3,488 |
|
National Institute on Aging |
3,083 |
|
Neurological Disorders/Stroke |
2,274 |
|
Diabetes/Digestive/Kidney |
2,030 |
|
National Institute of Mental Health |
1,870 |
|
General Medical Sciences |
1,726 |
|
Child Health/Human Development |
1,506 |
|
National Institute on Drug Abuse |
1,420 |
|
Human Genome Research Institute |
576 |
|
Biomedical Imaging/Bioengineering |
389 |
|
The Other 18 Institutes/Centers |
5,985 |
|
Total |
36,014 |
Since NIH is the primary federal agency charged with enhancing health and lengthening life, it is useful to compare the funding it receives for particular purposes against the leading causes of death in the United States, which are shown in Table 21.3.7
TABLE 21.3 The Leading Causes of Death in the United States in 2017
Source: Data from the Medical News Today
|
The Leading Causes of Death in the United States in 2017 |
|||
|
Deaths in 2017 |
% of Total Deaths |
||
|
Heart Disease |
667,457 |
23.5% |
|
|
Cancer |
599,108 |
21.3% |
|
|
Unintentional Injuries |
169,936 |
6.0% |
|
|
Chronic Lower Respiratory Disease |
160,201 |
5.7% |
|
|
Stroke & Cerebrovascular Disease |
146,383 |
5.2% |
|
|
Alzheimer’s Disease |
121,404 |
4.3% |
|
|
Diabetes |
83,564 |
3.0% |
|
|
Influenza & Pneumonia |
55,672 |
2.0% |
|
|
Kidney Disease |
50,633 |
1.8% |
|
|
Suicide |
47,173 |
1.7% |
|
In light of the opportunities opened up by the Money Revolution described in the first two parts of this book, the questions we need to ask in relation to the NIH's budget are
The Department of Energy
The Department of Energy (DOE) received the third largest share, 13%, of the government's R&D funding in FY2018.
The “DOE conducts basic scientific research in fields ranging from nuclear physics to the biological and environmental sciences; basic and applied R&D relating to energy production and use; and R&D on nuclear weapons, nuclear nonproliferation, and defense nuclear reactors.”8
The DOE's mission is to “ensure America's security and prosperity by addressing its energy, environmental and nuclear challenges through transformative science and technology solutions.”9 Its activities are classified under three broad categories, Science, National Security and Energy, each with a number of subcategories. Table 21.4 provides a breakdown of how the DOE's funding is allocated.
Among the subcategories, basic energy sciences receives the most R&D funding, at $2.2 billion; followed by energy efficiency and renewable energy ($2.1 billion); and weapons activities: research, development, test and evaluation ($2.0 billion). Other areas of particular interest include nuclear energy ($1.3 billion); high energy physics ($980 million); advanced scientific computing research ($936 million); nuclear physics ($690 million); and fusion energy sciences ($564 million).
NASA
The National Aeronautics and Space Administration (NASA) was created in 1958, after the Soviet Union successfully sent Sputnik, the first man-made satellite, into orbit in 1957. By 1969, NASA had landed a man on the moon.
Today:
NASA has research programs in planetary science, Earth science, heliophysics, astrophysics, and aeronautics, as well as development programs for future human spacecraft and for multipurpose space technology such as advanced propulsion systems. In addition, NASA operates the International Space Station as a facility for R&D and other purposes.10
NASA was the recipient of the fourth largest share of government R&D funding in FY2018. It received 9% of the total. Table 21.5 shows how its $15.3 billion FY2019 budget was distributed between R&D work for Science, Aeronautics, Space Technology, Deep Space Exploration Systems, and Spaceflight Operations, including funding for the International Space Station.
TABLE 21.4 Department of Energy R&D, FY2019
Source: Data from the Congressional Research Service
|
Department Of Energy R&D US$ Millions |
|
|
US$ Millions |
|
|
Science |
6,585 |
|
2,166 |
|
980 |
|
705 |
|
690 |
|
936 |
|
564 |
|
545 |
|
National Security |
4,406 |
|
2,014 |
|
1,789 |
|
576 |
|
28 |
|
Energy |
4,721 |
|
2,067 |
|
740 |
|
1,326 |
|
132 |
|
9 |
|
366 |
|
Total |
15,712 |
National Science Foundation
The National Science Foundation received the fifth largest share of government R&D funding in FY2018, with 5% of the total.
TABLE 21.5 National Aeronautics and Space Administration R&D, FY2019
Source: Data from the Congressional Research Service
|
National Aeronautics and Space Administration R&D, US$ Millions |
|
|
NASA |
|
|
US$ Millions |
|
|
Science |
6,906 |
|
1,931 |
|
2,759 |
|
1,192 |
|
305 |
|
720 |
|
Aeronautics |
725 |
|
Space Technology |
927 |
|
Deep Space Exploration Systems |
5,051 |
|
Spaceflight Operations |
1,678 |
|
R&D Total |
15,287 |
The National Science Foundation (NSF) supports basic research and education in the nonmedical sciences and engineering. Congress established the foundation as an independent federal agency in 1950 and directed it to “promote the progress of science; to advance the national health, prosperity, and welfare; to secure the national defense; and for other purposes.” The NSF is a primary source of federal support for U.S. university research, especially in mathematics and computer science. It is also responsible for significant shares of the federal science, technology, engineering, and mathematics (STEM) education program portfolio and federal STEM student aid and support.11
Table 21.6 shows how the NSF's $8.1 billion of R&D funding was deployed.
TABLE 21.6 National Science Foundation Funding, FY2019
Source: Data from the Congressional Research Service
|
National Science Foundation Funding, US$ Millions |
|
|
US$ Millions |
|
|
Research & Related Activities |
6,520 |
|
Education & Human Resources |
910 |
|
Major Research Equipment & Facilities Construction |
296 |
|
Agency Operations & Award Management |
330 |
|
National Science Board |
4 |
|
Office of the Inspector General |
15 |
|
|
|
|
Total |
8,075 |
Working Miracles
A great deal of important research and development work is being done in the United States, as Chapter 18 and the preceding paragraphs have shown. But we must ask ourselves, a great deal relative to what? As we have seen, the United States is not investing “a great deal” relative to China. China overtook the United States in R&D investment in 2019 and, if current trends continue, will vastly outspend the United States on R&D within a matter of only a few years.
Nor is the United States investing a great deal in R&D relative to what it has invested in the past. Federal government investment in R&D peaked a decade ago. The level of its investment was 10% less in 2018 than it was in 2010.
Most importantly, the United States is certainly not investing as much in research and development as it could afford to do. The preceding two chapters have demonstrated that the US government could easily finance an additional $10 trillion investment in R&D over the next decade.
Therefore, here, let's consider what an additional $10 trillion investment would look like between now and 2031 in comparison with the level of R&D investment that would result if federal government R&D investment remains flat for another decade.
In FY2018, the federal government invested $136 billion in R&D through its various departments and agencies. If we assume that level of investment will remain flat for the next 10 years, then government investment in R&D would total $1.36 trillion between 2022 and 2031.
An additional $10 trillion investment would mean the US government would invest $11.36 trillion over the next 10 years rather than $1.36 trillion. That would represent an increase of 735%. That amount of investment would ensure that the United States retained its position as the world's most powerful nation.
In 2017, the growth rate of Chinese R&D investment was more than 50% larger than that of the United States. If that trend continues, then China will invest 44% more in R&D than the United States by 2031. Should that occur, the United States' technological lead would be lost to China – probably forever – in which case the United States would no longer be the master of its own destiny.
However, were the US government to invest an additional $10 trillion in R&D over the next decade, in line with the investment schedule presented in Chapter 19, then the United States would greatly outspend China on R&D, just as it outspent the Soviet Union following Sputnik. In that scenario, the United States would invest two-thirds more than China in R&D in 2031, rather than nearly one-third less. Chart 21.1 illustrates the large lead the United States would have over China in R&D investment if the US implements that investment program. An investment gap of that magnitude would guarantee US national security for generations.
Applying a 735% increase in investment to the R&D budget of each of the federal agencies would mean the Department of Defense would invest $4.7 trillion in R&D over the next decade rather than $558 billion as it would if its level of investment remained flat at the FY2019 level each year. The R&D budget for the Department of Health and Human Services, 97% of which would be allocated to NIH, would be $3.2 trillion rather than $386 billion. The Department of Energy would have $1.5 trillion of R&D funding rather than $178 billion. NASA would invest $1.3 trillion instead of $153 billion. And the National Science Foundation would have $545 billion to invest, rather than $65 billion. See Table 21.7.12
CHART 21.1 Gross Domestic Expenditure on R&D: the US vs. China, 2000 to 2031 est.
Source: Based on data from the National Science Foundation, incorporating the author’s projections to 2031.
Likewise, a 735% increase in the R&D funding available to the National Institutes of Health would provide the NIH with $3 trillion over the decade instead of $360 billion if funding were to remain flat. The National Cancer Institute would have more than half a trillion dollars to invest to cure cancer rather than only $61 billion. The Heart, Lung, and Blood Institute's R&D funding would jump to nearly $300 billion, rather than just $35 billion. The National Institute on Aging would be allocated $257 billion with which to attempt to cure Alzheimer's Disease instead of $31 billion. And the Diabetes, Digestive, and Kidney Institutes would have $170 billion in R&D funding rather than $20 billion. See Table 21.8.
TABLE 21.7 Federal R&D Funding by Agency: With and Without a $10 Trillion Investment Program
|
Federal R&D Funding by Agency: |
|||
|
With and Without a $10 Trillion Investment Program, US$ Millions10 Year Budget |
|||
|
FY2019 |
Flat |
Plus$10 trillion |
|
|
|
|||
|
Total* |
136,000 |
1,360,000 |
11,360,000 |
|
|
|||
|
Department of Defense |
55,832 |
558,320 |
4,663,614 |
|
Department of Health and Human Services |
38,647 |
386,470 |
3,228,161 |
|
Department of Energy |
17,793 |
177,930 |
1,486,239 |
|
NASA |
15,287 |
152,870 |
1,276,914 |
|
National Science Foundation |
6,520 |
65,200 |
544,612 |
* The Total for FY2019 assumes no change from FY2018Source: Data from the Congressional Research Service, incorporating the author’s assumptions.
TABLE 21.8 National Institutes of Health Funding, Selected Institutes, With and Without a $10 Trillion Investment Program
Source: Data from the Congressional Research Service, incorporating the author’s assumptions.
|
National Institutes of Health Funding, Selected Institutes |
|||
|
With and Without a $10 Trillion Investment Program, US$ Millions10 Year Budget |
|||
|
FY2019 |
Flat |
Plus $10 Trillion |
|
|
|
|||
|
Total NIH |
36,014 |
360,140 |
3,008,228 |
|
|
|||
|
National Cancer Institute |
6,144 |
61,440 |
513,205 |
|
Heart, Lung, and Blood Institute |
3,488 |
34,880 |
291,351 |
|
National Institute on Aging |
3,083 |
30,830 |
257,521 |
|
Diabetes/Digestive/Kidney |
2,030 |
20,300 |
169,565 |
The preceding paragraphs have assumed that the $10 trillion in additional funding would be allocated so that each department or agency would receive a 735% increase in R&D funding, in line with the increase in total funding. Of course, that need not be the case. For instance, perhaps it would be appropriate to increase the R&D budget of the National Institutes of Health by 15 times rather than by 8.4 times, taking the additional NIH funding from part of the new R&D funding that would have been allocated to the Department of Defense, which, in that case, would still see its R&D funding quadruple in comparison with what it would receive if its funding remained flat at the FY2019 level.
In that scenario, NIH would have $5.4 trillion to invest in R&D over the decade. The National Cancer Institute's 10-year R&D budget would be $922 billion; that of the Heart, Lung, and Blood Institute, $523 billion; and that of the National Institute on Aging, $462 billion. Would that amount of R&D investment suffice to cure cancer, heart disease, Alzheimer's and all the other diseases? It just might. If not, then double it. As we approach the second quarter of the twenty-first century, the United States has the financial resources to work miracles.
America's New Manifest Destiny
Just as Jules Verne's works of science fiction foretold the future, the dreams of the visionaries of our time are very likely to become reality during the decades ahead.
Elon Musk, CEO of SpaceX and Tesla, intends to make us “a multi-planet species” and is building rockets that he believes will enable humans to begin colonizing Mars during this decade.
Aubrey de Grey, chief science officer of the SENS Research Foundation and the editor-in-chief of the journal Rejuvenation Research, is working to slow aging to the point where people will live youthful, healthy lives for hundreds of years.
Ray Kurzweil, renowned futurist, author, and inventor, whom Forbes Inc. called the “the rightful heir to Thomas Edison,” has written that, by 2040, people will have the option to “live forever.”
Google has hinted at plans to “cure death.”
Yuval Noah Harari, bestselling author of Sapiens13 and Homo Deus,14 believes that it is humanity's inevitable destiny to strive for immortality, and, even, happiness.
This book has argued that it is imperative for the United States to invest in research and development on a much larger scale for reasons of national security. However, beyond and above the national security rationale, there is a moral imperative for investing much more, as well.
The Money Revolution of the last century gives the United States the power to induce a technological revolution that would vastly enhance human well-being.
We must make the most of this opportunity. We can explore the universe and embed life, including human life, on other planets. At the same time, we can eliminate all the pollution from our own planet to ensure that it continues to be capable of sustaining life here.
We can use quantum computing and artificial intelligence to find out what is really going on around us at the subatomic level, in the stellar realm and within our own minds; and to illuminate dark matter and discover new dimensions.
We can cure all the diseases and stop aging, at which point we will have a great deal more time to work on reversing aging and even “curing” death.
All these things are within our grasp.
The United States must make the most of the Money Revolution by carrying out an investment and technological revolution that will turn these twenty-first century dreams into twenty-first century realities.
Here is America's new Manifest Destiny.
Notes
1. John F. Kennedy in special State of the Union message on May 25, 1961.
2. Federal Research and Development (R&D) Funding: FY 2020, Congressional Research Service https://fas.org/sgp/crs/misc/R45715.pdf
3. About DARPA, DARPA's website: https://www.darpa.mil/about-us/about-darpa
4. Budget, DARPA's website: https://www.darpa.mil/about-us/budget
5. “About NIH, What We Do, Mission and Goals,” National Institutes of Health. http://www.nih.gov/about-nih/what-we-do/mission-goals
6. Federal Research and Development (R&D) Funding: FY 2020, Congressional Research Service https://fas.org/sgp/crs/misc/R45715.pdf
7. “What are the leading causes of death in the US?” Medical News Today. https://www.medicalnewstoday.com/articles/282929.php
8. Federal Research and Development (R&D) Funding: FY 2020, Congressional Research Service. https://fas.org/sgp/crs/misc/R45715.pdf
9. Mission, Department of Energy. https://www.energy.gov/mission
10. Federal Research and Development (R&D) Funding: FY 2020, Congressional Research Service https://fas.org/sgp/crs/misc/R45715.pdf
11. Federal Research and Development (R&D) Funding: FY 2020, Congressional Research Service. https://fas.org/sgp/crs/misc/R45715.pdf
12. These paragraphs which discuss “applying a 735% increase in investment to the R&D budget of each of the federal agencies” are simply intended to illustrate how dramatically a $10 trillion investment program would increase the United States’ R&D efforts. They are not intended to suggest that these government agencies should be put in charge of making all the new investments. As discussed in Chapter 16, the best approach would probably involve a combination of entirely government-directed investment programs and public-private joint ventures.
13. Yuval Noah Harari (2015), Sapiens: A Brief History of Humankind. Harper.
14. Yuval Noah Harari (2017), Homo Deus: A Brief History of Tomorrow. Harper.
Conclusion
The brilliant economist, Joseph Schumpeter, taught that economic growth is driven by waves of innovation, such as the railroad boom of the mid-nineteenth century, and later the development of the chemicals industry, electricity, and automobiles.
The breakdown of the Bretton Woods international monetary system in 1971 set off another similarly transformative innovation; this time an innovation in the way our economic system functions, one that has removed all limits on the amount of credit that can be created, while simultaneously eliminating the labor and industrial capacity bottlenecks that, in the past, had resulted in high rates of inflation when credit expanded rapidly.
With the collapse of Bretton Woods, an international monetary system that had constrained how much credit could be created was suddenly replaced by a system that permits limitless credit creation. At the same time, an international trading system that had comprised dozens of relatively closed national economies, each compelled to prevent persistent trade imbalances, was replaced by a new system, globalization, that encompasses the entire world and in which labor and industrial capacity are excessive, rather than scarce.
This new monetary system, operating within a new international trading order, has been the most powerful Schumpeterian innovation of our age. It vastly expands the resources at humanity's disposal. With money no longer backed by gold, there are no longer any limits on how much credit central banks and commercial banks can create. At the same time, the labor and industrial constraints that had caused inflation and held economic growth in check simply no longer exist.
The financial and economic fetters that had long restrained us are no longer binding. We are living in a new, much larger economic environment, which presents us with the possibility to accomplish much more than had ever been possible before.
The only impediment left to overcome is insufficient imagination. Policymakers are captive to outdated economic theories that most of them never really understood in the first place. The best of those theories were appropriate for the age when they were developed, but not for our age. This is not the early twentieth-century world of Ludwig von Mises, when gold reserves limited how much credit could be created. Nor is it Milton Friedman's 1960s, when the size of the US workforce and the depth of industrial capacity within the United States dictated how much the US government could spend without setting off an inflationary firestorm.
This is the twenty-first century. It presents opportunities that did not exist in the past. We must recognize those opportunities, grasp them, and extract every last benefit from them as quickly as we can and for as long as we can. If we do, we will greatly improve our lives and our children's lives. Then, our children's children will recall hearing of diseases like cancer and Alzheimer's the way we only remember hearing of diseases like smallpox and cholera; and they will live in a clean and sustainable environment, never knowing the stench of gasoline.
A multitrillion-dollar investment program targeting new industries and technologies is certain to yield miracles. There is nothing to stop the United States from making that investment. We are like fish in a fishbowl that has been dropped into the ocean. All we have to do is realize that the walls that had long confined us no longer do – and swim out the top. There, a new world of superabundance awaits.
About the Author
Since beginning his career as an equities analyst in Hong Kong in 1986, Richard Duncan has served as global head of investment strategy at ABN AMRO Asset Management in London, worked as a financial sector specialist for the World Bank in Washington D.C., and headed equity research departments for James Capel Securities and Salomon Brothers in Bangkok. He also worked as a consultant for the IMF in Thailand during the Asia Crisis.
Richard is now the publisher of Macro Watch, a biweekly video-newsletter he launched in 2013. To learn more about Macro Watch, visit his website:
http://www.richardduncaneconomics.com/
Also by Richard Duncan:
The Dollar Crisis: Causes, Consequences, Cures
The Corruption of Capitalism: A Strategy To Rebalance The Global Economy And Restore Sustainable Growth
The New Depression: The Breakdown Of The Paper Money Economy