by Tyler Durden

Wednesday, Oct 22, 2025 – 10:45 AM

Authored by Lipton Matthews via The Mises Institute,

Donald Trump has been criticized heavily for cutting federal funding of science. Opponents claim that his decision threatens to undermine American innovation, weaken the nation’s economy, and diminish its global influence. Yet the assumption behind these complaints is rarely examined. It is taken for granted that the government must play a central role in supporting science if society is to progress. A closer inspection of historical experience, economic reasoning, and the actual dynamics of research reveals that this assumption is false.

Innovation has flourished without state patronage, and government support often politicizes science, crowds out private initiative, and undermines the very progress it is supposed to promote.

The conventional argument for public support rests on the idea that science is a public good. Because knowledge is said to spread widely, with benefits that cannot be fully captured by one individual or company, economists and policymakers have long argued that private actors will underinvest. In the twentieth century, this reasoning took a more formal shape in the so-called linear model: government funds basic research, which then produces applied technologies, which in turn drives economic growth. This model justified the expansion of government patronage after the Second World War and has been invoked ever since to defend public spending on science.

Yet the historical record undermines this theory. During the Industrial Revolution, Britain devoted little public money to civil science, yet it became the most inventive society on earth. The United States, likewise, relied on private initiative and by the early twentieth century had overtaken Europe as the world’s most technologically advanced nation. By contrast, France and Germany—both of which systematically funded research through their governments—failed to converge with the leading economies. Their per capita incomes and levels of industrialization remained lower, despite their extensive state programs. If government support were truly indispensable for innovation, these results would not have occurred.

It is often suggested that private industry will only invest in applied research, leaving fundamental discovery untouched. But evidence shows otherwise. Many crucial advances came from industrial laboratories and workshops rather than from universities. This illustrates that the supposed boundary between pure and applied research is misleading. Private firms have historically funded investigations into fundamental principles because they recognized that such inquiry could deliver long-term advantage. Large companies in telecommunications, chemistry, and electronics sustained major laboratories that not only applied knowledge but produced it, winning international recognition and shaping entire industries. The claim that private actors will not support basic science is therefore contradicted by both historical and modern evidence.

The idea that government support is required to make science cooperative is also flawed. Collaboration and openness are not the exclusive products of public patronage but have long characterized private research. Even when secrecy was more common, scientists found ways to reveal discoveries while preserving their priority, for example, by publishing results in coded form or depositing them with trusted intermediaries. In modern times, industries form joint ventures, share patents, and create professional associations to diffuse knowledge. Research operates as a social system, in which individuals and firms cooperate across institutional boundaries, adjusting to incentives and opportunities. The vitality of this system stems from competition and voluntary cooperation within markets rather than from political direction.

The supposed neutrality of public funding is, in fact, a dangerous illusion. Government support is shaped not by scientific merit but by political agendas. What appears to be generous assistance often brings hidden costs. As one study warns, the liaison between state and science “carries with it unrecognized dangers for the functioning and integrity of science.” Research agendas become tied to wartime mobilization, electoral calculations, or bureaucratic rivalry rather than to the internal logic of discovery. The vast expansion of federal programs during the twentieth century was largely justified by military necessity. Yet after wars ended these programs were preserved, not because they were indispensable for progress, but because bureaucracies and interest groups lobbied to keep them alive. This politicization diverts resources to fashionable or electorally-attractive subjects while neglecting less visible but more promising ones. It corrodes the independence of science and distorts its priorities.

More damaging still, government spending suppresses private investment. Evidence shows that when firms dependent on public contracts expand their research budgets, their industry peers reduce theirs. Managers under pressure to maintain performance relative to subsidized competitors often cut long-term research to boost short-term earnings. The result is a net decline in overall industry research. Even if dependent firms increase activity, the contraction among their peers outweighs the gain. At the level of the industry as a whole, government spending reduces investment. Far from filling a gap left by markets, public money displaces and undermines private initiative.

The fundamental difference between public and private science lies in incentives. Private research is guided by profitability. Projects that promise a return attract funding, while those that fail are abandoned. This discipline ensures that resources are directed to fruitful lines of inquiry. Government projects, by contrast, are not disciplined in this way. Bureaucrats and politicians do not bear the costs of failure, and programs often persist because they have political support rather than scientific justification. Once agencies and budgets are established they develop their own momentum, expanding regardless of outcomes. The system becomes self-perpetuating, corroding adaptability and tying research to political interests.

The assumption that innovation requires government patronage therefore cannot stand. History demonstrates that the most transformative advances occurred where private initiative led the way. Private firms and individuals have consistently supported both applied and basic science, cooperating within networks that diffuse knowledge and spread risk. Government involvement, on the other hand, politicizes priorities, entrenches bureaucracy, and displaces private funding. When critics attack Trump for cutting budgets, they reveal their attachment to a myth rather than to the evidence.

The reduction of federal spending should not be seen as a threat to innovation but as an opportunity to restore research to its proper place in the market.

Without political distortion and dependent subsidies, science can regain the creativity, openness, and independence that have always been the true source of progress.