But the government has always spent money in ways that drive the economy, note Massachusetts Institute of Technology economists Jonathan Gruber and Simon Johnson. Often, government dollars have been essential, whether it was defense programs that led to the creation of the Internet or ongoing research dollars in health and science.
In their 2019 book Jump-Starting America, Gruber and Johnson noted that the nation’s overall spending in research and development had plummeted from its post-World War II highs. They argued that government should step up its R&D spending and spread that wealth to metropolitan areas around the country, away from the “superstar cities” on the coasts that were already thriving and attracting the lion’s share of venture capital in the tech era.
Their book enjoyed a rare kind of success — a work by academics that had a major influence on national policy. (Earlier, Gruber had helped shape the Affordable Care Act.) Their ideas helped shape industrial policy during the Biden administration, notably legislation such as the 2022 CHIPS and Science Act that aimed, among other things, to revitalize U.S. competitiveness in manufacturing semiconductors. The following year, the administration named 31 tech hubs to receive concentrated federal investment, as authorized by the CHIPS Act.
In his second term in office, President Donald Trump is moving away from such investments. During his address to Congress in March, Trump called on Congress to “get rid of” the CHIPS and Science Act, which had passed with strong bipartisan support. Last month, Commerce Secretary Howard Lutnick said the administration would renegotiate grants made to semiconductor firms that he called “overly generous.”
More broadly, Trump has sought to slash funding for basic science research through the National Science Foundation (NSF) and the National Institutes of Health.
Governing spoke with Gruber about this change in direction. Spoiler alert: He’s not happy. Here are edited excerpts from that phone interview:
Governing: For people who haven’t read your book, why don’t you summarize its main arguments?
Gruber: There are really two main arguments in the book. The first is that what made America great, so to speak, was public investment in science in the decades following World War II. By 1965, we were spending 2 percent of our entire economy on government-funded science, and that became the basis for essentially all the technology we have today. That’s fallen to less than half a percent of GDP today and there's lots of evidence that that fall has contributed to a slowdown in the productivity of the U.S. economy.
The second feature of the book is that, unfortunately, the investments in R&D that happened, both privately and publicly, were concentrated in a small set of elite coastal cities. We argued that we should both invest more in public science, but we should do so the way that spreads the wealth across the country.
The Biden administration passed major legislation that was in line with your book. Were you consulted?
Yes, we were consulted. The Biden administration already wanted to increase science funding as part of their bill. The part that we really helped with was a $10 billion provision that offered funding for what they called new tech hubs. The idea was to have a competition where cities could compete to get massive federal investments to upgrade where they were and be a new technology hub. And that was something we worked very closely with the administration and Congress on.
(Courtesy of Jonathan Gruber)
There was a lot of concern around the time your book came out that too much economic activity was concentrated in a small number of cities. Do you think the pandemic has had any effect in terms of spreading the wealth geographically?
The pandemic really sort of proved our case in two senses. One is that, despite all the press, nobody's really leaving these cities. It hasn't happened. The concentration of economic activity and technological skill in the same set of superstar cities has really remained. People might not live in the inner city as much because they work more from home, but they’re not leaving the San Francisco and Boston areas in droves.
The other point, and we talked about this in our paperback edition, is that the COVID-19 vaccine was a perfect example of what we talked about — of the government investing massively in public science with a huge benefit for society.
Operation Warp Speed, which devoted billions of dollars to the development and manufacturing of COVID-19 vaccines, was a Trump administration project. When he was re-elected, did you have any expectation that he would take the steps he’s been taking, to reverse the kind of policies that you’ve called for?
No, I did not. R&D has fallen on a bipartisan basis for decades. Biden seemed committed to reversing that trend. I figured Trump would not share that commitment. I did not think he'd go so far the other way — things like proposing the research funding of the Department of Energy get cut by 50 percent, NSF funding get cut by 50 percent. I did not anticipate these massive cuts to public science.
What is your sense of the potential harm of this course reversal?
The harm is irreparable. What we show in the book, and decades of research shows, is that public science doesn't just lead to the creation of cool stuff that saves our lives and helps us find our way from point A to point B and gets us on a plane and things like that, but it also creates jobs. In the long run, in terms of creating the technology that leads to new businesses here in America, we're going to lose scientists to other countries. We're going to lose scientific innovation that will cost us jobs.
The direction is unambiguous. You know, a lot of the innovations in this country are done by foreign scientists. And why would you come live here when you can go someplace where you're more welcome? There will be a dramatic reduction in the willingness of students to come here and researchers to be here. How big it'll be, I think, remains to be determined. It depends on if these are one-time cuts, or if this becomes a permanent cut. I think it will be a permanent cut.
