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The question of science and economics brings up a number of different and overlapping issues. One of these topics is the matter of getting the best economic payoff from science, getting dollar value from the D part of research and development. The success of some rural industries in Australia suggests that three important factors can be identified, including free trade which is likely to surprise people who think it is all about picking winners for government support. For more on this topic http://badanalysis.com/catallaxy/?p=1490

On the question of science becoming more like market activity, there are problems of funding since people stopped being able to win Nobels in physics with components of equipment purchased from the local hardware store. The need for megabucks means that the government has to come to the party or commercial firms or both. So the national research budget becomes a political football and there are major issues about access to the results. The age of innocence would appear to be well and truly past, and those who can remember better days are bound to be disillusioned.

On entrepreneurial activity and scientific research (or the growth of knowledge more generally) the difference between the Type 1 (classic) entrepreneur and the Type 2 (organisational promoter) may be fruitful. As an aside, what about Type 3, the welfare recipient who knows more about his entitlements than the clerks at the front desk of the agency. This is a person who keeps up do date with the complex and volataile mix of welfare opportunities (including the pickings from private charities) in order to maximise their return from their particular field of expertise. Leaving aside Type 3, the issues spit in two (a) the mindset of the entrepreneur and the researcher and (b) the traditions and institutions which help them to flourish - the ecology of creative problem solving. Hamming has a fine paper on (a) and Jacques Barzun has addressed a wide range of issues connected with (b).

This particular example doesn't indict Krugman at all.

He seems to agree that over the past few decades, skill biased technical change has been important for explaining inequality.

But his NYT article was talking about patterns of inequality simply in the past few years. In these years, all the gains in income were being captured by people at the very top of the distribution. This cannot be explained by changes in returns to skill.

There is no contradiction.

Pete,

You claim that the lower costs of publishing has erupted the clear signals of quality in the old institutions. I don't think we disagree on this but I think the analysis is incomplete there. Think of a simple technology advancement like digital music sharing (for example Napster), the first response is that it will be harder for artists to earn money off of their music sales, because there is a lower cost to getting free music via the internet. This is true, but I think it's great for music in general. My thought is that one hit wonders or teenie bopper heartthrobs whose record sales used to soar because one track on their album was huge won't sell as many albums and thus won't top the charts. What it means to be a chart topping musician is thus up for grabs. Who ever bundles the highest value musical package for the consumers will win the day in the new institutional context.

I think the economics profession could be much the same way.

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