As the blog had a huge file of things which it thought interesting its annual taking a break is in three parts. This is part two.

It’s an exciting time to be an innovative, agile Australian researcher

Well up to a point according to the OECD’s latest science and technology data reported on by the American Association for the Advancement of Science. Needless to say they don’t spend a lot of time analysing the Australian situation (although they do provide links to the full OECD data) but they do show that Australia is a laggard in the energy and environment fields and only has a modest investment in defence R&D – a good thing on the face of it until you realise that much US defence R&D is actually industrial policy under a name more acceptable to US legislators.

The report also talks about R&D tax incentive policies and private sector investment in research – especially the laggard nature of the latter – which in the Australian context raises the question of appointing a venture capitalist as the CSIRO head and what the results might be. Just as new UK PM, Theresa May, has said that society was not just about markets but also about communities so research is not just about focussing on ‘practical’ things. After all every bit of the IT and Internet revolutions is dependent on fundamental physics research rather than quests for commercial applications.

The investment record of such venture capitalist/ investment banker experts is also not that flash. The Japanese appointed a private equity veteran to its government pension investment fund and he shifted the fund’s strategy into equities – the result a big drop in the fund’s performance. The evidence that investors – and super funds – are better off following index-tracking funds (such as those pioneered 40 years ago by the Vanguard Group) is overwhelming. But the Masters of the Universe have a different story – one which resonates with the Abes, Turnbulls and Osbornes (recently sacked by the new UK PM Ms May in another good move) of the political world. What Australia’s Treasury Head, John Fraser, who is a great admirer of George Osborne thinks of this the blog doesn’t know. Ironically, by the way, one of the most successful 20^th century investors (although he had his ups and downs) was Keynes who is dismissed so cavalierly by the epigones of the neo-liberal fraternity.

Innovation and religion

 Our PM, who is of course a former investment banker and was so successful that he could donate $1 million to his failing election campaign, may have a more profound problem with his innovation agenda.

Given the number of fundamentalist Christians in his party he might be interested in the results of a recent paper which suggests that the more religious countries are the less innovative they are. This rather cuts across the view of Tawney in Religion and the Rise of Capitalism although those in the Turnbull Cabinet who subscribe to the ‘prosperity Christianity’ type of evangelism might say it is confirmation that the problem is only in ‘certain’ countries.

Nevertheless The Economist in one of their daily charts illustrates the findings of a paper published by America’s National Bureau of Economic Research, In Forbidden Fruits: The Political Economy of Science, Religion, and Growth by Roland Benabou of Princeton and Davide Ticche and Andrea Vindigni of the IMT Institute for Advanced Studies Lucca, which finds a strong negative correlation between innovation, as measured by patents, and religiosity, measured by the share of a population that self-identifies as religious.

The Economist says “The authors do not claim to prove that religion causes an innovation deficit. However, they hypothesise that theocratic models of government, in which political leaders are strongly influenced by religious institutions, may provide a channel for anti-scientific views to influence public policy. As examples, they cite the banning of printing in the Ottoman Empire, and the controversial decision by the former American president George W. Bush to limit the federal government’s funding of stem-cell research.”

There is a proviso of course – the US may well be an outlier because it is 20% of world GDP and is both religious and innovative. The Economist also posits that religion might benefit economic growth because it could promote social cohesion. To the blog this is a long bow indeed – in the last few thousand years the evidence is that religion promotes far more division than cohesion. Although Christianity, as demonstrated by Peter Horsfield’s book  From Jesus to the Internet, used and shaped new technologies from writing to printing to social media in its proselytising.

 Perceptions and misperceptions

 The investment reality blindness, and the rip offs it can involve, have a lot to do with issues of primary concern to communicators – perceptions and misperceptions.

In an Economist Buttonwood column (28 May 2016) it was suggested that :”it is not the ‘unknown unknowns’ that catch people out, but the truths that they hold to be self-evident that turn out to be completely wrong.” A few the column reports: Americans think 33% of the population are immigrants when only 14% are; Brits think 24% of the population is Muslim when the actual figure is 5%; a quarter of Brits think foreign aid is the top area of government spending even though it only 1% of the total; and that when confronted with the real figures many people assert government’s made them up or they just don’t believe them.

This is probably a manifestation of what the Stanford psychologist, Lee Ross, describes as ‘naïve realism’ in which we believe that someone we meet with different views to ours is deluded rather than realising that we might be wrong. The great Keynes, and his aphorism about changing your mind when the facts change, is apposite here.

Of course we should not underestimate the amount of misperception which results from what Richard Denniss calls “the language of deception” in his fascinating book Econobabble which is a guide to decoding political spin and economic nonsense. As he says: “Just as speaking in Latin can make the ridiculous seem plausible, so can talking in econobabble. Especially when the journalists nod along instead of asking politicians what on earth they are talking about.” The same principle applies to all the business and industry association rent-seekers who deploy econobabble to prosecute their case and make it seem axiomatic. Tory PM, Theresa May (see the last blog post) also had something to say on this as well.