open letter re: supporting university research

by isaac black

Sent the following letter to my Senators and House representative as well as Spencer Bachus, chairman of the House Committee on Financial Services:

I’m writing to encourage you to promote the cause of education in our country, especially the research that comes from our universities. In the current economic climate, it may be tempting to cut grants for research that may not appear to yield immediate returns, but this would hobble our long-term growth as a country. The federal government has a role to play in shaping incentives that will result in a better economic climate for our country. Consider the fact that before the economic crash of 2008, the financial sector accounted for forty percent of all corporate profits. And currently the financial sector accounts for a greater share of our GDP than it did before the crash. Wall Street has made these gains through complex financial “products” that don’t add value to our economy and in fact endanger it through their speculative nature. We should be steering industries away from such risky, valueless endeavors and into more productive fields. Countless companies have developed ideas that came from academic research into million- and billion-dollar industries. But there is a glut of qualified PhD holders who can’t find funding for the research that they should be doing. I propose that we tax financial transactions and use that money to increase the amount of federal grants. A small tax (an idea supported by Bill Gates and Warren Buffett) of $.50 on every $100 worth of trades could add up to $350 billion a year. Besides the revenue that a transaction tax would create, it would discourage risky speculation of the type that caused the 2008 crash. We should be using federal money in ways that build up the U.S., not giving speculators a tax-free environment in which to make untold amounts of money while we provide them an implicit guarantee of a bailout should they fail. Investing in university research would not only pay off in helping our economy shift away from its reliance on the financial sector, but it would increase our standing in the world and help maintain our premier university system.

I am employed in the private sector and have no vested interest in this idea other than a fear of another market collapse and a future in which our society continues to become divided among the super-wealthy financier class and the service economy subsistence class. Please consider the role that the federal government inevitably plays in shaping the macroeconomic environment of the United States, and make the right decision. Thank you for your tim