Saturday, July 10, 2010

Does government funding enhance private sector downsizing?

Recent comments relating to Senator Byrd's approach to securing federal funding for West Virginia include:

Federal funding is a shaky foundation for an economy because no one can replace Big Daddy. In their recently released paper "Do Powerful Politicians Cause Corporate Downsizing?" Harvard professors Lauren Cohen, Joshua Coval and Christopher Malloy found that states that lose chairmanships on important congressional committees lose 20% to 30% in earmarks.

Even worse, they found that pork actually pushes private investment out of a state. When the federal government intrudes, it raises demand for the state's workers and real estate, jacking up prices. Often, companies can't compete, so they flee.

Such analysis is relevant to the many debates about the Bayh-Dole Act.

For example:

Forbes on Bayh-Dole Act


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