Ernest Rutherford, the great New Zealand scientist, encouraged the British government to set up state sponsored science in the form of the Department of Scientific and Industrial Research (DSIR). He also had a hand in setting up the NZ version of DSIR when Rutherford was here on a return visit in 1925.

A book, "DSIR; making Science Work for NZ", by Ross Galbreath, records the achievements of the DSIR divisions. The last chapter records the destruction of DSIR by ignorant Treasury economists. It started with a 'freeze', then a 'sinking lid' on staff numbers, followed by a 'user pays' and a contracting approach. A process of economic deregulation, reform, and "restructuring" were applied based on market theories and new managerialist ideas regardless of need or justification.

According to Galbreath, "It was marked by what one observer (Heretical economist Brian Easton) called a 'mutually incomprehensible dialogue' between 'scientists who did not understand economics and economists who did not understand science'. Certainly scientists and economists spoke rather different languages. Treasury economists referred to scientists and other professional groups as 'vested interest groups' seeking to 'capture' policy and increase their funding at the public expense."

Of course scientists cannot understand economics because scientists put some rigour into their thinking. Economists cannot understand science because they use the scholastic approach and will not apply scientific methods. The Treasury economists did not use any analysis in their dogmatic approach in spite of studies which showed that the economic returns of scientific research was in the 20% internal rate of return range.

Further, Galbreath says: "To the economist there was nothing particularly pejorative about these terms; it was a basic premise of their theoretical understanding of the way society worked, that all human behaviour was driven by self-interest. But to the scientists (as to the doctors, teachers and other professional groups under similar scrutiny), who believed in the worth of what they were doing, the suggestion that they were simply pursuing self-interest was a slight and an insult; they regarded their work as being for the public good."

As we have revealed in earlier issues, economists have a corruptible, selfish personality and cannot understand an altruistic way of working. They obviously do not know of the principled legacy which Rutherford left to science.

"Indeed, scientists argued that for the good of the country and its economic development, more scientific research was needed. But Treasury economists rejected this proposition, maintaining that 'analysis would point to an alternative conclusion that a better economic performance would result from a more competitive economic environment'. The economists argued that this applied to science as anything else, and recommended the standard recipe for restructuring science into a more competitive economic environment: separating funders and providers, contestability, and purchasing outputs rather than funding inputs. Scientists disagreed with both the analysis and the prescription. To scientists the economists' arguments did not measure up; they seemed, as one scientist put it, to be 'preconception dressed up as analysis - and damn the consequences'."

With the 'lid' already sunk on staffing, the new fancy structures meant that further redundancies were made. Senior scientists found their time was now taken up in paper work, making proposals for funding and in 'marketing' their work. It is no wonder that younger scientists were joining the 'brain drain' rather than waste their expertise on bureaucratic mumbo jumbo. One scientist describes the current scientific research policy in New Zealand has the "hauntingly familiar feel of the misguided Soviet system of scientific endeavour that was shackled by political interference. ... On the basis of the unfortunate Soviet experience, we can state with absolute certainty that political direction of scientific research prevents scientific innovation."

Following the capture of politics by Treasury in 1984 some of the debate on science took place in "NZ Science Review." One such article on the Government Involvement in Research and Development was written by a Divisional Director of the Treasury, Roger L (Lysenko?) Kerr. In it Kerr refers to just one study published in the Harvard Business Review. In a following paper by a scientist, Kerr's habit of distortion is exposed. David Penny says: "... when the original paper was checked it was found that Mansfield's conclusion is quite different from that drawn by Treasury. The overall conclusion of Mansfield's paper is: 'To many economists, the relatively - and absolutely - high social rates of return are an indication that we (USA) as a nation are under-investing in civilian technology ...'."

Penny give a further analysis of what Mansfield really said. Regarding the Treasury view, he says: "This is an elementary form of deceit, using a quote from a recognised authority and then appending a different conclusion without indicating the end of the quote. In this case it was made worse by appending a conclusion that is quite different from the intent of the author." and referring to the high rate of 'social' economic benefit uncovered by Mansfield, Penny comments "A disturbing feature of this aspect of the expected high social rate of return (70%) from R & D has been completely omitted from Treasury's discussion of Mansfield's paper."

Kerr is a prime example of 'confabulation' (confabulation: to invent past experiences either consciously or unconsciously, to compensate for loss of memory). Oneirataxia is another syndrome which Kerr suffers from.

At the end of his paper, Penny says: "The problems of R & D policy in New Zealand illustrate the need for checks and balances in policy formation. Treasury has been asked to do a job outside it area of expertise. It has both formulated an R & D policy, and carried it out. Our government administrative system normally works on checks and balances: a department prepares a case according to established guidelines and State Services Commission and Treasury check the case. Such a system has not worked with science; there is no group with overall responsibility and it has been left to Treasury to present, and then to judge its own case."

A later paper in which Penny was a co-author examined the "restructuring" of science and science policy. A further comment is made about Treasury's competence: "A recent development that has made the situation worse seems to be an avoidance of those with expertise in the area being reviewed - a Treasury theme that technically competent input leads to "user capture". This was the argument used by Treasury to sideline much of the Beattie report. Treasury, after having its arguments destroyed in the open forum of the Beattie Committee, then used secret reports to government to resubmit its discredited ideas. In any profession, such behaviour is unethical."

It is just as well that the fuming of Rutherford's ashes could not set fire to the stone of Westminster Abbey, as all he stood for is torn down. Science is not a market, economists have no place to interfere in science.