On Monday, 11 March 2013, President Obama secretly asked us to explain the dynamics of how cuts in R&D spending might affect the nation's economic growth.
Here's the proof, as documented by StatCounter:
Here are the key points of what the President learned about how R&D cuts in the private sector can affect the economy, which we've tweaked from the material we originally presented for greater clarity:
In practice, when a company anticipates that it will not be able to afford its current level of new product development into the future, its management will begin a process of winnowing the list of research and development projects that it is willing to develop. That process occurs well in advance of the layoffs of the people who actually carry out the work involved with them.
Development projects are often reviewed and ranked according to their prospective return on investment (ROI) in that process. Here, projects that fail to meet a certain ROI threshold are discontinued, with the people engaged in those projects initially reallocated to other projects. In addition, the company's management may also kill a high ROI project, should they judge it to involve too much risk to continue developing in the fading economic climate it foresees.
Following this phase, the company's management evaluates its staffing needs to support the "winning" projects it will continue and this may lead to the resulting layoffs of its creative staff. Then the process repeats until whatever cost reduction target the company's leadership has set for its intangible investments has been met.
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