PSEUDOMONEY: It Is like Real

Pseudomoney is any invested money that does not reproduce in the foreseeable future.

In research, you can rarely trace how invested money returns, which is one of the fundamental differences between research and business.

For instance, in the most straightforward form of business, one buys a pencil for a dollar and sells it for two. Thus, a return on investment is one dollar (2-1=1), and the return loop, equal to delay, is short: buy, sell, get a profit. When one builds a house, the loop becomes longer: one gets money, buys land and materials, hires workers, builds, and sells. Yet, money also returns to you in its pure form—as money.

However, when somebody invests in basic research, there is no monetary return. One invests, people buy equipment, pay themselves a salary, conduct experiments, and get results satisfying their curiosity at the investor’s expense. Later, researchers publish these results. Alternatively, they may not get results and cannot publish them, as journals do not like to publish negative results. (Shame on these journals, of course)

That’s mostly it.

The result of research is knowledge—significant or not—but it is never money.

Based on that knowledge, somebody might do something that will return money. This idea fuels numerous spinoffs. Yet, the return might happen many years later by different people in different locations.

For instance, a brilliant Austrian scholar, Christian Doppler, described the eponymous phenomenon—the Doppler effect—in 1842; another brilliant French physicist, Pierre Curie, discovered piezoelectricity (and the ability to generate waves) in 1880; an imaging device to detect some internal flaws in metal works was invented by a brilliant American, Floyd Firestone, in 1940—almost a hundred years later after Doppler. On it went, and ultimately, it has led to the production of ultrasound diagnostic machines—a huge market, where an echocardiography part is almost two billion USD annually. No one could forecast it in the 19th century.

{DELAY, GRANTING IS NOT INVESTING, INFORMATION, INFORMATION ASYMMETRY, HETEROGENEITY, LIQUIDITY}