The New Jersey Commission of Health Science Education and Training recently proposed to merge state's three public research universities. Soaring federal and state budget deficits are likely to exert added pressure on already strained relationship between academe and state - especially with regards to research priorities and allocation of ever-scarcer resources.

This friction is inevitable because interaction between technology and science is complex and ill-understood. Some technological advances spawn new scientific fields - steel industry gave birth to metallurgy, computers to computer science and transistor to solid state physics. The discoveries of science also lead, though usually circuitously, to technological breakthroughs - consider examples of semiconductors and biotechnology.

Thus, it is safe to generalize and say that technology sector is only more visible and alluring tip of drabber iceberg of research and development. The military, universities, institutes and industry all over world plough hundreds of billions annually into both basic and applied studies. But governments are most important sponsors of pure scientific pursuits by a long shot.

Science is widely perceived as a public good - its benefits are shared. Rational individuals would do well to sit back and copy outcomes of research - rather than produce widely replicated discoveries themselves. The government has to step in to provide them with incentives to innovate.

Thus, in minds of most laymen and many economists, science is associated exclusively with publicly-funded universities and defense establishment. Inventions such as jet aircraft and Internet are often touted as examples of civilian benefits of publicly funded military research. The pharmaceutical, biomedical, information technology and space industries, for instance - though largely private - rely heavily on fruits of nonrivalrous (i.e. public domain) science sponsored by state.

The majority of 501 corporations surveyed by Department of Finance and Revenue Canada in 1995-6 reported that government funding improved their internal cash flow - an important consideration in decision to undertake research and development. Most beneficiaries claimed tax incentives for seven years and recorded employment growth.

Sam Vaknin is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He is a columnist for Central Europe Review, PopMatters, and eBookWeb , a United Press International (UPI) Senior Business Correspondent, and the editor of mental health and Central East Europe categories in The Open Directory Bellaonline, and Suite101 .

Visit Sam's Web site at http://samvak.tripod.com

The woeful state of Germany's financial system reflects not only Germany's economic malaise - "The Economist" called it "sick man" of Europe - but its failed attempt to imitate and emulate inimitable financial centers of London and New-York. It is a rebuke to misguided belief that capitalistic models - and institutions - can be transplanted in their entirety across cultural barriers. It is incontrovertible proof that history - and core competencies it spawns - still matter.

When German insurers and banks, for instance, branched into faddish businesses - such as Internet and mobile telephony - they did so in vacuum. Germany has few venture capitalists and American-style entrepreneurs. This misguided strategy resulted in a frightening erosion of strength and capital base of intrepid investors.

In a sense, Germany - and definitely its eastern Lander - is a country in transition. Risk-aversion is giving way to risk-seeking in forms of investments in equities and derivatives and venture capital. Family ownership is gradually supplanted by stock exchange listings, imported management, and mergers, acquisitions, and takeovers - both friendly and hostile. The social contracts regarding employment, pensions, role of trade unions, balance between human and pecuniary capital, and carving up of monopoly market niches - are being re-written.

Global integration means that, as sovereignty is transferred to supranational entities, cozy relationship between banks and German government on all levels is over. Last October, Hans Eichel, German finance minister, announced OECD-inspired anti-money laundering measures that are likely to compromise bank secrecy and client anonymity and, thus, hurt German - sometimes murky - banking business. Erstwhile rampant government intervention is now mitigated or outright prohibited by European Union.

Thus, German Laender are forced, by European Commission, to partly abolish, three years hence, their guarantees to Landesbanken (regional development banks) and Sparkassen (thrifts). German diversification to Austria and central and east Europe will provide only temporary respite. As EU enlarges and digests, at very least, Czech Republic, Hungary, and Poland in 2004-5 - German franchises there will come under uncompromising remit of Commission once more.

In general, Germans fared worse than Austrians in their extraterritorial banking ventures. Less cosmopolitan, with less exposure to parts of former Habsburg Empire, and struggling with a stagnant domestic economy - German banks found it difficult to turn central European banks around as successfully as likes of Austrian Erste Bank did. They did make inroads into niche structured financing markets in north Europe and USA - but these seem to be random excursions rather a studied shift of business emphasis.

On bright side, Moody's - though it maintains a negative outlook on German banking - noted, in November 2001, banks' "intrinsic financial strength and diversified operating base". Tax reform and hesitant introduction of private pensions are also cause for restrained optimism.

Pursuant to purchase of Drsedner Bank by Allianz, Moody's welcome emergence of bancassurance and Allfinanz models - financial services one stop shops. German banks are also positioned to reap benefits of their considerable investments in e-commerce, technology, and restructuring of their branch networks.

The Depression on 1929-1936 may have started with meltdown of capital markets, especially that of Wall Street - but it was exacerbated by collapse of concatenated international banking system. The world today is even more integrated. The collapse of one or more major German banks can result in dire consequences and not only in euro zone. The IMF says as much in its "World Economic Outlook" published on September 25.

The Germans deny this prognosis - and diagnosis - vehemently. Bundesbank President Ernst Welteke - a board member of European Central Bank - spent better part of last week implausibly denying any crisis in German banking. These are mere "structural problems in weak phase", he told a press conference. Nothing consolidation can't solve.

It is this consistent refusal to confront reality that is most worrisome. In short to medium term, German banks are likely to outlive storm. In process, they will lose their iron grip on domestic market as customer loyalty dissipates and foreign competition increases. If they do not confront their plight with honesty and open-mindedness, they may well be reduced to glorified back-office extensions of global giants.

Sam Vaknin is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He is a columnist for Central Europe Review, PopMatters, and eBookWeb , a United Press International (UPI) Senior Business Correspondent, and the editor of mental health and Central East Europe categories in The Open Directory Bellaonline, and Suite101 .

Visit Sam's Web site at http://samvak.tripod.com