Private industries are not incentivized to pursue the same kind of research as the public sector. An excellent example of this is antibiotics (or antifungal drugs). Pharma companies do not put forth a large budget for research like this, because it isn't profitable. But, if we were to see a super bug crop up in the next 10 years (unfortunately this is not a crazy "if" due to trends in antibiotic resistance), then you would quickly see the public sector's research paying enormous dividends in terms of missed economic hardship. These economic benefits would not affect the private sector in the same way, because a pharma company would not see, let's say, $50b in profits from helping ease an equivalent $50b in economic hardship caused by hospital bills/suffering/lost productivity.On top of this, let's just look at the current private sector and what they spend R&D dollars in: can you really say that $1b spent by Google, Meta, Amazon etc. actually ends up being better worthwhile than $1b spent by NASA? see this list of inventions NASA has inadvertently created: https://www.jpl.nasa.gov/infographics/20-inventions-we-would...
In general, public sector research is already so strapped for cash. Their budgets are not large. Their salaries are lower than the private sector. I agree that public R&D spending is likely not at a "theoretical optimal level", but would you argue that private sector R&D spending is?
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