I don't get why there is this tendency to try and avoid giving the government the credit it's due. It seems to me to be a distinctly West Coast "we pulled ourselves up by our bootstraps, which we made ourselves" attitude. It's foreign to me, as someone who grew up in the DC area, in a climate where innovators and the government had a comfortable relationship.
There is a ton of fundamental innovation that is coming out of what's often derisively called the "Military Industrial Educational Complex." MIT gets about a billion dollars a year in DOD funding. Apple's Siri came out of SRI, a major defense contractor, and is derived from a DARPA-funded project. My friend just finished his PhD in robotics from Stanford. From high school, where our robotics team was funded by the Navel Surface Warfare Center, through college, where he worked on DARPA's Grand Challenge on Autonomous vehicles, the government has played an enormous role in his development as an expert in the field.
This is good. Not everything is something you can hack out in your basement with no capital. There's a lot of hard problems where you need big teams of PhD's with a lot of resources, and the MIEC does that better than anyone.
Private industry tends to innovate in different ways from governments, and it has been crowded out of innovation in many areas, in most Western countries, making this comparison difficult. You could look at industries which have low levels of government regulation and intervention, and try to compare them to government-run industries, to find the comparative innovativeness of the industries. This analysis will give you a mixed bag, with some government-related fields having historically high levels of innovation (aerospace), and others having low levels (education and healthcare). The private sector has many innovative sectors (retail, software, semiconductors, IT) and probably some low achieving industries, though none come to mind.
Those arguing for the positive role of government in disruptive innovation should also avoid allowing the government to 'take credit' for anything in any field which it has ever been involved in, as the private sector is not given the same deference; (McDonnell built Mercury and Apollo, Grumman made the moon lander, and Rockwell designed the space shuttle; Rocketdyne and P&W designed, tested, and built the engines).
This is hardly a West Coast attitude. It's just the typical narrow perspective on the world from people that overly rely on well tuned skills with first-order logic, and therefore use ridiculously leaky abstractions that fall down.
It's also ignorance, a lot of people don't know where ideas and implementations came from, and how various products got traction.
Combine that with politics, the most powerful tool that mankind has invented for turning off critical thought, and you get a bunch of people parroting "government bad" who are far louder.
That same innovation could be funded without also funding weapons development and other destructive wastes of resources. How much more innovation would there be if 100% of the funds went to R&D of non-military applications?
Yes some good does come of it, but at what cost? The whole point of MAD was that it was no longer necessary to develop better killing tools, because any war should be unthinkable. Yet we continue to waste valuable resources, 100s of billions of dollars that could be used for education or humanitarian efforts, on shit like this: http://www.wired.com/2012/03/f35-budget-disaster/
What's the point, other than making a small number of people rich?
> Government had nothing to do with Bill Gates, Steve Jobs, Zuckerberg
Gates and Jobs built their companies on the microprocessor, the development of which was completely dependent upon government contacts to Fairchild.
Zuckerberg's debt is even more so - the Internet was a government funded R&D project from 1969 until the 1991 entry of ANS/CIX. He built his business on top of a 20+ year government project, just like Google and other businesses did. To say that the government had nothing to do with it is absurd, and just highlighting Gordon's own ignorance of how technology, and for that matter the economy, works.
Just looking at the official government forms, tens of billions in military contracts have come into the Peninsula over the past decade ( http://www.governmentcontractswon.com/department/defense/cal... ). That doesn't even cover all military spending, and it does not cover non-militray government spending.
The debate over the nation’s budget deficit aside, government’s contribution to innovation is not financially rewarded. The benefits to government, it has always been argued, would be increases in tax revenues as companies grow based on its research. The fact that Apple avoids almost all taxes by international avoidance strategies, as do many other high-technology companies, shows such hypotheses to be largely bogus.
This sounds to me like a non sequitur. The government has collected massive tax revenue from a growing Apple, let alone the larger, more productive economy spurred by the internet as a whole. Income taxes on Apple's employees, capital gains taxes on AAPL stock transactions, sales taxes on Apple products...
If spending on basic research leads to even a tenth of a percent of higher annual GDP growth, it will almost certainly pay for itself as that compounds over time into a much larger tax base.
I don't understand why some feel the need to defend Apple on this count. They've evaded taxes to an outrageous degree and are sitting on a pile of cash so big it would take generations for the company to get anywhere near bankruptcy again. Had they been forced to pay the taxes any sane tax regime would say they owe, they'd still be the same company making the same products. They'd just have a smaller nest-egg.
Non sequitur or not, this actually cuts to the heart of the matter. Governments play a huge role in innovation, so we should stop using false claims to the contrary when rationalizing theft of revenues the government is owed for its work. Corporate tax evasion is a crime against innovation and theft from all of us who actually do pay our taxes.
>This sounds to me like a non sequitur. The government has collected massive tax revenue from a growing Apple, let alone the larger, more productive economy spurred by the internet as a whole. Income taxes on Apple's employees, capital gains taxes on AAPL stock transactions, sales taxes on Apple products...
Compare the real taxes reaped by the state from companies that make use of publicly-funded research versus the alternative: the government holds all intellectual-property rights to publicly-funded discoveries and licenses them for a profit to commercial firms.
I think the author and many people who look at this fail to distinguish between a research grant (good thing for the government to do) and investment/tax break/subsidized loans for an on going business concern (iffy thing for the government to do.)
It's a good idea for the government to get involved in basic research, research which might not have a positive economic return for at least a generation. On the other hand, if the government is involved in trying to make unprofitable companies profitable, it's social policy not technology research.
I don't see much difference between giving science team a grant and giving research company money to develop cool robot. Either way it's giving money to the people that free market doesn't want to fund so they can do the stuff that free markets deems too risky to undertake.
Ya, good call. It is a super interesting fallacy that people interested in disassembling dysfunctional status quo models should be good at calling-out. Something like a "post hoc rationalization".
For me, another use case is 'all the fantastic things that have been invented because of war'.
Can you elaborate on this? Because there were plenty of projects funded by no-bid government contracts that failed. Likewise, plenty of government R&D dollars have also gone toward efforts that have failed.
Nobody bats 100%, but it all becomes worth it when they hit on something very big, like the micro-processor or the internet.
In all of the examples given, government contributed funds toward the creative process.
At no point was the government itself the source of the creativity. Which makes sense, since those who create are scientists, artists, industrialists, etc. etc. ... not politicians and bureaucrats.
Politicians do not create. Well, that's not exactly right, there are political and legal works which can be considered great contributions, but they seem to come only every few decades.
> At no point was the government itself the source of the creativity. Which makes sense, since those who create are scientists, artists, industrialists, etc. etc. ... not politicians and bureaucrats.
No doubt, but you could just as easily have said that about the USSR and been right. The inventor of Tsar Bomba was a scientist, not a politician, after all. Does that mean a Communist planned economy is a bad way to advance science?
When people are saying government needs to be involved in science it's almost never because they think the government itself should be training administrative clerks to do science and then engaging in research. It's because they want the government to ensure that our existing pool of trained scientists are tasked with doing research, either directly or indirectly.
That vast resources were confiscated from the public at large and spent with some notable successes (waste & failures are conspicuously absent), does not trump the conspicuously absent analysis of what that money would have been used for outside of confiscation.
Sure, but what's notably absent is any sort of major counter-example. What civilization has build massive technology and infrastructure without government-coordinated programs? The U.S. government has had a tremendous impact on everything from aerospace to medicine to nuclear energy to computing. Where in the world does that development happen without the government? Not in China, where centralized government is transforming the country from a backwater into a world power. Not in Singapore or Taiwan, where government investment into R&D turned poor countries into rich ones. Not Great Britain, not Rome not Ancient Egypt. It was government that built the Roman road network, government that split the atom, and government that sent man to the moon.
On average, governments spend a higher percentage of their income on innovation and investments for the future than individuals or corporations do. Infrastructure, Education, Innovation, and Civil Order are critical to society's long term success. Eating out does not.
As much as I agree (the central point is very obvious), the author does something pretty common which I think might be a mistake: defending current government-sponsored projects as having a low bankruptcy rate. Right now that's true, but it's also an indication that they might be doing it wrong rather than an indication of that spending's correctness.
Government money would best be spent on things that might have an outsized impact but are too risky, expensive or unfashionable for private enterprise to fund alone. If government is taking the same amount of risk as private funds, they should probably be looking a little harder. On the other hand, try selling that to voters...
> On the other hand, try selling that to voters...
Aint that the rub?
Solyndra cost taxpayers ~$550 million in 2011. It was an attempt to develop a domestic manufacturing capacity for a next-gen solar panel technology. It failed due to shitty management, but also to the massive subsidies on Chinese panels that dropped PV prices dramatically.
Their bankruptcy is still in the news on a regular basis.
For comparison's sake; US Military-related spending in 2011 was $1.2 trillion. Solyndra's failure cost the same as four hours of 2011's military budget.
The author's hilarious use of the Medici family[1] as an example of government contributing to great advances of civilization aside, one of the things that is often overlooked is not that government has successfully contributed to some major technological advances, but why, and whether government contributions were really necessary.
The examples of government successes range from those that almost certainly required government backing to those that almost certainly did not. I have a hard time imagining that anyone but a government is going to finance atomic research. The profits simply aren't there to justify it, particularly when compared to existing means of energy production.
But I have an equally hard time believing that the internet or pharmaceuticals wouldn’t have come to market if government had nothing to do with them. The profit potential, even in those early years, was simply too staggering for the market to ignore. The fact that, in many cases, companies were able to persuade governments to share their costs or flat-out underwrite their research doesn’t change this. And so, because government was persuaded to share or pay for many of these costs, I think we get a distorted view of history, including success stories that can be attributed to government involvement, even though we don’t know whether government involvement was really necessary at all. [2]
[1] If you're unaware, the House of Medici became so wealthy that they were able to essentially buy control of Florence, then most of Italy, and turn it into their own little kingdom. They used their wealth to foster wars that expanded their sphere of control, but are now generally known for underwriting the production of some of the great art of the 15th century. Shockingly, much of that art lionized the House of Medici. Claiming that the House of Medici is an example of a government contributing to the advancement of the arts is like claiming Brunei contributed to the advancement of the automotive industry because the Sultan spent a billion dollars on Ferraris, Lamborghinis, Bentleys, and crazy one-off concepts.
[2] Another example from the article highlights this: touch-screens. Once it was clear computers would eventually be more than simply adding machines, was there any doubt that users would eventually want touch-screens? (The Jetsons, in the early 1960's, featured consumers using touch-screens, for reference.) And is there any doubt that this is something that absolutely could have been developed privately?
> But I have an equally hard time believing that the internet or pharmaceuticals wouldn’t have come to market if government had nothing to do with them.
The argument is that the private sector invests for shorter time frames. VCs look for commercial viability within 3-5 years. They're unlikely to fund biotech and green energy, which have 10-20 year time frames, or the internet, which took 30 years to reach commercial viability.
The question is not only about what could be invented with private funds. No, we also consider if it was actually invented with private funds - or if the government did that first, and now we are not sure when - or if - private capital would actually do that without government.
I'd agree that there are examples of advancements which almost certainly would be delayed without government involvement, and there are examples where it's almost certain that even without government we'd have results in almost the same time. Human genome sequencing comes to mind.
"The government" does not exist. It's just individual people, manipulated by psychological tricks into identifying with a certain tribe.
It's a lot like "the company", actually.
Those two metanymic illusions should probably be compared more on the basis of how efficiently they allocate resources to productive people than their absolute number of successes.
Given only $100 apiece, which could make more--"the company" or "the government"? Remember also that the same $100 cannot be given to both at the same time.
A government that prints money to spur innovation is merely redistributing wealth around. Arguably it does pull top talented citizens to do it's bidding in a captive economy. But eventually it goes down in a spiral despite more and more poured in. The govt. is an inefficient machine for such ventures as it eventually attracts scammers who systematically drain the pipe. For every 1 of successful outcome there are millions of screwed up endeavours for which it guzzles our money.
I do have a problem with foreign companies( or foreign subsidiaries) owning US patents, copyright trademark etc. if it's a US patent, trademark copyright you should pay a US tax on earnings from that.
On the flipside, imagine US companies licensing necessary patents (such as those for colored shapes or round buttons) from foreign companies that are made extremely expensive because the licensing is heavily taxed and full of fees by foreign governments.
Presumably they do: a US patent only protects you if you are selling something in the US. Assuming that sale shows up somewhere as someone's profit, there would be an income tax from that.
[+] [-] rayiner|12 years ago|reply
There is a ton of fundamental innovation that is coming out of what's often derisively called the "Military Industrial Educational Complex." MIT gets about a billion dollars a year in DOD funding. Apple's Siri came out of SRI, a major defense contractor, and is derived from a DARPA-funded project. My friend just finished his PhD in robotics from Stanford. From high school, where our robotics team was funded by the Navel Surface Warfare Center, through college, where he worked on DARPA's Grand Challenge on Autonomous vehicles, the government has played an enormous role in his development as an expert in the field.
This is good. Not everything is something you can hack out in your basement with no capital. There's a lot of hard problems where you need big teams of PhD's with a lot of resources, and the MIEC does that better than anyone.
[+] [-] nickff|12 years ago|reply
Those arguing for the positive role of government in disruptive innovation should also avoid allowing the government to 'take credit' for anything in any field which it has ever been involved in, as the private sector is not given the same deference; (McDonnell built Mercury and Apollo, Grumman made the moon lander, and Rockwell designed the space shuttle; Rocketdyne and P&W designed, tested, and built the engines).
[+] [-] epistasis|12 years ago|reply
It's also ignorance, a lot of people don't know where ideas and implementations came from, and how various products got traction.
Combine that with politics, the most powerful tool that mankind has invented for turning off critical thought, and you get a bunch of people parroting "government bad" who are far louder.
[+] [-] canvia|12 years ago|reply
Yes some good does come of it, but at what cost? The whole point of MAD was that it was no longer necessary to develop better killing tools, because any war should be unthinkable. Yet we continue to waste valuable resources, 100s of billions of dollars that could be used for education or humanitarian efforts, on shit like this: http://www.wired.com/2012/03/f35-budget-disaster/
What's the point, other than making a small number of people rich?
[+] [-] firstOrder|12 years ago|reply
Gates and Jobs built their companies on the microprocessor, the development of which was completely dependent upon government contacts to Fairchild.
Zuckerberg's debt is even more so - the Internet was a government funded R&D project from 1969 until the 1991 entry of ANS/CIX. He built his business on top of a 20+ year government project, just like Google and other businesses did. To say that the government had nothing to do with it is absurd, and just highlighting Gordon's own ignorance of how technology, and for that matter the economy, works.
Just looking at the official government forms, tens of billions in military contracts have come into the Peninsula over the past decade ( http://www.governmentcontractswon.com/department/defense/cal... ). That doesn't even cover all military spending, and it does not cover non-militray government spending.
[+] [-] twoodfin|12 years ago|reply
This sounds to me like a non sequitur. The government has collected massive tax revenue from a growing Apple, let alone the larger, more productive economy spurred by the internet as a whole. Income taxes on Apple's employees, capital gains taxes on AAPL stock transactions, sales taxes on Apple products...
If spending on basic research leads to even a tenth of a percent of higher annual GDP growth, it will almost certainly pay for itself as that compounds over time into a much larger tax base.
[+] [-] beloch|12 years ago|reply
Non sequitur or not, this actually cuts to the heart of the matter. Governments play a huge role in innovation, so we should stop using false claims to the contrary when rationalizing theft of revenues the government is owed for its work. Corporate tax evasion is a crime against innovation and theft from all of us who actually do pay our taxes.
[+] [-] eli_gottlieb|12 years ago|reply
Compare the real taxes reaped by the state from companies that make use of publicly-funded research versus the alternative: the government holds all intellectual-property rights to publicly-funded discoveries and licenses them for a profit to commercial firms.
[+] [-] JackFr|12 years ago|reply
It's a good idea for the government to get involved in basic research, research which might not have a positive economic return for at least a generation. On the other hand, if the government is involved in trying to make unprofitable companies profitable, it's social policy not technology research.
Grant proposal -- good; Business plan -- bad.
[+] [-] scotty79|12 years ago|reply
[+] [-] ataggart|12 years ago|reply
[+] [-] Kroem3r|12 years ago|reply
For me, another use case is 'all the fantastic things that have been invented because of war'.
[+] [-] wyager|12 years ago|reply
P(X) = "X exists due to the government"
S = "Scientific developments"
Fallacious statement:
∃x ∈ S (P(x)) ⇒ ∀x ∈ S (P(x))
[+] [-] scotty79|12 years ago|reply
Strict reasoning is hard.
[+] [-] logfromblammo|12 years ago|reply
[+] [-] mattmcegg|12 years ago|reply
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[+] [-] crusso|12 years ago|reply
The problem is that it's never allowed to fail.
[+] [-] gopher1|12 years ago|reply
Nobody bats 100%, but it all becomes worth it when they hit on something very big, like the micro-processor or the internet.
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] maratd|12 years ago|reply
At no point was the government itself the source of the creativity. Which makes sense, since those who create are scientists, artists, industrialists, etc. etc. ... not politicians and bureaucrats.
Politicians do not create. Well, that's not exactly right, there are political and legal works which can be considered great contributions, but they seem to come only every few decades.
[+] [-] bowlofpetunias|12 years ago|reply
Both government and business merely provide incentives.
[+] [-] mpyne|12 years ago|reply
No doubt, but you could just as easily have said that about the USSR and been right. The inventor of Tsar Bomba was a scientist, not a politician, after all. Does that mean a Communist planned economy is a bad way to advance science?
When people are saying government needs to be involved in science it's almost never because they think the government itself should be training administrative clerks to do science and then engaging in research. It's because they want the government to ensure that our existing pool of trained scientists are tasked with doing research, either directly or indirectly.
[+] [-] pessimizer|12 years ago|reply
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] ctdonath|12 years ago|reply
[+] [-] rayiner|12 years ago|reply
[+] [-] Retric|12 years ago|reply
[+] [-] justin66|12 years ago|reply
Government money would best be spent on things that might have an outsized impact but are too risky, expensive or unfashionable for private enterprise to fund alone. If government is taking the same amount of risk as private funds, they should probably be looking a little harder. On the other hand, try selling that to voters...
[+] [-] mikeyouse|12 years ago|reply
Aint that the rub?
Solyndra cost taxpayers ~$550 million in 2011. It was an attempt to develop a domestic manufacturing capacity for a next-gen solar panel technology. It failed due to shitty management, but also to the massive subsidies on Chinese panels that dropped PV prices dramatically.
Their bankruptcy is still in the news on a regular basis.
For comparison's sake; US Military-related spending in 2011 was $1.2 trillion. Solyndra's failure cost the same as four hours of 2011's military budget.
[1] - http://upload.wikimedia.org/wikipedia/commons/8/86/Inflation... (2011 Dollars)
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] liber8|12 years ago|reply
The examples of government successes range from those that almost certainly required government backing to those that almost certainly did not. I have a hard time imagining that anyone but a government is going to finance atomic research. The profits simply aren't there to justify it, particularly when compared to existing means of energy production.
But I have an equally hard time believing that the internet or pharmaceuticals wouldn’t have come to market if government had nothing to do with them. The profit potential, even in those early years, was simply too staggering for the market to ignore. The fact that, in many cases, companies were able to persuade governments to share their costs or flat-out underwrite their research doesn’t change this. And so, because government was persuaded to share or pay for many of these costs, I think we get a distorted view of history, including success stories that can be attributed to government involvement, even though we don’t know whether government involvement was really necessary at all. [2]
[1] If you're unaware, the House of Medici became so wealthy that they were able to essentially buy control of Florence, then most of Italy, and turn it into their own little kingdom. They used their wealth to foster wars that expanded their sphere of control, but are now generally known for underwriting the production of some of the great art of the 15th century. Shockingly, much of that art lionized the House of Medici. Claiming that the House of Medici is an example of a government contributing to the advancement of the arts is like claiming Brunei contributed to the advancement of the automotive industry because the Sultan spent a billion dollars on Ferraris, Lamborghinis, Bentleys, and crazy one-off concepts.
[2] Another example from the article highlights this: touch-screens. Once it was clear computers would eventually be more than simply adding machines, was there any doubt that users would eventually want touch-screens? (The Jetsons, in the early 1960's, featured consumers using touch-screens, for reference.) And is there any doubt that this is something that absolutely could have been developed privately?
[+] [-] mrxd|12 years ago|reply
The argument is that the private sector invests for shorter time frames. VCs look for commercial viability within 3-5 years. They're unlikely to fund biotech and green energy, which have 10-20 year time frames, or the internet, which took 30 years to reach commercial viability.
[+] [-] avmich|12 years ago|reply
I'd agree that there are examples of advancements which almost certainly would be delayed without government involvement, and there are examples where it's almost certain that even without government we'd have results in almost the same time. Human genome sequencing comes to mind.
[+] [-] logfromblammo|12 years ago|reply
It's a lot like "the company", actually.
Those two metanymic illusions should probably be compared more on the basis of how efficiently they allocate resources to productive people than their absolute number of successes.
Given only $100 apiece, which could make more--"the company" or "the government"? Remember also that the same $100 cannot be given to both at the same time.
[+] [-] sunshinerag|12 years ago|reply
[+] [-] acdha|12 years ago|reply
Perhaps your binary thinking is not adequate for explaining the complexities of the modern economy.
[+] [-] sharemywin|12 years ago|reply
[+] [-] Drakim|12 years ago|reply
[+] [-] ARothfusz|12 years ago|reply
[+] [-] mistakoala|12 years ago|reply
[+] [-] AccountsBlow|12 years ago|reply
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