

New Bailout Plan - $700B to go to Startups.  YC on steroids. - ericksoa
http://blog.magenic.com/blogs/aarone/archive/2008/10/21/A-700-Billion-Dollar-Bailout-Plan-that-will-Actually-Work.aspx

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nostrademons
This wouldn't work, for the same reason that the subprime derivatives bubble
collapsed. If you increase the amount of funding available to people, then
more marginal teams/ideas/homeowners get funded. The actual success rate will
be far lower than the historical 1 in 10, because the driving factors of
success (having a market and sufficient technical ability to go after that
market) remain constant, yet the pool of people going after success increases.

Same effect as the dot-com boom, or the Web2.0 boomlet.

If I were to craft a bailout plan with those $700B, I'd do it like this: $400B
to go towards undergrad scholarships and graduate research fellowships for
science & engineering fields; $200B to be spent directly on basic research;
and $100B as a venture fund for entrepreneurs pursuing wildly ambitious ideas
based on emerging technologies.

Currently, there's a glut of Ph.Ds and inadequate research funding, so many
physics & math Ph.Ds end up working on Wall Street. This is a huge waste of
talent; instead of performing basic research that could expand the
capabilities of the human race, they waste their time shuffling money around.
$200B could fund between 500k-1M new professors. Imagine the potential
breakthroughs they could discover.

1M professors is definitely more than the pool of qualified Ph.Ds, so $400B
goes toward increasing that pool. This could fund 2.5M college educations, or
5M man-years of graduate school stipends. Combined with increased research
funding for after they finish their Ph.D, this would make grad school more
attractive relative to law or business school - the old "default options" for
bright young individuals who don't know what they want to do with their lives.
Imagine if everyone said "I want to be a physicist" instead of "I want to be a
lawyer".

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pedalpete
I think the article, and the above response are both reactions in the 'to a
hammer, everything is a nail' analogy. And as I use to say to my father, it
only works for the hammer!

These two solutions are only address small parts of somewhat unrelated
problems. Will more start-ups strengthen the economy? likely! Will more phd
create more technology for the start-ups? likely!

But what is missing is the scale of employing thousands if no millions of
people. I know history says the original trickle-down economics of the Reagan
era didn't work, but that was giving people money in the hope they would spend
it rather than invest. The new version is keep financial institutions alive so
that they can continue loan/borrowing activities - though hopefully without
making the same dumb moves they have made in the past.

Start-ups are theoretically small in nature at the beginning, and therefore
are potentially a long road to recovery. Same with PHD's? How many individual
auto-workers or even accountants are going to become PHD's. Though you
(nostrademons) do say 'many physics & math Ph.Ds ' are not using there Ph.D
abilities, that will hopefully change due to the lack of potential in the new
Wall St. Though you could also argue that this is the time when Wall St.
actually needs those Ph.Ds the most.

~~~
ericksoa
True, but isn't the combination of money, IQ, and courage to take a risk the
world's only known universal hammer?

