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Debunking “America has become so anti-innovation – it's economic suicide” (subverter.co)
25 points by subverter 157 days ago | hide | past | web | 72 comments | favorite



Interesting that he mentions Elon Musk when his companies are literally kept alive by billions in government subsidies and contracts.

I don't like the binary view of "Give all power to corporations, with no government intervention" and "Let the state control all means of research and access"

The ideal is clearly in between, where the state should break up monopolies and punish companies that have detrimental externalities to their functioning(like polluting the environment).

That's not to dismiss government funded research either. We have Computers and The Internet in large part due to US Government research. Once an idea becomes marketable and profitable, private companies can swoop in, like Microsoft or Apple with Computers.

But decades of unprofitable research is not feasible in a corporation. You would need the government to fund that.


"Interesting that he mentions Elon Musk when his companies are literally kept alive by billions in government subsidies and contracts."

Your point would be stronger without this falsehood. Both SpaceX and Tesla could do business without subsidies and government contracts. There were times during the worst parts of the Great Recession when this WAS true (and both businesses benefited from the technology and general environment enabled by government investment), but it's not "literally" true any longer that they're "kept alive" by government subsidies or contracts. Most of SpaceX's are non-US-govt satellites now, and SpaceX doesn't receive launch support subsidies like ULA. Tesla would still sell a lot of cars without the EV tax credit (which goes to the consumer, not Tesla, by the way... and is a bigger proportion of their competitors' car value than their own). Both companies would need to pull back growth without govt contracts and incentives, but to say they are today literally kept alive is blatantly false.

And your false claim undermines your central point, actually. If innovative corporations need government subsidies indefinitely to literally stay alive, then government-funded innovation isn't competitive and all government is doing is propping up industries instead of making R&D investments that pay off in long-term growth.


Without the NASA contract in 08, SpaceX would have gone down, according to Musk himself. It's true that they are increasingly less dependant on the government, and they hopefully reach a point soon where they are completely independent. But in the early stages when they weren't making profits, government contracts were crucial in keeping SpaceX alive and is the reason they exist today.

>If innovative corporations need government subsidies indefinitely to literally stay alive

I didn't say they need subsidies indefinitely. It's clear that once they start making large profits, it's not a necessity- but they take it anyway. I think SpaceX and Tesla are good examples of companies that governments should subsidise, because they are focussed on innovation in fields which are important for long term sustainability. I don't think they should subsidise Exxon or oil companies, for instance.

My point was you can't dismiss government subsidies as irrelevant when in comes to innovation. It is necessary to support companies that carry out important research, but aren't able to make profits yet.


"Without the NASA contract in 08, SpaceX would have gone down, according to Musk himself."

Yeah, that's what I said in my above post. In the depths of the Great Recession, both were on the razor's edge, and the government helped a lot for both (particularly SpaceX). But this situation was temporary, not current.


I get what you're saying. It's a common view that balances the two ends of the spectrum, as you point out.

There was an article just a few days ago by Farhad Manjoo entitled Google, Not the Government, Is Building the Future (https://www.nytimes.com/2017/05/17/technology/personaltech/g...) that I think captures your viewpoint well. I'd like to spend some time digesting it, after which I'll likely write some thoughts.


  Pure socialism doesn't work. As most people are selfish and only give a shit about themselves or their families. 
   And pure capitalism doesn't work because humans have a short life span so are mostly thinking about 5-10 years from now not 50 to 60 years in the future. So goverment intervention is needed to plan far into the future.


In the US it's not ok to discuss a balance between different approaches​. Either private business/government is all good or it is all bad.


I'm tired of these articles. Seriously. Government has funded hi-tech through the military for the last 70 years. That's not a secret and we wouldn't have what we have now with out it. The government knows this and the large corporations who benefit from it know it.

Corporations are not willing to take on the risk to sink billions of dollars to develop a technology which may or may not pay out. Plus once it does pay out, who is to say China isn't going to steal the tech and then undercut the very thing they just developed.

He cites SpaceX as this idea of private investment, completely overlooking the fact that the government is subsidizing the whole endeavour. Please....


> He cites SpaceX as this idea of private investment, completely overlooking the fact that the government is subsidizing the whole endeavour. Please....

Take your pick of any of the major US industries. Chances are the successful players they take a lot in subsidies. None of the Musk companies are really outliers in this, they just get a lot more attention (e.g. GM, Boeing, and GE all take a lot of subsidies).


True that Musk is absolutely not an outlier. But you can't really use him as an example of a company doing all their innovation without any government help. I'd rather the government fund SpaceX and Tesla than Exxon anyway.


You know, I was fully in agreement with you, but I just went looking for numbers and apparently Space X has only received about $20 million in local incentives and rebates for a space launch facility in Texas (although I'm not sure about the "only". That info is generally prefaced by a note that Space X doesn't disclise financial info, and I'm not sure if that implies there could be more or not). Almost all of the $4.9 billion that it's been reported his companies have received in subsidies is for Tesla and Solar City.

So, apparently the example is actually better than it seemed to both of us.


Subsidies are one thing, contracts are another form of support. Government contracts are what kept SpaceX afloat in 08, when they couldn't find private clients, and these contracts can be excess of 100 million.


If we start counting government contracts as "support", there's a whole bunch of companies that need to be viewed in a different light. Every defense contractor for one. Every company that sells to the public school system for another.

It's not like these companies are getting something for nothing, they still have to provide a good or service.


A few big companies have done expensive basic research without direct market value: AT&T, IBM, Xerox, Google to some degree. All of them were (quasi-) monopolists when they did that.


I think that example is also interesting: other than Google, they did that when they had lucrative monopolies but it was also when executive compensation rates were much, much lower and the stock market wasn't as heavily focused on share price growth.

I think there's a potentially valid argument that those factors combined to encourage more long-term planning than we've seen since the 1980s.


Why would you fund billions in research if you can get government handouts?


The same reason you'd fund it without them, for a competitive edge. If you're getting handouts and everyone's getting handouts you still have incentives.


Classic Austrian economics. There's a clear misunderstanding throughout the whole article about how money works, which is typical of the entire school. This sentence is illuminating: "... monetary expansion, the latter of which causes prices to go up and the purchasing power of the dollars in my pocket to go down."

That is not necessarily true, and in fact is often false. That is called the 'quantity theory of money', and for all its faults even mainstream economics doesn't buy into that anymore... It does appear intuitive - if there is more money in existence then existing money is worth less, right? There's even an identity that 'proves' this, PY = MV. Well, no. For price rises to be the case, the economy must be both at full capacity and full employment. It is also thinking about the problem statically, assuming that the amount of goods and services in the economy does not change to respond to an increase in demand.

In the real world, economies actually have a lot more capacity to absorb extra money than people think (many people are spooked by cases like Zimbabwe and Venezuela, whose problems in reality were caused by completely different factors). And the Austrian mistake of assuming that monetary expansion == price inflation is dangerous, because if implemented the kind of policy leads to effectively controlling inflation by causing unemployment.


>For price rises to be the case, the economy must be both at full capacity and full employment.

Who's using intuition now? Stagflation in the 70's is a pretty jarring counter-example.

We're living in an interesting economic time where Keynesian policies seem intuitively more effective than Austrian economics. Afterall, the Fed has been printing money like mad for the last 20 years, and there's no worrying inflation to be found.

But there's an argument to be made that prices should be much lower than they are - that the scale of automation and globalization that we've seen has put enormous downward pressure on prices, and the currency devaluing effects of Fed monetary policy have put upwards pressure on prices without resultant inflation.

So we can still afford a loaf of bread without having to push a wheelbarrow full of greenbacks up to the register, but the problem has manifested itself in different ways. Most obviously in the growing wealth gap, where those who are most capable of taking advantage of the Fed's cheap currency (the financial industry) have gotten all of the gains from automation and globalization, while the rest of us are stuck with a devalued currency.


Stagflation was associated with two things: high spending on the Vietnam War, and OPEC oil price hikes. To illustrate this, let's take for granted that inflation is "too much money chasing too few goods." That's really a statement about two things: inflation very much can be driven by having fewer goods with the same amount of money. This is why Germany and Zimbabwe are bad examples, because both of them involved a real goods collapse. Likewise, oil supply shock can easily drive large inflation.

In other words, the way to reconcile stagflation with the text you quoted is, "full capacity" was lower in the 70s, so we had inflation without full employment. And to be fair, the text you quoted should be "full capacity OR full employment."

Quantitative easing is also very different from what you might think, but in a sense, QE was also the ultimate refutation of, at least, the money multiplier view. The Fed injected far more base money than necessary to maintain the prime rate, and what happened? The money multiplier fell. So really the Fed had the story backwards there, or else they were trying to invoke some voodoo magic.


> Who's using intuition now? Stagflation in the 70's is a pretty jarring counter-example.

My wording wasn't clear. I meant for price rises to necessarily be the case for any rise in the monetary supply, by the PY = MV identity. Of course inflation is still still possible when the economy is not at full capacity or full employment.


> economies actually have a lot more capacity to absorb extra money than people think (many people are spooked by cases like Zimbabwe and Venezuela, whose problems in reality were caused by completely different factors)

The critical thing to understand these cases - and Weimar - is that you can't print foreign currency.

What happens in those economies is that the balance of trade worsens dramatically, but either people still need imports (oil, pharmaceuticals, spare parts for industry) or in the case of Weimar the country was obliged to export gold by the reparations treaty.

So prices of imports or import-dependant goods rise; the goverment prints money to try to keep up, but since it can't print exports or forex this doesn't work.

(I'm not sure whether your PV=MQ argument is precisely correct or if it overlaps with IS/LM, but it's broadly right)


> When the government floods the economy with cheap money printed out of thin air, it distorts market indicators, making many unprofitable projects appear profitable.

Oh, is that a new one? It's the first time I read someone stating that when VCs get high on drugs and spend their money on stupid ideas, it's because of something the government did.


It's not new at all. It's actually fairly easy to demonstrate. I recommend Murray Rothbard's America's Great Depression[0] from 1963.

The quick hit is this: A. US Monetary policy provides large banks with extremely cheap capital B. Large banks competing with each other in the free market must make use of that capital C. Only so many investments are good investments, because in the end, there's only so much consumption, but the unnatural levels of capital driven by US monetary policy push banks to make bad investments (see every financial crisis since the Fed was founded). D. Those bad investments fail, and mass margin calls lead to an economy-wide de-leveraging that destroys economic growth for months or years.

Systemic financial crises can't happen without cheap, printed money.

It's also reasonable to question whether giant companies could exist at all without US monetary policy. Companies of that size are almost completely dependent on the financial industry, which is completely dependent on the Fed's cheap currency.

[0][PDF]https://mises.org/files/americas-great-depressionpdf-0/downl...

Edit: added PDF label


I'm sorry, but Murray Rothbard is not taken seriously by the profession at this point. He has no economic model to speak of (he never modelized anything in a testable mathematical framework), and none of his claim were ever supported by econometric evidence.

His "analysis" harks back to economics of the 1800s, similar to Marx, where you would try to understand the economy by intuition, using nothing more than the english language. It turns out if you don't rigorously test your ideas you can use the english language to make a case for all sorts of loopy theories.


You like many people are confusing money with resources. If I make 100 trillion dollars from thin air you can't actually build 10x the number of houses.

What's really happening is an allocation of resources. Banks can only back specific kinds of investments which approximate zero sum as you keep pumping ever more resources in ex: Real Estate. yes, everyone wants shelter. So, we can all get a 100,000 sf house! Well, no.

However, you can increase the money supply without simply handing banks all that money just increase reserve requirements as your pumping money into the economy.


> C. Only so many investments are good investments, because in the end, there's only so much consumption, but the unnatural levels of capital driven by US monetary policy push banks to make bad investments (see every financial crisis since the Fed was founded).

If the US government in 2008 had let Goldman Sachs (and others) to get what they really deserved, possibly keeping afloat tiny investors/victims for social reasons, I think investment would be pretty balanced.

I would argue that the problem is a revolving door between Goldman and the US Gov that benefits very specific ppl and not the FED's policy.


I agree with the revolving door.

The way I see it, the Fed is inflating bubbles by pumping cheap money into the financial sector, and then the US Gov is bailing out the financial sector when the bubbles burst.

It's hard to distinguish between the government and big finance, that's for certain.


Beyond the issues with Rothbard's thinking, this :

"Systemic financial crises can't happen without cheap, printed money"

is ahistorical nonsense.


Ahistorical. As in not backed up by history?

You'll have to cite with examples. Here's some of mine:

Amsterdam opens the precursor to central bank in 1609[0]. Less than thirty years later, one of the earliest speculative financial crises on record demolishes the Dutch economy.[1]

In the early 20th century, fractional reserve lending practices paired with a rapidly growing economy leads to the first banking crises, most notably in 1907[2]. The damage is largely limited to financial types, but the banking industry starts clamoring for government help to feed their recklessness.

The government obliges them with founding of the Federal Reserve in 1913[3], which allows fractional reserve lending to go off the rails. A World War and a boom cycle later, and we have the worst financial catastrophe in history in 1929[4].

Going off the gold standard in the 1970s preceded the financial crises of the early 80s[5] and the Black Monday in 1987[6]

Finally, another lax round of monetary policy under Greenspan led to a rash of bad investments in dotcoms, and then Bernanke helped precipitate the 2008 financial crises.

Now, you can go ahead and say that I'm making a post hoc ergo propter hoc argument, and that's fine, BUT you absolutely cannot say Austrian economics is ahistorical. It completely relies on history as its foundation.

[0]https://en.wikipedia.org/wiki/Amsterdam_Wisselbank

[1]https://en.wikipedia.org/wiki/Tulip_mania

[2]https://en.wikipedia.org/wiki/Panic_of_1907

[3]https://en.wikipedia.org/wiki/Federal_Reserve_Act

[4]https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929

[5]https://en.wikipedia.org/wiki/Black_Monday_(1987)


I am of course not suggesting Austrian school has paid no attention to history. Insufficient, perhaps :)

I'm objecting to the rather stronger (than an austrian would make) statement that :"systemic financial crises cannot happen without cheap,printed money". Emphasis mine. You even have to squint very hard at your first example to make it fit - it's increasingly hard to try and argue from anything pre 18th century. You can probably (and many Austrian's would) try and make the argument for this as a root cause of most/all modern crisis, but of course alternate analysis exist that are similarly grounded. It's a complex subject.


I think all of your points are valid. It IS a complex subject, and we should be open to many view points. There are certainly a number of lines of attack on my ideas that are valid and reasonable.

I bristled at the idea that my statement is ahistorical. It may have other problems, but I've yet to see any historical counter examples - a period of mass-deleveraging leading to economic retractions in the absence of artificially low interest rates. If you can cite an example like that, I'll rethink my statement.


Ok, I don't have time to do this properly but as a first pass:

1) I think you are now narrowing quite a bit ".. mass-devleveraging ... interest rates"

2) Consider e.g. sovereign defaults of England and Spain in 14th, Roman bank collapses & liquidity issues - multiple times during both Roman and Byantize (will posit that many early issues are difficult to separate from wars, but there were fairly clear panic effects in iirc 3rd and 4th). Italian banks in 14th c. etc.


Please step out of your bubble and try reading some analysis from people who call themselves economists before they call themselves libertarians or austrians(aka not mises.org). The other commenter is right, Rothbard is not taken seriously and anyhow citing economics thats over 50 years old isn't exactly good practice. Austrian economics is the climate science denialism of economics, there's a reason "we are all Keynesians now."


It's fine to call me and Rothbard and other proponents of Austrian economics kooks, if that does it for you.

But where's your counter example? What book should I read to become enlightened? If I was curious enough to read Rothbard's book from 1963, don't you think I'd at least consider your recommendation?

If you can find me a Keynesian who can explain a systemic financial crisis without ringing their hands and shouting "Capitalism is reckless and greed causes financial crises!" than I'll consider their ideas.

But a systemic problem demands a systemic explanation. Austrians give us monetary policy. Keynesians give us greed.

I'm not going to simply side with the Keynesians because they have the dominant view. I'm not built that way. I need a better explanation than hand wringing and worship of Piketty.


>But a systemic problem demands a systemic explanation. Austrians give us monetary policy. Keynesians give us greed.

Keynesians give regulation. If you're unwilling to consider the ideas of someone who believes that capitalism is reckless, that greed does cause financial crises and that regulation is an answer, then why are you asking for a book recommendation? You should also note that I believe in regulated markets not socialism or communism. There are a million shades of gray here.

>I need a better explanation than hand wringing and worship of Piketty.

Have you read Piketty?

I'm going to recommend two books which should be a gentle introduction to my viewpoint:

23 Things They Don't Tell You About Capitalism by Ha-Joon Chang

Economism: Bad Economics and the Rise of Inequality by James Kwak

EDIT: I'd also note that one of the things that frustrates me most is to see the politicization of economics. The misuse of economic terminology to advocate a specific political viewpoint is exactly what mises and similar institutions engage in and it leads to a group of the public who believes that they're educated in economics when they're actually just inculcated to a political worldview. If you read those books and still disagree, that's fine but just think about whether it's an intelligent disagreement. I've run into so many individuals who know Friedman, Hayek, Mises, Rothbard, maybe Hoppe and no one else. People who explain to me all about how supply and demand lead to market clearing but don't know a single model other than "the free market model" (actually the perfectly competitive model) and definitely don't know its assumptions. People who have never read an empirical/econometric study of economics that did not come with an easy synopsis from a blog they read(and agree with). These people do not know economics, they know politics.


Your argument against the mixing of politics and economics seems reasonable to me, and I am definitely going to read your suggestions and reach out for further discussion.

I'd like to see a separation of politics and economics too, I just think that's sort of a utopian ideal. What I really want is a separation of coercion and economic opportunity. Pre-Fed, most concentrations of wealth were driven by private-sector coercion - industrialists like Vanderbilt, Carnegie, and Rockefeller coerced both their competition and their labor force, which is as equally distasteful to me as government coercion leading to concentrations of wealth.

Anyway, I'll get back to you. Do you have some social media or email address I can reach out after I've read your suggestions?


Unfortunately I'm one of those guys so I keep all my profiles firewalled. I do post several econ stories to HN every morning so you'll definitely be able to find me.


>Oh, is that a new one?

Not at all. We dealt with a similar collusion between the government and private banking industry in the housing collapse of 2008. Cheap money along with bad policy is problematic no matter where it occurs because the cheap money ends up in the stock market/speculation market eventually.


There's very little serious literature that points to "cheap money" as a source cause of 2008. Neither does banks taking risks because they are "too big to fail".

The main cause you get by reading the research on 2008 is that bank managers were incentivized by their shareholders to take excessive risks. This is because 1) shareholders are pretty shortsighted and 2) managers suffer comparatively little personal consequences by crashing a bank (clearly they don't go to jail; they still get the massive bonuses in the years where they pumped returns with excessive risks, etc.)


>bank managers were incentivized by their shareholders to take excessive risks.

Which is no different than supplying money to a market below cost. Any market failure that leads excessive lending will lead to asset inflation and reinvestment of that money in speculation.


The problem is the VC, stock market and the economy are becoming a giant monopoly(monopsony) engine. It's stupid to invest in competition.

VCs invest "small"(way larger than the average person can afford to start) bets on a few companies so they can dump a large amounts on the winners. Once the companies have passed the test they go to the stock market to raise even more money to further entrench their monopoly.

It used to be the market was justified because competition drove innovation and choice, but investors don't invest in competition.


Think of it like a systems problem. You'll only find local minima/maxima with greedy algorithms.


> Other than Juicero and some sweeping statements about the technology, energy, and pharmaceutical industries benefitting from government research, Tarnoff offers little evidence to back up these claims.

The "debunked" article is not scientific in 100% of the meaning of the word, that's a fact -- but if we go by the message of this "debunker" this means we must doubt every single deduction we make in our lives, on the grounds of what? Oh, none of us can't access all the information on the planet in real time. Legit as hell, lol. Let's face it, none of us is Skynet-like and yes we will always work with sparse data. Trying to make a good use of those is not a bug. It's a damn good feature.

Far too often I am seeing a very perverse and backwards "arguing" on HN these days -- people grossly underestimate our innate human ability to draw rather good conclusions based on incomplete data, and constantly require "scientific proof" about pretty much anything. Science doesn't have data on most of what's happening on this planet however. And that won't change for a long time still.

We make do with what we have. The rest are yelling "give me evidence!" in non-deterministic areas like country/world economics. Heh, OK.


Henry Hazlitt, one of the economists quoted in the article, wrote a book called Economics in One Lesson [1]. It is a brilliant, and very approachable, piece of writing that should be read by everyone interested in the basics of economic theory.

[1] https://www.amazon.com/Economics-One-Lesson-Shortest-Underst...


>My point being, these examples show that, without market forces, the government has no indicator as to what’s worth allocating resources to and what’s not.

This supposes that the only things worth allocating resources to are things which would be successful in the market place. He mentions public goods in this essay so I know that he's aware of them, why does he ignore their existence here?

>Shifting focus from the public sector to the private, the idea that entrepreneurs and corporations are somehow worse at innovating, or don’t invest enough in R&D, is also called into question by many examples to the contrary. Like SpaceX, the aerospace company founded by Elon Musk with the goal of one day colonizing Mars,which recently accepted a $1 billion investment from Google and Fidelity.

Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times.

http://www.latimes.com/business/la-fi-hy-musk-subsidies-2015...

Hmm. He also presupposes that public R&D spending will drive out private R&D but that is actually an open economic question. (lots of studies showing them to be complements and lots showing them to be substitutes)

This short survey demonstrates that existing empirical studies do not allow for a definitive conclusion regarding the sign of the relationships between publicly and privately funded R&D. Hence, it is still an open empirical question as to whether public R&D funding increases or decreases privately funded R&D. In order to answer this question, more research with more comprehensive datasets is needed.

http://aei.pitt.edu/6736/1/1195_30.pdf

>As Ludwig von Mises so eloquently put it...

Ah come on, I am so tired of libertarians whose entire economic education comes from reading other libertarian blogs online. Please quote some living economists, maybe even an economist who is still publishing papers. When will we realize this (specific) sort of libertarian for what they are, a utopian. The market can't solve every problem, that's why we have governments in the first place.


I don't really follow this:

> First, it confuses technological innovation (impressive to engineers) and economic innovation (valuable to consumers). Second, it confuses gross and net benefit — of course, when government does X, we get more X, but is that more valuable than the Y we could otherwise have had?

[...]

> And don’t forget Bitcoin and the underlying blockchain technology that has the potential to decentralize everything from web apps to logistics.

The latter here seems like a rather good example of the former. EU is about to introduces the revised payment services directive (PSD2) which is set to force banks to interface with third parties. I would expect this action to have far greater value to people than the blockchain.


Many already mentioned (at least partially) the fundamental flaws in the economic theory he bases his text on, and also his bad examples (completely ignoring you could provide as many counterexamples of staet-funded innovation and private sector waste) but I just want to emphasize his quotes: Being so obsessed with trying to point out logical fallacies, they don't provide any proof or actual arguments for their side.

For example, the third quote literally provides zero evidence for the fact that the market's failures are primarily attributable to government intervention. Collective action theory alone points out how at least parts of the failures will be the market's.


Government does engage into efforts/projects that end up being wasteful.

But, market forces should not be heralded as panacea of there being no-waste.

Every private sector bankruptcy is wasteful for its investors.

Yahoo, HP, Former Dell, Anderson

Ton of examples of failed efforts, pure waste, nepotism, bribery and downright illegal (civil/criminal) behavior in private sector.

I look at it this way... The will of the people also acts as a market force. I think most would agree with that.

Whether there is waste or if it is most efficient, is immaterial. Will of the people, in terms of government's willingness to legislate, will always be a market force. Push and pull is given and is to be expected. Let the battle rage on.


You will fail (almost all of the time).

People tend to forget that when talking about waste. Almost every project, company, idea will end in failure. Pointing at the successes around us is a case of survivorship bias. Government projects fail all the time. Company projects fail all the time. Personal projects fail all the time.

So, looking at failures is really useless, it tells us nothing. In the end we have to look at return on investment. If the government spends $1 billion and $500 million is completely wasted, yet they get a $700 million return on the other half, that's not a bad deal. It's even better if that is money that private industry would have never invested in said technology.

And private industry is just as apt to chase bubbles leading to massive losses. When it becomes more profitable for private industry to invest in speculation in the short term a bubble occurs almost every time, followed by large economy damaging losses.


Agree completely, however companies tend to have better feedback loops to point to lack of ROI.


Better or shorter?

Must-solve, long shot things like GPS, Internet, Modern Weaponry require resolve behind it to make it happen.

I am sure those programs had hundreds offshoots trying things out to solve problem, to see if it works, within the umbrella of that major effort e.g. GPS.

ROI measured in terms of money results in drug companies chasing chronic pills than cures. That need not be the only measure.


Shorter = better in my world. The government could have that too if they did budgets differently.


Ehh, maybe.

Then again the Great Retail Apocalypse of 2017 may lead to to think otherwise. US retail is massively overbuild, most of that because the companies are allowed to take on tens or hundreds of millions of debt. This debt acts as a buffer "It's only bad now, it will be better soon, we promise". By the time feedback signals give a clear message that the investment will never be repaid investors are overextended and losses occur.


That industrywide, the individual companies will soon find out if the overinvested or not.


The old saying "The market can remain irrational longer than you can remain solvent" always applies.

It really doesn't matter if you are a responsible company that takes on low/no debt if a significant number of your competitors take on debt, and their investors allow it. "Soon" is highly overrated. Amazon is going to make lots of money 'soon' unless they are wrong about future market conditions, yet their investors have given them a pass at reinvesting most of their money for growth. Entire industries can commit irrational actions for long periods of time and have plenty of analyst attempt to rationalize the situation.


Sure but the point is once the market dries up the companies will know. Thats not the same for governments who do their budgetting rather different.


The market is certainly not perfect. There is waste, bad investment, etc. There's no avoiding that. Unlike government, however, the market is much more efficient in realizing and correcting for that.


If only we had the evidence to support this sort of sweeping generalization. It's a nice theory on paper, in practice it seems to be more complicated depending on time scales and type of goal. There is a lot of no-true-scotsman-ing in support of the dogma, which muddies the waters. For people who want to affect actual change and believe in evidence-based approaches, it's really hard to avoid the conclusion that (today at least) you are best off with a mix.

This empirical mismatch is either handled by engaging in no-true-scotsman support for the dogma, or engaging


Having worked in both government and corporate environments, I don't see it. The efficiency of the market is about as mythical as the long term planning ability of the government.


Companies that waste too much go out of business and are replaced by organizations that are more efficient.

Governments that waste too much suck up ever more of your taxes or go bankrupt and cause misery for all.


America: Good for innovation! except for the predatory patent lawsuits which as a small business you won't be able to afford the legal bill to defend against.


A good topic for a future article!


I think there is some interesting things going on with patents that need looking into. Especially the root cause.

Someone should look at wisdom of making the Patent office self funding, seemingly incentivizing them to give out more patents (if they're valid or not), and having them being seeming immune to penalties for issuing bad patents.


> The truth is government and the public sector is where innovation, and the money that fuels it, comes from.

Bell labs? Xerox Parc?


What you quote is part of the summary of the article I critique. To avoid any confusion, that's certainly not what I believe. :)

That said, both of those are good examples that I don't even mention in the article.


And because the private sector doesn't have anything to do with where the public sector gets it's money.


CompuServe called. This internet thing is a government boondoggle. They want their article back.


Why does he list Bitcoin as an American innovation? Or did I miss read that.


It's sort of a stretch, but nobody knows who Satoshi is and many of the major players are American. The Bitcoin Foundation is American, the first user[1] is American, the predecessor to Bitcoin was developed by an American[2].

[1] https://en.wikipedia.org/wiki/Hal_Finney_(computer_scientist...

[2] https://en.wikipedia.org/wiki/Nick_Szabo


For this sort of distributed project, it's mostly inept to attempt to nationalize any claim to innovation anyway. Not that it will stop countries from doing it, but it's all rather silly.


I can see how that's confusing. I was thinking in broader terms of the private sector with that one. Although there is American innovation happening there, it's certainly not the only place.




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