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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 o

by liber8 13y ago

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?

mrxd 13y ago
> 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.
- liber8 13y ago
  That's an extremely narrow argument though. There's a huge world of funding outside of VCs. Of course, this also overlooks the fact that even VCs fund tons of biotech work, and are funding green energy right this very second. (In fact I personally know one VC who made his 9-figure fortune almost exclusively from funding biotechs in the 90s. I'm sure there are many others.) The internet may have taken 30-years to reach commercial viability, but that doesn't mean it would not have happened privately. Again, as soon as people began using computers as more than simply adding machines, it was pretty clear how beneficial it would be if computers could talk to each other. Eventually, the internet would have happened. Who knows if it would look like it did today (or would be better, or worse) without government involvement. It's impossible to say. But, when stock traders, for example, are willing to invest hundreds of millions of dollars to build a fiber cable to shave 3 milliseconds off their trade times, I have no doubt they would have invested similarly to have the communication abilities afforded by the internet. My original point was, be careful when people hold up the fruits of government investment. Government fertilizer might have had nothing to do with the size or taste of the fruit. And moreover, that fertilizer might have been much better used on some other type of fruit.
  - mrxd 13y ago
    It sounds like you might be falling into hindsight bias, to be honest. Stock traders building high speed data links are actually a perfect example of the limitations of private sector innovation. It was a $300 million project, they started seeing profits after one year when the project was completed, and they were able to calculate the speed increase well in advance and estimate how much more profitable their trades could be. So it was a short term project with very little risk and nowhere near the scale of government investment. Mazzucato does talk about VCs in biotech and she thinks they have largely been harmful to innovation.
avmich 13y ago
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.

by liber8 13y ago

mrxd 13y ago

> 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.

liber8 13y ago
That's an extremely narrow argument though. There's a huge world of funding outside of VCs. Of course, this also overlooks the fact that even VCs fund tons of biotech work, and are funding green energy right this very second. (In fact I personally know one VC who made his 9-figure fortune almost exclusively from funding biotechs in the 90s. I'm sure there are many others.) The internet may have taken 30-years to reach commercial viability, but that doesn't mean it would not have happened privately. Again, as soon as people began using computers as more than simply adding machines, it was pretty clear how beneficial it would be if computers could talk to each other. Eventually, the internet would have happened. Who knows if it would look like it did today (or would be better, or worse) without government involvement. It's impossible to say. But, when stock traders, for example, are willing to invest hundreds of millions of dollars to build a fiber cable to shave 3 milliseconds off their trade times, I have no doubt they would have invested similarly to have the communication abilities afforded by the internet. My original point was, be careful when people hold up the fruits of government investment. Government fertilizer might have had nothing to do with the size or taste of the fruit. And moreover, that fertilizer might have been much better used on some other type of fruit.
- mrxd 13y ago
  It sounds like you might be falling into hindsight bias, to be honest. Stock traders building high speed data links are actually a perfect example of the limitations of private sector innovation. It was a $300 million project, they started seeing profits after one year when the project was completed, and they were able to calculate the speed increase well in advance and estimate how much more profitable their trades could be. So it was a short term project with very little risk and nowhere near the scale of government investment. Mazzucato does talk about VCs in biotech and she thinks they have largely been harmful to innovation.

avmich 13y ago

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.