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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 limit

by 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.

liber8 13y ago
First, the stock trader bit was an example, and doesn't demonstrate limitations. It demonstrates that people will invest huge sums to generate returns. I will agree that they likely could calculate the returns ahead of time, and the payback time was very small. (This example is further complicated, since the builders actually licensed the use of the cable to other companies and essentially made their money back immediately.) Nevertheless, I simply can't buy the argument that the military and a bunch of academics were the only ones who foresaw the use of the internet, and thus the private sector never would have built it. It simply doesn't make sense, even without the hindsight bias. Second, whether VCs in biotech are harmful to innovation is irrelevant, both to the current biotech field and to the history of pharmaceuticals. My point, again, is that if you want the government involved in research, you should want it involved in research individuals aren't willing to pay for, but has the chance to significantly improve society. Otherwise, you're going to see a ton of taxpayer money ultimately flow into the pockets of the rich who likely would have funded the work anyway.

by mrxd 13y ago

liber8 13y ago

First, the stock trader bit was an example, and doesn't demonstrate limitations. It demonstrates that people will invest huge sums to generate returns. I will agree that they likely could calculate the returns ahead of time, and the payback time was very small. (This example is further complicated, since the builders actually licensed the use of the cable to other companies and essentially made their money back immediately.) Nevertheless, I simply can't buy the argument that the military and a bunch of academics were the only ones who foresaw the use of the internet, and thus the private sector never would have built it. It simply doesn't make sense, even without the hindsight bias. Second, whether VCs in biotech are harmful to innovation is irrelevant, both to the current biotech field and to the history of pharmaceuticals. My point, again, is that if you want the government involved in research, you should want it involved in research individuals aren't willing to pay for, but has the chance to significantly improve society. Otherwise, you're going to see a ton of taxpayer money ultimately flow into the pockets of the rich who likely would have funded the work anyway.