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> When Google received funding for its algorithm from the National Science Foundation (NSF), is it right that after it earned billions nothing went back to the

> When Google received funding for its algorithm from the National Science Foundation (NSF), is it right that after it earned billions nothing went back to the NSF Serious mental gymnastics. Page and Brin doing research with NSF grants isn't even remotely the same thing as Google, their future company, getting a check directly from the government. Page and Brin produced publicly available research with NSF money. They started a company based on that public research. That company created untold billions of dollars of value out of thin air. Taxes are paid out of those new dollars, some of which go to fund the NSF. This is exactly how it's supposed to work.

spikels 12y ago
The NSF grant played a minor role but the OP is exagerating it's importance to support her political viewpoint of how the world should be run. More background here: http://www.politifact.com/georgia/statements/2012/jul/09/barack-obama/obamas-google-claim/ http://www.politifact.com/georgia/statements/2012/jul/09/bar... Also the $504,000 SBIC investment in Apple actually returned $44 million apparently to it's sponsoring bank. In fact the program is exactly what the author is against as the frequent losses end up being covered by the government. More here: http://articles.latimes.com/1990-09-25/business/fi-1303_1_small-businesses/2 http://articles.latimes.com/1990-09-25/business/fi-1303_1_sm...
- nmridul 12y ago
  What if Apple had failed ? This is what she is trying to say. The risk is taken by the public. And the rewards mainly goes to the private entities.
  - zo1 12y ago
    The risk is taken by the public and all the other investors. The loss/reward is proportional, which is something that's being glossed over. From the look of it, the author is trying to make it seem like the public funds it, and the private people reap all the benefits. Weird scenarios aside (such as the NSF research grant stuff), we should see the "public" in the same light as all the other investors.
  - bsbechtel 12y ago
    >>What if Apple had failed? What if the Federal Government subsidizes mortgages causing a housing bubble and subsequently making our entire financial system to collapse costing hundreds of thousands of jobs? What if California spends $6B+ on a high speed rail system and no one uses it? I understand what you (and by extension, she) are trying to say, but remember that every government action has risk and reward, just like every action taken by the private sector. It would be nice if we could keep the risks/rewards of the two sectors completely separate, but that would entail moving to either a completely communist or completely anarcho-capitalist model of society, which might be nice to think about in theory, but will never happen. It's important to note that even if Apple and Google send all their profits and jobs overseas, their investors still have had to pay out $100B+ in capital gains taxes over the years. This has more than paid back any investments the gov has made in them.
    - tessierashpool 12y ago
      This is the common theme in the comments on this story: The argument we have socialized risk but privatized the successes is invalid, because when those successes pay off, the taxes paid by those success stories repay the individual investments in those individual success stories. That is not what the term "risk" means. "Risk" also includes all the investments which did not pay off.
      - bsbechtel 12y ago
        >>That is not what the term "risk" means. "Risk" also includes all the investments which did not pay off. That's certainly true, but I'm not sure what you're getting at. I'd appreciate it if you could clarify. Diversifying your investments to hedge against those that don't pay off is the foundation of modern portfolio theory. You can see it in action at virtually every level of society: individual firms have employees that don't generate returns, but they hope that the collective productivity of the entire company can generate a positive return, angel investors and VCs invest across a broad spectrum of companies hoping that a few big wins will offset those investments that don't pay off, and governments invest in a variety of projects, research, and (sometimes) companies that they hope will generate positive returns for the economy as a whole.
cafebeen 12y ago
Then why does Stanford own the PageRank patent instead of Page and Brin?
- brandonmenc 12y ago
  I'm not sure what you're getting at. Could you clarify?
  - cafebeen 12y ago
    Just pointing out that the reality is more complicated. The research wasn't "publicly available", rather it was licensed (exclusively) from Stanford. There is legislation that applies to the ownership of federally funded research, e.g. https://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act https://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act It's also worth pointing out that before this was passed in 1980 federally funded research was typically owned by the gov't.
    - adventured 12y ago
      The research is publicly available. You can go read it right now and learn from it. You're confusing the difference between the research they did being publicly available, and Stanford holding a patent on PageRank. http://ilpubs.stanford.edu:8090/422/1/1999-66.pdf http://ilpubs.stanford.edu:8090/422/1/1999-66.pdf
      - makomk 12y ago
        The paper is publicly available, but we're not allowed to implement the system they designed in their research because it's patented. The cost of developing PageRank was paid for by the government, but the rewards - a Government-granted monopoly on the use of it and all the income from licensing it - went entirely into private hands.
        byEngineer 12y ago
        The same is true with public schools. You went to public school learnt how to write and read, maybe how to code and now all of that is monetized by you in your private hands!!! Oh horror!!!
hcarvalhoalves 12y ago
Not to mention, what actually makes money is AdWords...
- hkmurakami 12y ago
  Without search quality, adwords would be nothing.
  - hcarvalhoalves 12y ago
    Yeah, but my point was that AdWords is a separate patent.
frownie 12y ago
>> Taxes are paid out of those new dollars Interestingly, here in Belgium, the press often states that Google pay his taxes as requested by the law. And that Google have some very expert accountant who read the law in suach a way that those taxes are close to zero. I'm afraid Google doesn't pay his taxes like we, the tax payers, think it should... Of course, that's totally proof-less, but well, I've heard that quite often (cf. intérêts notionnels)...
- roel_v 12y ago
  That's orthogonal to this discussion. Google never received Belgian research funding. (I'm Belgian)
  - nl 12y ago
    The Belgian case may be irrelevant, but more broadly it is very relevant - Google reduces their US tax burden in the same way. The fact that corporate entities are able to shift their profits to places with favorable tax regimes mean that the calculations about the assumptions about increased tax receipts from business activity generated by publicly funded research are at least partially wrong.
- ErikBjare 12y ago
  Since when is Google a he? Perhaps it is some quirk of your language that makes the direct translation take masculine form? Edit: Sorry if this came off as rude, was not intended.
  - tomp 12y ago
    Instead of just criticising, maybe you could suggest how parent should improve? I'm always very confused about what personal pronoun to use for organisations or companies.
    - masklinn 12y ago
      The singular impersonal "it" when talking about Google as a corporate entity (its component personnel would likely be "Googlers"). So "Google pays its taxes" and "Google doesn't pay its taxes".
tessierashpool 12y ago
Page and Brin produced publicly available research with NSF money. They started a company based on that public research. That company created untold billions of dollars of value out of thin air. Taxes are paid out of those new dollars, some of which go to fund the NSF. You left out the part where Stanford patented the results of the research, thereby monopolizing it. Likewise, Google did not create untold billions "out of thin air." Google created untold billions by leveraging NSF-funded research, and the patent which Stanford licensed to them, in the midst of an explosion of new opportunities which was created when the NSF lifted commercial restrictions on the use of the Internet (which had also been built with public funding). I know Americans like to imagine that even acknowledging the public sector exists is the same thing as surrendering to the USSR, but the USSR doesn't even exist any more, and there's actually a lot of merit in being aware of history and being honest about how economies work. Just like putting a man on the moon, the Internet was a massive public research project which succeeded wildly. As OP says, America likes to tell a "hands off the market" story about how its government relates to its industries, but that story doesn't match the reality.
- therobot24 12y ago
  > Likewise, Google did not create untold billions "out of thin air." Google created untold billions by leveraging NSF-funded research, and the patent which Stanford licensed to them, in the midst of an explosion of new opportunities which was created when the NSF lifted commercial restrictions on the use of the Internet (which had also been built with public funding). You say it as if it was easy. Like they had it handed to them. Clearly a lot of tumblers fell into place, but that doesn't mean the NSF is due a share of the profits. Would you claim Harvard is due a share of Microsoft if it gave Bill Gates a scholarship? > I know Americans like to imagine that even acknowledging the public sector exists is the same thing as surrendering to the USSR, but the USSR doesn't even exist any more, and there's actually a lot of merit in being aware of history and being honest about how economies work. What are you getting at? I have no idea what you're trying to say here.
  - Iftheshoefits 12y ago
    > You say it as if it was easy. Like they had it handed to them. Clearly a lot of tumblers fell into place, but that doesn't mean the NSF is due a share of the profits. Would you claim Harvard is due a share of Microsoft if it gave Bill Gates a scholarship? A private educational institute giving a student a scholarship is very much not the same thing as a public institution granting monies for research. That isn't to say the NSF ought to receive a share of profits, necessarily, but your comparison isn't reasonable. Moreover, it underlines the point: that the risk of research was socialized (NSF Grant), but the profits were privatized (Google). I think the debate is whether or not that's a good thing. Personally I think it depends on the context but generally I don't think that public grants should result in private profits (at least not exclusively), and it should be especially closely scrutinized if any of the resulting research work is not 100% made available as public knowledge. > What are you getting at? I have no idea what you're trying to say here. He's mocking the "rah rah free market! American Capitalism is awesome!" mentality that he perceives "Americans" (clearly a generalization; I doubt he thinks all, and hopefully not even most, Americans actually subscribe to that view) to have. I can't say I disagree with his point. It's especially prevalent in the software industry, where all the programmers are Jon Galt (apologies to Garrison Keillor). It's an especially amusing thing to see given just how much the software industry is and has been, since its inception, reliant on government for its existence.
api 12y ago
The point about taxes is important. When a company like Google makes a lot of money, a lot of taxation occurs. This allows the government to essentially capture an ROI on that research. Given current "financial technology," government is indeed the only entity that can make R&D investments that are both high-risk and broad-payoff -- broad-payoff meaning that they pay off unpredictably and often across the entire economy. ROI is captured through economy-wide growth via taxation. Only governments can do this because there is currently no private financial instrument that can securitize that kind of investment or capture its upside. Is/was the public research that led to PageRank patented? If that were the case, it's the only thing I would disagree with. Public research should not be patented, or if it is it should be made available to all domestic (US tax paying) companies and individuals royalty-free. It'd be appropriate to charge foreign licensees fees, as they are not paying into the US R&D fund, but the impracticality of that makes such a national patent licensing scheme kind of dubious. Edit: yes -- so my comments above should be tempered by this: https://encrypted.google.com/patents/US6285999 https://encrypted.google.com/patents/US6285999

spikels 12y ago

The NSF grant played a minor role but the OP is exagerating it's importance to support her political viewpoint of how the world should be run. More background here: http://www.politifact.com/georgia/statements/2012/jul/09/barack-obama/obamas-google-claim/ http://www.politifact.com/georgia/statements/2012/jul/09/bar... Also the $504,000 SBIC investment in Apple actually returned $44 million apparently to it's sponsoring bank. In fact the program is exactly what the author is against as the frequent losses end up being covered by the government. More here: http://articles.latimes.com/1990-09-25/business/fi-1303_1_small-businesses/2 http://articles.latimes.com/1990-09-25/business/fi-1303_1_sm...

nmridul 12y ago
What if Apple had failed ? This is what she is trying to say. The risk is taken by the public. And the rewards mainly goes to the private entities.
- zo1 12y ago
  The risk is taken by the public and all the other investors. The loss/reward is proportional, which is something that's being glossed over. From the look of it, the author is trying to make it seem like the public funds it, and the private people reap all the benefits. Weird scenarios aside (such as the NSF research grant stuff), we should see the "public" in the same light as all the other investors.
- bsbechtel 12y ago
  >>What if Apple had failed? What if the Federal Government subsidizes mortgages causing a housing bubble and subsequently making our entire financial system to collapse costing hundreds of thousands of jobs? What if California spends $6B+ on a high speed rail system and no one uses it? I understand what you (and by extension, she) are trying to say, but remember that every government action has risk and reward, just like every action taken by the private sector. It would be nice if we could keep the risks/rewards of the two sectors completely separate, but that would entail moving to either a completely communist or completely anarcho-capitalist model of society, which might be nice to think about in theory, but will never happen. It's important to note that even if Apple and Google send all their profits and jobs overseas, their investors still have had to pay out $100B+ in capital gains taxes over the years. This has more than paid back any investments the gov has made in them.
  - tessierashpool 12y ago
    This is the common theme in the comments on this story: The argument we have socialized risk but privatized the successes is invalid, because when those successes pay off, the taxes paid by those success stories repay the individual investments in those individual success stories. That is not what the term "risk" means. "Risk" also includes all the investments which did not pay off.
    - bsbechtel 12y ago
      >>That is not what the term "risk" means. "Risk" also includes all the investments which did not pay off. That's certainly true, but I'm not sure what you're getting at. I'd appreciate it if you could clarify. Diversifying your investments to hedge against those that don't pay off is the foundation of modern portfolio theory. You can see it in action at virtually every level of society: individual firms have employees that don't generate returns, but they hope that the collective productivity of the entire company can generate a positive return, angel investors and VCs invest across a broad spectrum of companies hoping that a few big wins will offset those investments that don't pay off, and governments invest in a variety of projects, research, and (sometimes) companies that they hope will generate positive returns for the economy as a whole.

cafebeen 12y ago

Then why does Stanford own the PageRank patent instead of Page and Brin?

brandonmenc 12y ago
I'm not sure what you're getting at. Could you clarify?
- cafebeen 12y ago
  Just pointing out that the reality is more complicated. The research wasn't "publicly available", rather it was licensed (exclusively) from Stanford. There is legislation that applies to the ownership of federally funded research, e.g. https://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act https://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act It's also worth pointing out that before this was passed in 1980 federally funded research was typically owned by the gov't.
  - adventured 12y ago
    The research is publicly available. You can go read it right now and learn from it. You're confusing the difference between the research they did being publicly available, and Stanford holding a patent on PageRank. http://ilpubs.stanford.edu:8090/422/1/1999-66.pdf http://ilpubs.stanford.edu:8090/422/1/1999-66.pdf
    - makomk 12y ago
      The paper is publicly available, but we're not allowed to implement the system they designed in their research because it's patented. The cost of developing PageRank was paid for by the government, but the rewards - a Government-granted monopoly on the use of it and all the income from licensing it - went entirely into private hands.
      - byEngineer 12y ago
        The same is true with public schools. You went to public school learnt how to write and read, maybe how to code and now all of that is monetized by you in your private hands!!! Oh horror!!!

hcarvalhoalves 12y ago

Not to mention, what actually makes money is AdWords...

hkmurakami 12y ago
Without search quality, adwords would be nothing.
- hcarvalhoalves 12y ago
  Yeah, but my point was that AdWords is a separate patent.

frownie 12y ago

>> Taxes are paid out of those new dollars Interestingly, here in Belgium, the press often states that Google pay his taxes as requested by the law. And that Google have some very expert accountant who read the law in suach a way that those taxes are close to zero. I'm afraid Google doesn't pay his taxes like we, the tax payers, think it should... Of course, that's totally proof-less, but well, I've heard that quite often (cf. intérêts notionnels)...

roel_v 12y ago
That's orthogonal to this discussion. Google never received Belgian research funding. (I'm Belgian)
- nl 12y ago
  The Belgian case may be irrelevant, but more broadly it is very relevant - Google reduces their US tax burden in the same way. The fact that corporate entities are able to shift their profits to places with favorable tax regimes mean that the calculations about the assumptions about increased tax receipts from business activity generated by publicly funded research are at least partially wrong.
ErikBjare 12y ago
Since when is Google a he? Perhaps it is some quirk of your language that makes the direct translation take masculine form? Edit: Sorry if this came off as rude, was not intended.
- tomp 12y ago
  Instead of just criticising, maybe you could suggest how parent should improve? I'm always very confused about what personal pronoun to use for organisations or companies.
  - masklinn 12y ago
    The singular impersonal "it" when talking about Google as a corporate entity (its component personnel would likely be "Googlers"). So "Google pays its taxes" and "Google doesn't pay its taxes".

tessierashpool 12y ago

Page and Brin produced publicly available research with NSF money. They started a company based on that public research. That company created untold billions of dollars of value out of thin air. Taxes are paid out of those new dollars, some of which go to fund the NSF. You left out the part where Stanford patented the results of the research, thereby monopolizing it. Likewise, Google did not create untold billions "out of thin air." Google created untold billions by leveraging NSF-funded research, and the patent which Stanford licensed to them, in the midst of an explosion of new opportunities which was created when the NSF lifted commercial restrictions on the use of the Internet (which had also been built with public funding). I know Americans like to imagine that even acknowledging the public sector exists is the same thing as surrendering to the USSR, but the USSR doesn't even exist any more, and there's actually a lot of merit in being aware of history and being honest about how economies work. Just like putting a man on the moon, the Internet was a massive public research project which succeeded wildly. As OP says, America likes to tell a "hands off the market" story about how its government relates to its industries, but that story doesn't match the reality.

therobot24 12y ago
> Likewise, Google did not create untold billions "out of thin air." Google created untold billions by leveraging NSF-funded research, and the patent which Stanford licensed to them, in the midst of an explosion of new opportunities which was created when the NSF lifted commercial restrictions on the use of the Internet (which had also been built with public funding). You say it as if it was easy. Like they had it handed to them. Clearly a lot of tumblers fell into place, but that doesn't mean the NSF is due a share of the profits. Would you claim Harvard is due a share of Microsoft if it gave Bill Gates a scholarship? > I know Americans like to imagine that even acknowledging the public sector exists is the same thing as surrendering to the USSR, but the USSR doesn't even exist any more, and there's actually a lot of merit in being aware of history and being honest about how economies work. What are you getting at? I have no idea what you're trying to say here.
- Iftheshoefits 12y ago
  > You say it as if it was easy. Like they had it handed to them. Clearly a lot of tumblers fell into place, but that doesn't mean the NSF is due a share of the profits. Would you claim Harvard is due a share of Microsoft if it gave Bill Gates a scholarship? A private educational institute giving a student a scholarship is very much not the same thing as a public institution granting monies for research. That isn't to say the NSF ought to receive a share of profits, necessarily, but your comparison isn't reasonable. Moreover, it underlines the point: that the risk of research was socialized (NSF Grant), but the profits were privatized (Google). I think the debate is whether or not that's a good thing. Personally I think it depends on the context but generally I don't think that public grants should result in private profits (at least not exclusively), and it should be especially closely scrutinized if any of the resulting research work is not 100% made available as public knowledge. > What are you getting at? I have no idea what you're trying to say here. He's mocking the "rah rah free market! American Capitalism is awesome!" mentality that he perceives "Americans" (clearly a generalization; I doubt he thinks all, and hopefully not even most, Americans actually subscribe to that view) to have. I can't say I disagree with his point. It's especially prevalent in the software industry, where all the programmers are Jon Galt (apologies to Garrison Keillor). It's an especially amusing thing to see given just how much the software industry is and has been, since its inception, reliant on government for its existence.

api 12y ago

The point about taxes is important. When a company like Google makes a lot of money, a lot of taxation occurs. This allows the government to essentially capture an ROI on that research. Given current "financial technology," government is indeed the only entity that can make R&D investments that are both high-risk and broad-payoff -- broad-payoff meaning that they pay off unpredictably and often across the entire economy. ROI is captured through economy-wide growth via taxation. Only governments can do this because there is currently no private financial instrument that can securitize that kind of investment or capture its upside. Is/was the public research that led to PageRank patented? If that were the case, it's the only thing I would disagree with. Public research should not be patented, or if it is it should be made available to all domestic (US tax paying) companies and individuals royalty-free. It'd be appropriate to charge foreign licensees fees, as they are not paying into the US R&D fund, but the impracticality of that makes such a national patent licensing scheme kind of dubious. Edit: yes -- so my comments above should be tempered by this: https://encrypted.google.com/patents/US6285999 https://encrypted.google.com/patents/US6285999