Good. Name one major technological innovation that was not largely or wholly a product of government subsidies. The only ones I can think of were out of Bell Labs and Bell was a government backed monopoly so they don't really count. They were so profitable and protected they could spend like a government.
Nothing new is ever profitable until you get past the early prototype and scaling stages. For big capital intensive stuff only government historically has pockets deep enough to burn enough money to get big stuff off the ground (sometimes literally). Rockets, jet engines, microprocessors, huge scale power grids, the Internet, genomics, supercomputing, nuclear power, solar power, the list goes on and on.
Private investors just have too low a risk tolerance and too short a time horizon.
I actually wish this weren't so, but it is so.
It's also terribly hypocritical to bash Elon for taking government contracts when everyone does it. Why do you think Amazon's HQ2 is going to be in the DC area?
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....
and that would be absolutely amazing; though in some ways (and not to discount musk’s undertaking at all) i feel it speaks more so to a failure of governments (generally speaking) in investing to drive technological advance.
it should be the public sector that leads in these types of endeavors. one of the most important functions of a state is its ability and willingness to invest in projects that would be otherwise unprofitable or far too long-term for any rational player in the private sector to take-on. these investments, while maybe unprofitable to a single entity, are what lay the foundation for significant productivity and standard of living gains down-the-line (which, in-turn, spur many future profitable companies). it’s how everything from highways spanning a continent and parks in the middle of crowded cities to the internet and atomic energy get developed; and it's so crucial to society..
it’s really quite sad to see this important economic function of government neglected, particularly in the us where its proven so successful in generating wealth and societal good time-and-time again.. i mean would we have microsoft and apple around if it wasn’t for the development of the internet? (and google certainly wouldn’t exist).
it’s also sad that the great focus that the nation apparently (long before i came to be) had in driving technological advance has stalled, and such investments have become issues of budgets and ‘big government’ (which i am not a fan of at all by the way). if governments are going to run ridiculous budget deficits anyways (even in years of economic growth) then there should at least be something to show for it at some point; that doesn’t seem to be the case these days..
fortunately there are irrational players in the private sector, like elon musk, who are able to fill the voids. unfortunately though, if (and most likely when) such endeavors prove unprofitable in the long-run, little may show for it.. you’d think more people would be interested (and economically incentivized) to have a government that covers the expensive research and development costs associated with spearheading technologies which they can one-day build-off of (and in incredibly profitable ways), but i guess economic self-preservation (and therefore political pressure) prevail over advance.
with all that said, i really do hope he succeeds.
(also, off topic, but i really wish i could afford a model s right now!)
I don't see how that is a refutation of what I wrote. For every example that people can point to of how government funding creates innovation you can point to a private example too. Heavier than air flight was mostly private money, jet engines were mostly government. The transistor was mostly private (Bell Labs) the IC was mostly government. In terms of energy the two most important things in the last few decades are solar and fracking. Solar got a lot of government subsidies, fracking improvements were largely due to industry.
Edit: and there are entire industries, like petrochemicals, where most of the advances came from industry.
Another example of government funded invention being converted to dollars using capitalist innovation. People still don't understand how much our government is involved in bringing us the tech we have now. government invests and about 10-20 years we see it in our homes.
The internet, heaps of computing technology advances, several trips to the moon, space stations, and a shuttle program all have been done by the government "for the last several decades."
It is undeniably government funded, backed, and run research that has fostered the technological "magic" we see today. I wrote "undeniable" because it is a fact--not a conjecture, opinion, or item subject to debate. Government funded and government run research programs created our space-age technology (literally) and the internet, and fueled a great percentage of the other developments that have advanced our technology so rapidly in the last several decades.
Private companies (whether held privately or publicly traded) are mainly creatures of fear and risk aversion--even the ones that are relatively less so than others. There's nothing especially "bleeding edge" about SpaceX or Tesla, or just about anything else Musk has been involved with. Historically, it has usually taken a great thrust by the government to make big advances, whether through subsidies (i.e. corporate welfare) or direct involvement (NASA/DARPA).
I'd just like to point out that the internet was government-funded innovation. As well as the massive amounts of R&D we do in the military space. Another area in which we lead the world. To assume that government-funded equates to lack of innovation is false.
I'm not saying that Government can't do great things, but it should never be the only player in town when it comes to innovation on a large scale. Denying private citizens the ability to have great wealth basically gives the Government a large scale monopoly on far out projects.
These are the types of projects where a single billionaires great wealth can inspire other investors to come along. If Musk couldn't pour millions into his ventures, it's unlikely the average investor would have followed him into space.
In addition, the USA invested in the internet, space and atomic weapons solely for the purpose of war, even the hubble is based on military technologies. I am again concerned that people are arguing for a future that's dependent on the needs of politicians or the military.
Even China was smart enough to see value in the capitalism model. Allow for the ability of great wealth, allow the private citizen to decide how to deploy the fruits of their work and something good might come out it.
Also, the Government has taken over a billion dollars in tax from Mark Zuckerberg, so the Government has plenty to play with. Remember, it's always easier to play with other people's money, hence the inefficiency regarding the use of tax dollars.
While this is true, its also not the point. Russia and other places have and had tons of programs like it, but they don't have a Silicon Valley.
Government is usually always involved in nearly everything, because they are spending almost 50% of the GDP, and even 100 years ago they spent 20% or so. Other countries its sometimes as high as 70%.
Saying that computers, the web, satellites would not exist without government is a pretty absurd claim. The idea of satellites, networks and all this stuff was around and would have happened. The US was commercially successful, actually uniquely successful in almost all of world history, during a period when federal government spent only about 2% of GDP. During this time tons of innovation, the most in the world, came out of the US.
Tesla is successful not because of government handouts anymore then many other large companies. It of course helps them, just like with any other large company. Elon would be a idiot if he didn't advocate for tax breaks, you have to play the politics game.
Tesla was built before tax payer money, they got loans for scaling. They paid them back with interest, the tax payer profited.
SpaceX was also mostly built with Musk's personal fortune, after they developed the Merlin engine, and got the Falcon 1 to orbit, only then did they get contracts from NASA, and they actually saved NASA money, because SpaceX launch costs are significantly lower, ergo, in a way, they also paid the taxpayer back.
Pretty much most large successful companies have been subsidized by tax payer money in some way, if not by direct loans or contracts, then by taking publicly financed research from the military or academia, and commercializing it. Silicon Valley was started by Fairchild Semiconductor whose first contracts were military contracts. Computing started out funded by military. The CIA through In-Q-Tel put $150 million into 90 companies, including Google. Google Maps, acquired from Keyhole, was a CIA funded satellite mapping company.
Let's dispense with the rugged individualism. We all benefit from the government, and we all have a duty to pay it forward.
this is a narrative pushed for the sake of vested interests who would rather these things be privately owned
democratic governments are perfectly capable of developing new technologies and do so all the time. the issue is the level of investment and public interest, not anything else
There are things that Gov spending can help with foundational technologies - multi-decade research that would otherwise VCs impatient and create a complete breakdown of private enterprise. There are areas of engineering where Gov involvement creates asymmetry for big companies and screw the small guy - in turn creating inefficient private enterprise, thus fostering giant monopolies or quasi-monopolies. There is nuance which is missing in the discussion on HN perhaps due to political team sport.
Further back, modern computing / internetworking wouldn't exist without military and DARPA cash from the government. Read any book on the history of these.
The US dominant ideology is private enterprise, not government enterprise. This is why the US does not even own its high-tech weapon manufacturers, preferring to have Boeing, Raytheon and Lockheed-Martin at one remove. Of course, they wouldn't exist without government money, but they're private companies with private shareholders.
So when you're talking a few hundred billion dollars for a US-first technological capability, the important question is who will get the money and how will they be held accountable for delivery? What, even, are they expected to deliver - no use if the plant is more expensive than TSMC so everyone chooses them anyway.
Still true today. Except the original capitalists in the case of the computer industry was the government, not VCs. Almost every major technology you use everyday in your computer originated with a government grant or program. Those HD LCD screens? They were originally developed for the Abrams XM-1 tank in the First Gulf War. Google was first funded by a DARPA grant. The Internet itself was a large DARPA project. The integrated circuit, you name it.
First world nations become that way by government-led expansion. The private sector comes along later to make a profit after the fact in almost every case.
What articles like these fail to mention or take into account is how much of this funding is via government grants and how that springboards the whole ecosystem. The early silicon valley was more supported by government grants than private funding.
The modern day examples of that is Tesla and SpaceX.
Have you considered how much American innovation happened as a result of:
- Government programs, the huge military budget, and the once huge space budget (which can be argued was really an extension of the military budget). Can you say for certain that the Internet and would have come about in the U.S. first if it weren't for DARPA? The advancement of computers if it weren't for NASA?
- Non capitalist or profit seeking scientists (Many if not most of whom are funded by the government or philanthropies).
- Luck. The U.S. has an immense natural resources to population ratio, perhaps the highest. It has, at present, virtually limitless land. It doesn't have to worry much about its borders or invasion. Our one border "worry" is actually a benefit to exploitive capitalism: a super cheap black-market labor.
I could easily extend this list and make a more powerful argument, but I have work to do. The point I'm really making is to be objective about your analysis of what is behind American innovation and success.
We won't even get into things that we call innovation but have not made the world a better place.
Nothing new is ever profitable until you get past the early prototype and scaling stages. For big capital intensive stuff only government historically has pockets deep enough to burn enough money to get big stuff off the ground (sometimes literally). Rockets, jet engines, microprocessors, huge scale power grids, the Internet, genomics, supercomputing, nuclear power, solar power, the list goes on and on.
Private investors just have too low a risk tolerance and too short a time horizon.
I actually wish this weren't so, but it is so.
It's also terribly hypocritical to bash Elon for taking government contracts when everyone does it. Why do you think Amazon's HQ2 is going to be in the DC area?
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