Want to Startup America, fund Mega Projects and R&D not more web apps
victusspiritus.com
victusspiritus.com
Unfortunately the government can't magically create resources. The only thing the government can do is reallocate funds from one area to another which is inefficient. The most efficient form of allocating resources is the market, not central planning.
When the market allocates resources there is a much greater chance of the resources being put to good use because they are seeking to generate a profit. In order to generate a profit people must not only want something, but find the price reasonable.
When the government allocates funds it takes money away from entrepreneurs. More often than not what the government invests in would not be bought by citizens for how much resources they actually put into it. This is completely inefficient, as we are putting in let's say 100,000$ to get something that is worth 10,000$ to the people using it. If this were a business, they would be operating at a huge loss and go out of business. But since it is the government they don't go out of business and continue to misallocate resources.
In the off chance that the government uses these resources efficiently, it is certainly not because of any magical "gift" the government has. In this case, the same exact thing could have been accomplished by entrepreneurs. In fact, entrepreneurs are incentivized to seek out these opportunities because there is profit involved.
The only investments we need the "gift" of government to pursue are those that we get less value out of than we put into. It's hard to argue that these are good investments.
Or those that need more than one person to implement. An entrepreneur can decide to buy a cab and offer rides to the airport - but there isn't much point unless a million tax payers have already got together and built the freeway.
And public works such as roads and bridges also apply to my argument. For example the infamous "bridge to nowhere". A lot of these projects are a waste of resources. If the private sector were in charge of building roads/bridges they would be much more inclined to make sure they were actually needed and good investments.
Also, the government is generally lousy at PR, and people rarely understand how to connect the dots. The internet, (or specifically, world wide web), and google are good examples of things fostered initially by the government. Whether or not they might have happened without the government is debatable, but they did happen, and the government did help. The wins are far less visible than the failures.
In my post I reference an earlier short essay on mega projects
http://www.victusspiritus.com/2010/01/13/think-bigger-short-...
Some projects entrepreneurs can't build unless thousands of them get together. Many of these mega projects have resulted in very long term benefits. Hoover Dam, Panama Canal, Lunar Mission, DARPAnet are just a few ideas which entrepreneurs can't possibly tackle on their own, even massive corporate IR&D budgets can't be risked on such endeavors.
There are some problems - do you allow compulsory purchase of land? If not then a single person can ransom your project if you do then you need government approval for each project. Upto 25% of the cost of some 19C railways were in legal fees to get the legal acts needed to build them
The first assertion is not true, and in fact the second assertion is the reason. Entrepreneurs are incentivized, but it is an incentive to get rich quick. If I as a VC can make 10x my investment in 2 years by investing in a 'Hot or Not' web app, I'll do that rather than invest in a fundamental technology that produces a 10x return in 15 years. The market is very focused on web apps now because there are great opportunities for viral growth at the expense of existing businesses. This is cannibalization, not real wealth creation. We should really stop referring to web businesses as tech companies: few of them produce any more real technology than your average McDonalds.
Government plays a valuable role precisely because it invests in technologies that are unlikely to produce a return but nonetheless could provide the basis for new businesses that can in the future. The Internet itself is a good example.
If the general public wants Hot or Not apps that is what they will get. Who are you to decide that their money/resources should instead be used on something that you want?
Is advancing the technology of a civilization a worthy goal?
If yes, then getting rich only accidentally contributes to advancing knowledge and technology.
It could accidentally (because the goal is to get rich, not anything else) make a huge contribution. It could also contribute almost nothing. Plenty of people have gotten rich by finding a slightly cheaper way to either make or distribute (or both) a commodity. We can look at webapps as a kind of commodity.
The general public almost never wants the early or even medium term benefits or a world changing technology. So if you only ever advance by what the public wants today, you would not get very far.
This is why R&D has always been a long bet.
Over time fewer large corporations have decided to make this kind of long bet (you can even think of it a long trading position) and more R&D has moved to public institutions like universities and government labs.
Government is just plain terrible at most of the things it does, but when it pours a ton of $ on R&D there are results.
It may not be the most efficient use use of $. I am certain startups quickly iterating over business plans can do A LOT more with a lot less. But I am also equally certain there are a lot of high tech things which require far more $ over farm more time then startups usually have.
But then again how much $ constitutes a startup is changing.
The recent Y combinator deal where you simply throw $150K at everybody is fascinating. This could be a way for Y combinator to fund biotech startups.
If someone makes money it is because they provided the rest of us with something that we value. It isn't our business to tell them exactly how to spend that money, it is theirs.
I may have different priorities than other people, but it is wrong to tax away their money that they could have spent on what they value, and to spend it on what I value.
I agree a lot of the companies VC's invest in are pretty stupid. However, the reason they are investing in a lot of these companies is because companies like Google are willing to pay large sums of money for them. Given this, it makes sense for them to invest in these companies.
Most of these acquisitions of web companies for millions of dollars are by most standards a complete waste of money. But it is not my place to tell Google or anyone else that they should not be offering to buy companies like Path for a rumored $100m because I have a better use for their money.
Google can afford to make these acquisitions at a loss though because they provide people with other things that are of value.
I'm not saying I disagree with your priorities, but I think it is wrong to tax others to pursue them.
As soon as you leave the limit of omniscient investors with infinite capital you will quickly see why government investment is necessary for large projects with long-term impacts.