Mariana Mazzucato's book "The Entrepreneurial State" is a good read on the matter of public funding for innovation:
On top of that, US gov has all kinds of laws and regulations that make it difficult to do certain valuable things. For example, if companies in the same industry come together to do something valuable, they might break antitrust laws. Government might also make it prohibitively expensive to do something and then they step in to do it themselves - you see it with pharma research.
The burden of proof for that is on you. Where did it happen like that in recent history ? Even in Germany and Japan two other powerhouses of research in the world, it's greatly helped by the fact that public research (funded by the state) and corporations are intertwined. I'm French, our best years for innovation were during our glorious 30's when state was directing mainly state corporations (telecom, energy, aerospace) to do long term research. When it was privatized due to antitrust pressure by the EU, all that was killed (see how much telecom technology came from the CNET/Alcatel, even one of the Internet primary idea, packet switching, came from a French researcher of this era).
Sources: [1] https://taxfoundation.org/taxing-high-income-2019/ [2] https://taxfoundation.org/publications/corporate-tax-rates-a... [3] https://www.irishtimes.com/business/technology/big-six-tech-....
With your assertion in mind: there were plenty of wealthy people in the US in the early 1990s so why didn't they fund the nascent Google project? You'd think anyone would love to be the likely majority owner of Google.
Yes, there are tons of people and companies currently investing in these things because earlier government investment proved those things possible. It would be irrational for a private company to invest time and money in something with knightian uncertainty.
The private sector is good with scale and incremental improvements. Quite bad with fundamental research.
Here are some of their contributions,
> The injector at the heart of Merlin is of the pintle type that was first used in the Apollo Lunar Module landing engine (LMDE).
> To meet that need, in 1994, just as Fastrac was getting underway, Majumdar began developing the Generalized Fluid System Simulation Program, or GFSSP, which was first used by the Agency’s analysts in October 1996. NASA employees used the software for the Fastrac turbopump, and even though the program was cancelled in the early 2000s, the turbopump became the predecessor for others like it, such as SpaceX’s Merlin rocket engines, which power the company’s Falcon 9 commercial launch vehicle.
> The basic principles of the Fastrac design (namely, a pintle injector and ablatively cooled chamber) lived on in SpaceX's Merlin 1A engine, which used a turbopump from the same subcontractor.[18] The Merlin-1A was somewhat larger with a thrust of 77,000 lbf (340 kN) versus 60,000 lbf (270 kN) for Fastrac. The same basic design was capable of much higher thrust levels after upgrading the turbopump. Variants of the Merlin-1D achieve 190,000 lbf (850 kN) of thrust as of May, 2018,[19] though the combustion chamber is now regeneratively cooled.[20]
https://en.wikipedia.org/wiki/Fastrac_(rocket_engine)
> Hackler: Did NASA share any technological types of lessons learned that influenced your vehicle?
> Giger: Yes, Mike Horkachuck and Warren Ruemmele were very good about looking at our system, seeing how it was similar or dissimilar to Shuttle, Apollo, Mercury, Gemini, any other program in history, and trying to share those lessons learned. For example, parachutes. We were able to get a lot of data from the Apollo Program, from the Orion Program even, and leverage lessons learned from them on that.
> A lot of joint technologies, too. We learned about PICA, Phenolic Impregnated Carbon Ablator tiles that we use on our heat shield, which was originally developed in conjunction with NASA. We learned a lot from how they did that, and they helped us bring that technology in house, which was great. Now we build our own variant of that in-house. There were numerous kinds of examples of that, where they shared technology or lessons learned that we then either incorporated in the design, or took that technology to the next level here, which was great.
Much of the materials technology, engine design, engineering simulations etc. at SpaceX were derived from NASA expertise and knowledge. Furthermore, this was all done largely on NASA's dime. NASA gave SpaceX an extremely favourable deal and is its single largest investor.
> Fourth, we took no equity. The reason the decision was to take no equity was that in the world of venture capital, sometimes you make poor investment decisions and you get no money back. Sometimes you make really good investment decisions, and you get five times your money back or ten times your money back. But you almost never get one time your money back.
> I knew enough about the federal government to know that if you invested money and you got none of your money back, everybody would get angry. But it also turns out that if you invest money and you get five times your money back, everybody gets angry too, because then you’re competing with the private sector. There’s no way that when you’re doing innovation like this you could expect that you were going to get one times your money back. That’s just silly. It was better to take no equity at all.
This is from the oral histories, https://historycollection.jsc.nasa.gov/JSCHistoryPortal/hist...
So NASA gives them access to technological expertise + historical engineering data + designs + prior NASA IP, gives them cash for development, takes no equity, let's SpaceX retain IP, and provides a guaranteed market.
SpaceX is doing incredible work and they're bringing these technologies to the market. They're making the sexy iPhone from the unsexy fundamental science done by NASA for them, and this development is being mostly funded by the tax payer, with nominal (up to 30% to 50%) private contribution.
I would hold them up as a model for how to blend the best elements of public works & private enterprise, and a model on how to do public-private partnerships.
One thing that people also aren’t pointing out is that Space is considered a multi-trillion dollar market for whoever can access it due to the Wild West “if you can reach it, it’s yours” resource policies, which is why it attracts so much investment for long term projects. Many sectors that need investment in fundamental research don’t have those properties (untapped, unclaimed resources you can look to the sky and see), and therefore don’t attract the same kind of money.
[1] https://www.theverge.com/2019/6/18/18683455/nasa-space-angel...
Goddard's research, or heck even the Wright Brothers, to go from a smidgen to the Saturn V or Boeing 737, took decades of funding and research over time spans that are just too long for most investors and human beings.
I know some contemporary investors are trying to be ambitious and change this, which is something I applaud them for. But their inputs are still focussed on bringing technologies to commercialization, not the greenfield research needed to produce the next paradigm.
For example, during the US' Apollo Program, the necessity of a lightweight, power-efficient, and resilient navigation led to a radical design proposal that suggested a computer designed entirely out of Integrated Circuits (ICs). At the time, the IC industry had barely entered its cradle, with the "monolithic concept" having been invented less than 2 years before the proposed design. The Apollo Guidance Computer was the technology's first major application and became the first computer built from Integrated Circuits.
But the technology was too immature. They just didn't have production processes that could produce ICs at any level of reliability. It took nearly 5 years of collaboration between NASA, MIT, Fairchild Semiconductors, Texas Instruments, and others to create scalable and reliable processes to bring the Integrated Circuit concept to the mass production.
During this time, the Apollo Program consumed nearly 60% of all production capacity in the world. Without this effort, the advent of the personal computer would likely have been pushed back by a decade or more, due to low general interest in the risky new technology.
https://twitter.com/_areoform/status/1319694832311304192
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Testing this assumption.
There is an easy test for this assumption. Apple has $192.8 billion in cash on hand. What exactly is it doing with this money? Is it spending it on fundamental research in optics, laser communication, optical computing, and other stuff? No, it's not. Apple invests about $16bn a year on "R&D" which includes new product development and seeking marginal gains for production processes. Even here they do so with the help of Government funding. Yes, Apple applies for Government grants and R&D tax incentives.
What about Google? They had Google X, but it was short-lived, and they've broken up their most ambitious projects (which now seem to be withering). These projects will be dead far short of the multi-decade timeline needed to bring things to fruition. And they have $120 billion in cash lying around.
Google's pattern seems to be, they make a flashy announcement, and then they bail from putting long-term, significant capital where their mouth is. Take Calico for example, what's going on there? It seems to have a foot in the grave, and it's less than a decade old.
This isn't Google's fault, it's what investors want. They just aren't patient enough for Google to deploy the unproductive capital they already have into long-term research;
https://realmoney.thestreet.com/investing/technology/alphabe...
https://www.engadget.com/2020-02-20-alphabet-makani-chronicl...
https://www.nasdaq.com/articles/is-alphabet-thinking-of-its-...
They don't see it as an investment into the future. They see it as a "money losing segment".
There will never be groundbreaking photonics Google research or a Google particle accelerator, simply because the "incentive structure" won't allow it.
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This fact translates geographies.
Furthermore, do people in low-tax jurisdictions and countries do more groundbreaking R&D? Places like Singapore and Hong Kong? As far as I can tell, no, they don't. Even there, what little research that gets done is on the taxpayer's dime.
This pattern has repeated itself across history & geography. There must be a reason for it. Saying that it's because Government takes away money and creates pressure on corporations + individuals which forfeits such private efforts denies the reality;
With few exceptions, almost every single breakthrough from the discovery of the Americas to the first computers has occurred on the taxpayer's dime. Or, more accurately, it has been performed by organizations who can afford to have some goals on decades-to-centuries long time horizons.
It is important to realize this dichotomy to understand why public funding matters, and why even today, for the pharma industry, the vast majority of targets and agents being tested have been/were funded/identified with public money.
Most of Apple’s “cash” is invested in corporate bonds, which allow other companies to access capital in order to expand their operations and grow their productivity, and most of the rest is in government bonds, which allow the government to make up for the shortfall of the “public money” you talk about. Sure, Apple might “only” spend $16B on R&D, but rest assured, they aren’t just sitting on their cash pile like Scrooge McDuck, instead it is efficiently used by many different actors.
If the logic of the comment I was replying to held, then Apple would be investing a commiserate amount into fundamental research. They're not. They'd rather seek a return (however, meagre) by buying bonds than fund research.
For example, Apple invests in metallurgy, it has the world’s largest private metallurgical lab, but Apple isn’t seeking to create metamaterials but rather to gain marginal improvements in glass manufacturing.
These improvements matter, but they aren’t the ones that drive our technology forward. Iterating on better compound bows wouldn’t have led to gun powder.
The places where Apple buys corporate bonds and assets from use those assets not to research breakthrough, but rather fund their growth. This money goes into advertising and other more mundane activities. This does not diminish the value of these activities, but it is a simple statement that humans can’t progress if we keep our gaze focused on such narrow gains.
AFAICT, no private or publicly traded corporation has created and ran a particle accelerator to investigate new principles of physics and improve our models of reality.
Why not? Because the ROI for that wouldn’t accrue to the discoverer, but rather some future generation. The aristocracy i.e. the feudal form of government + tax collection, the Duke of Devonshire, funded the creation of the Cavendish Laboratory, which funded J.J. Thompson’s discovery of the electron.
The Cavendish Lab revolutionized our understanding of matter before the start of the 20th century, and laid the theoretical foundations for the electronics revolution to come.
Where is today’s corporate equivalent?
You are of course right that most of the benefits of new discoveries is of the form of externalities that don't get captured by the discoverer, or patent holder. Moreover, as you point out, we haven't seen too many fundamental, revolutionary discoveries as we've seen in first half of 20th century, to come from private labs recently. That's all true, but my response is that we haven't seen much of those recently from state-funded labs either. Science productivity per dollar is falling all around the globe, even as research spendings keep growing. Maybe there simply aren't too many science revolutions left to have?
If you don't agree with the above, and believe that there's a huge research opportunity with great ROI for society at large, why focus your ire on Apple? Why not blame the government that in your view is supposed to be funding that? Why not reduce hundreds of billions US government is spending on, say, healthcare, and instead spend that on fundamental research if it's as huge ROI as you believe it is? California has great history of publicly funded research institutions, why not just tax Apple more and spend the proceeds on fundamental research? The answer is, of course, that if California did actually tax Apple more, the resulting revenue would fund teacher's pensions and some other high speed rail to nowhere, and even less of the Apple's pile of cash would get used for research than it is when Apple is buying corporate bonds.
The truth is that fundamental research is hard, and spending more money would not necessarily bring better results. The incentive structure of doing science on public dime is already broken as it is, and there's no clear way to fix it. Focusing on that would bring bigger ROI than throwing some of Apple's cash pile into fire.
They would actually, and it would be of significant interest to me as I've been involved with SME/corporate R&D incentives in the past.
> If you don't agree with the above, and believe that there's a huge research opportunity with great ROI for society at large, why focus your ire on Apple?
You have misjudged my tone. I am not angry with Apple. I'm using them and Google, with their large cash piles as practical proof points.
I don't blame them for what they're doing. Do I wish that people were more responsible, over all, in giving back to the system? Yes, absolutely. But I don't feel particularly angry over it. It would be a waste of my energy.
> Why not blame the government that in your view is supposed to be funding that?
Except I'm not looking for anyone to blame. It feels like to me, and I might be wrong, that you're approaching this from the perspective of someone trying to find fault. That's not my goal here.
My goal is to point out what works and what doesn't. We've found that, historically, the public purse has furthered the long-term goals of humanity.
And that private enterprise has helped to mature technologies from the lab and turn them into usable products.
It is clear that one cannot function without the other. Sadly, in the US, right now, there's a preference to overstate the achievements of the latter over the former.
> Why not reduce hundreds of billions US government is spending on, say, healthcare, and instead spend that on fundamental research if it's as huge ROI as you believe it is?
Once again, this is a false dichotomy, and it feels - again this is subjective - like another way to find blame. First off, healthcare is important too! We can think of this as the Eisenhower Matrix,
Healthcare is Urgent & Important. I'd say it's absolutely critical for the functioning of a broader free-market economy, as people dying from disease usually don't have the cash to spend on apps, new TVs, and nights out.
Can the US healthcare system be reformed? Absolutely. Should it be reformed? Yes. Does that mean we should stop doing it? No, of course not. Not only would it be cruel, it would be counter-productive and would send us back the dark ages.
Fundamental Research is Not Urgent & Important. There needs to be a balance between it and the rest of the concerns. Where this balance exists is a question that requires further analysis and careful study. It's not something I'm qualified to do alone.
> that if California did actually tax Apple more, the resulting revenue would fund teacher's pensions and some other high speed rail to nowhere, and even less of the Apple's pile of cash would get used for research than it is when Apple is buying corporate bonds.
[Citation Needed]
That being said, the "pensions" that you talk about are just another bond holding entity, exactly like Apple with payouts based on returns.
As for the high-speed rail fiasco, yes, that's troubling and a significant issue to solve. It's one of many issues to solve, but saying that we should underfund our public institutions because we the citizens didn't hold them to account doesn't make any sense.
The answer isn't either/or. I don't understand the split you're trying to make here.
> The truth is that fundamental research is hard, and spending more money would not necessarily bring better results. The incentive structure of doing science on public dime is already broken as it is, and there's no clear way to fix it.
Sure there is,
- Open access to research + data
- Reinstatement of Tenure
- Providing "Carte Blanche" grants for tenured professors
- Using one of the trillions of proposals on how to reform the grants system
- Making institutions such as the NIH more independent from Congress
- Shifting appropriations from a line-item model to a CERN-styled model where organizations like DARPA, the NIH, NSF etc receive a fixed amount per year, indexed to inflation that they can spend however they like to their expert discretion.