R&D is a Huge Externality, So Why Do Markets Do So Much of it?

This is weird from the beginning:

> Rote expansions of existing technologies and machines inevitably hit a ceiling: replacing and repairing the existing infrastructure and capital becomes so expensive that there is no income left over for building extra copies

Is this true everywhere? I realize we have little in the way of steady state but if it's true, the new stuff gets to be more expensive also, yet it's never more expensive than when it's first rolled out, so it's always too expensive to afford.

> So this leaves us with a question: Why aren’t governments taking this free lunch? Why are they letting the weakly incentivized private firms outspend them on the world’s most important positive externality?

Perhaps because in a capitalist system they only raise money by taxes and need to build roads, maintain armed forces, and perform many other mundane tasks with that money, while citizens ask that the government not take too much of their money. In systems in which the government owns businesses, it could make the businesses do anything.

And the R&D is for what? Better road construction? Better hairspray or artificial cheese flavoring? Quite a lot of it is pretty trivial and not of aggregate "benefit", just something that sells.