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"Oh boy. We've got political commentary trying to pose as analysis. Okay, let's get this straight: capitalism drives efficiencies in markets. Efficiencies drive innovation. If you look at this only in terms of money, you're missing the point."

Did you read anything else before you went into Political Strike Mode, or did you just skim it? From the previous section:

"most of Silicon Valley doesn't concern itself with aiming 'almost ridiculously high.' It concerns itself primarily with getting people to click on ads or buy slightly better gadgets than the ones they got last year....that's fine, that's capitalism - and these incremental improvements lead to slow productivity gains that at least quicken the pulse of economists. But maybe let's drop the pretense that we're curing cancer unless, you know, we're curing cancer."

The commentator has no problem with efficiency gains or capitalism. He's just saying that it's hypocritical to spend your life developing sheep-throwing software, while also complaining about how nobody aims for the stars anymore.

"If you want to see big changes, create big rewards for solutions without constraint to how they are accpomplished."

Right, like what the NIH and NSF do? Handing out money for research with no immediate commercial intent? Last I checked, that money (along with military spending) built the Valley. Government spending led to innovation.

You're looking for a political fight where none exists. Other than mentioning that Thiel tends to place the blame on the government (which he does), most of the essay is about the need for funding long-term research, not politics.

Other than mentioning that Thiel tends to place the blame on the government (which he does),

Not for the lack of innovation. In fact, he specifically decries the lack of innovation by the government as well as the private sector. Thiel seems to blame it on a cultural shift - he believes the US has moved from an optimistic-deterministic viewpoint to an optimistic-stochastic viewpoint.

Go read his stanford lectures to see this expressed fairly well.

Thiel [...] believes the US has moved from an optimistic-deterministic viewpoint to an optimistic-stochastic viewpoint.

The optimistic-deterministic viewpoint is the opposite of the "lean startup" movement and the MVP approach, which is an almost completely pure expression of the optimistic-stochastic viewpoint, i.e.:

    We're *optimistic* that innovation is possible,
    but we also believe we can't know in advance, so
    we'll use (controlled) chance to find out what 
    works (A/B testing, random trials, etc.).

IMO, the culture shift to an optimistic-stochastic viewpoint is also why people hate Apple -- not because Apple is unsuccessful, but precisely because Apple is successful – wildly successful – but Apple is using the wrong paradigm to achieve that success. In Thiel's terminology, Apple works from an optimistic-deterministic viewpoint, and to the culture today, that's just wrong somehow. Hence, the hate.

If you think about it, "minimum viable product" is practically the anti-thesis of innovation: let's create the least innovative thing we possibly can in the hopes that it might, someday, be successful after a lot of A/B testing to hack the buying and growth process and find a niche market. MVP is not about shooting for the stars, but it is about microscopic, incremental, improvement -- and a dramatic reduction in risk. That's the optimistic-stochastic viewpoint in action.

The problem with "deterministic optimism" (other than the obvious silliness of attributing one mindset to the entire US), is that it doesn't change the nature of reality. You can invest more in certain areas and yield a return on that investment, but you can't reliably call your shots. Life doesn't work that way.

Nearly all of the fruits of government research have been as a result of "stochastic" investment (i.e. nearly everything done by the NIH and NSF and DARPA), or second-order effects from "deterministic" investment (e.g. the space program and velcro, or radar and military spending). Other than wars and (maybe, debatably) the space program, we have a pretty spotty record of saying "we're going to do $X amazing technological feat in $Y years", and then making that happen.

Where we have successfully called our shots (and I'm thinking mainly of the space program here), it's only happened after decades of stochastic progress got us to the point where a politician could reasonably say "let's go to the moon" without sounding like a lunatic, and have some realistic hope that it would happen during a four-year term. Politics, as a societal force, is not particularly forward-thinking.

If you're looking for something governmental to blame for lack of innovation, you don't need to assign the entire political system a mindset, or compose elaborate pseudo-philosophical lectures: you need only look at the number of science PhDs who can't work in their fields, or the declining number of smart kids who go into research. When you gut government (and industrial) research, you don't get any returns.

Where is the research? I want to work in it, but every company in this 'hot' industry is too enamored with cranking out disposable apps.

That's my point: there isn't much going on.

You can try academia, but things are pretty bleak right now. There's so much competition chasing so little money that it's hard to see a path to a career for all but the luckiest few PhD graduates. And forget it if you don't have a PhD from a top school.

People put so much mental energy into pondering the lack of innovation, but we've been systematically under-funding science for more than a decade. There's not much of a puzzle here.

There's so much competition chasing so little money that it's hard to see a path to a career for all but the luckiest few PhD graduates. And forget it if you don't have a PhD from a top school.

The problem here is that academic research (at least in math+physics, what I'm familiar with) doesn't have a place for second best. Most academic research produced by people below the top tier is worthless and will never amount to anything.

It's a very different situation from technology, where yet another CRUD app can actually bring huge value to the business.

This notion that people can't pick winners is, in my opinion quite inaccurate. The need for light weight electronics for aerospace systems, and the view that semiconductors were 'the answer' to this problem led to a massive amount of government funding (50% of all R&D funding) and support (the government was far and away the largest customer for semiconductor devices) almost directly led to the creation of the Silicon Valley we are all so proud of [1].

Second, the notion that prizes can solve this problem is simply unreasonable. If a major goal (ie a cure for cancer) takes 20 years to develop, no organization can pursue the goal without intermediate funding. In order to provide intermediate funding with some semblance of accountability, you essentially create the existing R&D structure that exists in America today.

The other advantage to government funding is that with proper open access protocols, innovative ideas aren't trapped in the organizations that created them. There's no doubt that companies like SpaceX could have achieved what they have without the backbone of research done by NASA and published in NASA's amazing technical report series.

1. A nice article on the history of government support for the transistor industry. http://coursesa.matrix.msu.edu/~business/bhcweb/publications...

I think everyone on this thread would agree that people can pick winners, but some would argue that the government has been inefficient about picking those winners in the past. I personally think that there is a lack of scientifically literate people in our government, outside of Steven Chu, compared to the VC community who can pick winners.

Does the VC community actually have a better record than the government does in picking winners? A lot of VC funds do quite poorly.

Of course, you could say that good VC funds do, and choose what you count as good VC funds in hindsight, based on returns. But then you could also say that good government programs and agencies have good records, if they're also chosen in hindsight.

While it's hard to make a data driven argument in this field, I think the US government has been incredibly successful in picking winning new technological ideas, judged by my notion that the vast majority of the scientific and technical advances in the last 60 years have occurred here in the United States. The US government has long had a tradition of picking winners in science and technology, and I don't think the fact that we are also the leader in science and technology is simply coincidental to that.

Looking for counterexamples, ie technical advances that have occurred outside of the US due to lack of government support, the only one that comes to mind is the failures in green technology, but I think that small failures there are minor compared to the other successes.

I also think looking for scientific literacy in the executive positions of government is less relevant in the highly bureaucratic world of government funded research, as there executives have less control on individual funding than they would in the private sector. As long as the the executives respect the technical expertise of their bureaucrats, (and the workforce is knowledgeable), then individual domain knowledge is less critical than it would be in the private sector.

"If you want to see big changes, create big rewards for solutions without constraint to how they are accpomplished. So let's see $50 Billion to anybody who can take us to a repeatable $10/kilo to low earth orbit. Or $10 Billion for the first 3D printer able to print an electric car."

Arguably that's what government grants do or should do. Taking 50 billion dollars in tax money and stoking the fire in an area we are interested in WITHOUT THE EXPECTATION OF A MONETARY RETURN is the kind of thing the government can and does do. Of course, some of that 50 billion gets eaten by graft, and that's where the problem a lot of people have with government programs. Although private companies don't seem to have any better levels of control (usually much worse control) over corruption, a lot of people seem to think only 100% success demonstrates "working" government.

>Of course, some of that 50 billion gets eaten by graft, and that's where the problem a lot of people have with government programs.

That's why prizes are a good way to go. Nothing gets paid out if you don't reach your goal.

>Although private companies don't seem to have any better levels of control (usually much worse control) over corruption, a lot of people seem to think only 100% success demonstrates "working" government.

The difference is private companies are spending money provided as a result of an agreement freely entered into by all parties, while the government is spending money taken from people by force of law. The government should be held to a much higher standard.

The thing about prizes is that negative results are quite significant in real science.

Prizes still generate negative results. It's just that someone else is paying for it.

"You don't have a Facebook without an internet..."

The Internet wasn't created as a result of anyone "driving efficiency in the market". Get real.

http://en.wikipedia.org/wiki/Internet#History

Also: do you think that perhaps it is wasteful for society's businesses to spend hundreds of billions on marketing and advertising differentiating products like soda, fast food and alcohol? Is that a good use of resources?

They are not "society's businesses", so we don't have a say in how they spend their money. Not everything in this world has to be for some greater noble good. Sometimes we just want a burger and a beer.

http://en.wikipedia.org/wiki/Manhattan_Project

> Okay, let's get this straight: capitalism drives efficiencies in markets. Efficiencies drive innovation.

[citation needed] - please stop trying to argue from your own polemics you'd have us believe are axioms.