Most companies drive what I like to call dipshit innovation. You know what I'm talking about. The new X sandwich from McDonalds. The new X flavor from Coca Cola. Repackaged servers from Amazon. The new X phone from Apple. A variant of an already existing drug X with a different name by Pfizer. These things are not hard to develop, and that makes sense, since a company's return horizon must be on the order of 7 years or less to stay in business. Things that only take 7 or so years to develop just cannot be that hard to do. To make real impact requires sustained investment at a loss over decade to century level time spans, a space in which only the largest companies in existence, namely nation states, can compete.

Now, that's not to say that we don't need dipshit innovation. Dipshit innovation does in fact serve a very useful purpose: it helps to reduce costs by forcing a diverse group of small agents to survive by maximizing short term profits, whilst simultaneously minimizing short term costs. Some of these profits can then be pushed back into creating the next wave of things that nation states help develop. This next wave can then be fed right back into the free market where once again a diverse group of capitalistic agents can copy, scale up and reduce the costs of the next generation of tech.

Problems seem to occur when there is too much of a focus on long term investment (Communist China's/Russia's fascination with producing iron), or when there is too much of a focus on short term investments (The world's fascination with short term leveraged trades before the global financial crisis).

You really want something of a 40-60 split of resources, with 40 being pushed back into government/public institutes for long term societal level investments, and the remaining 60 going back to the free market as an incentive for further cost reductions.

We need both types, in the right amounts, to keep the economy chugging along. We also need competent people working on both sides of the split for us to move forward. What we don't need is to deify one to the exclusion of the other.

Addendum: This talk is an amazing discussion of the ideas listed in my above hypothesis: http://www.youtube.com/watch?v=jyp3Bw5H0VA which was tipped to me from here: https://news.ycombinator.com/item?id=6310207.

It's always nice when others back up what you say. But it seems that I'm always a year late with said ideas (talk is from 2012, and I hadn't previously seen it).

I blame the state for funding such radical research. I blame YouTube for not showing me it earlier.