Comment by liber8 | Hacker News Reader

Comment by liber8 | Hacker News Reader

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That's an extremely narrow argument though. There's a huge world of funding outside of VCs. Of course, this also overlooks the fact that even VCs fund tons of biotech work, and are funding green energy right this very second. (In fact I personally know one VC who made his 9-figure fortune almost exclusively from funding biotechs in the 90s. I'm sure there are many others.)

The internet may have taken 30-years to reach commercial viability, but that doesn't mean it would not have happened privately. Again, as soon as people began using computers as more than simply adding machines, it was pretty clear how beneficial it would be if computers could talk to each other. Eventually, the internet would have happened. Who knows if it would look like it did today (or would be better, or worse) without government involvement. It's impossible to say. But, when stock traders, for example, are willing to invest hundreds of millions of dollars to build a fiber cable to shave 3 milliseconds off their trade times, I have no doubt they would have invested similarly to have the communication abilities afforded by the internet.

My original point was, be careful when people hold up the fruits of government investment. Government fertilizer might have had nothing to do with the size or taste of the fruit. And moreover, that fertilizer might have been much better used on some other type of fruit.

It sounds like you might be falling into hindsight bias, to be honest.

Stock traders building high speed data links are actually a perfect example of the limitations of private sector innovation. It was a $300 million project, they started seeing profits after one year when the project was completed, and they were able to calculate the speed increase well in advance and estimate how much more profitable their trades could be. So it was a short term project with very little risk and nowhere near the scale of government investment.

Mazzucato does talk about VCs in biotech and she thinks they have largely been harmful to innovation.

First, the stock trader bit was an example, and doesn't demonstrate limitations. It demonstrates that people will invest huge sums to generate returns. I will agree that they likely could calculate the returns ahead of time, and the payback time was very small. (This example is further complicated, since the builders actually licensed the use of the cable to other companies and essentially made their money back immediately.) Nevertheless, I simply can't buy the argument that the military and a bunch of academics were the only ones who foresaw the use of the internet, and thus the private sector never would have built it. It simply doesn't make sense, even without the hindsight bias.

Second, whether VCs in biotech are harmful to innovation is irrelevant, both to the current biotech field and to the history of pharmaceuticals.

My point, again, is that if you want the government involved in research, you should want it involved in research individuals aren't willing to pay for, but has the chance to significantly improve society. Otherwise, you're going to see a ton of taxpayer money ultimately flow into the pockets of the rich who likely would have funded the work anyway.

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