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Debunking “America has become so anti-innovation – it's economic suicide”

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Re: Debunking “America has become so anti-innovation – it's economic suicide”

#31

Post by Retric »

padobson wrote: post #18
atmosx wrote: post #3

> When the government floods the economy with cheap money printed out of thin air, it distorts market indicators, making many unprofitable projects appear profitable. Oh, is that a new one? It's the first time I read someone stating that when VCs get high on drugs and spend their money on stupid ideas, it's because of something the government did.

It's not new at all. It's actually fairly easy to demonstrate. I recommend Murray Rothbard's America's Great Depression[0] from 1963. The quick hit is this: A. US Monetary policy provides large banks with extremely cheap capital B. Large banks competing with each other in the free market must make use of that capital C. Only so many investments are good investments, because in the end, there's only so much consumptio…

You like many people are confusing money with resources. If I make 100 trillion dollars from thin air you can't actually build 10x the number of houses.

What's really happening is an allocation of resources. Banks can only back specific kinds of investments which approximate zero sum as you keep pumping ever more resources in ex: Real Estate. yes, everyone wants shelter. So, we can all get a 100,000 sf house! Well, no.

However, you can increase the money supply without simply handing banks all that money just increase reserve requirements as your pumping money into the economy.

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#32

Post by ThomPete »

pixl97 wrote: post #27
AmIFirstToThink wrote: post #14

Government does engage into efforts/projects that end up being wasteful. But, market forces should not be heralded as panacea of there being no-waste. Every private sector bankruptcy is wasteful for its investors. Yahoo, HP, Former Dell, Anderson Ton of examples of failed efforts, pure waste, nepotism, bribery and downright illegal (civil/criminal) behavior in private sector. I look at it this way... The will of the…

You will fail (almost all of the time). People tend to forget that when talking about waste. Almost every project, company, idea will end in failure. Pointing at the successes around us is a case of survivorship bias. Government projects fail all the time. Company projects fail all the time. Personal projects fail all the time. So, looking at failures is really useless, it tells us nothing. In the end we have to look…

Agree completely, however companies tend to have better feedback loops to point to lack of ROI.

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#33

Post by frgtpsswrdlame »

padobson wrote: post #18
atmosx wrote: post #3

> When the government floods the economy with cheap money printed out of thin air, it distorts market indicators, making many unprofitable projects appear profitable. Oh, is that a new one? It's the first time I read someone stating that when VCs get high on drugs and spend their money on stupid ideas, it's because of something the government did.

It's not new at all. It's actually fairly easy to demonstrate. I recommend Murray Rothbard's America's Great Depression[0] from 1963. The quick hit is this: A. US Monetary policy provides large banks with extremely cheap capital B. Large banks competing with each other in the free market must make use of that capital C. Only so many investments are good investments, because in the end, there's only so much consumptio…

Please step out of your bubble and try reading some analysis from people who call themselves economists before they call themselves libertarians or austrians(aka not mises.org). The other commenter is right, Rothbard is not taken seriously and anyhow citing economics thats over 50 years old isn't exactly good practice. Austrian economics is the climate science denialism of economics, there's a reason "we are all Keynesians now."

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#34

Post by acdha »

bewo001 wrote: post #29
Crye wrote: post #6

I'm tired of these articles. Seriously. Government has funded hi-tech through the military for the last 70 years. That's not a secret and we wouldn't have what we have now with out it. The government knows this and the large corporations who benefit from it know it. Corporations are not willing to take on the risk to sink billions of dollars to develop a technology which may or may not pay out. Plus once it does pay…

A few big companies have done expensive basic research without direct market value: AT&T, IBM, Xerox, Google to some degree. All of them were (quasi-) monopolists when they did that.

I think that example is also interesting: other than Google, they did that when they had lucrative monopolies but it was also when executive compensation rates were much, much lower and the stock market wasn't as heavily focused on share price growth.

I think there's a potentially valid argument that those factors combined to encourage more long-term planning than we've seen since the 1980s.

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#35

Post by pixl97 »

VHRanger wrote: post #20
pixl97 wrote: post #16

Earlier quoted context omitted.

>Oh, is that a new one? Not at all. We dealt with a similar collusion between the government and private banking industry in the housing collapse of 2008. Cheap money along with bad policy is problematic no matter where it occurs because the cheap money ends up in the stock market/speculation market eventually.

There's very little serious literature that points to "cheap money" as a source cause of 2008. Neither does banks taking risks because they are "too big to fail". The main cause you get by reading the research on 2008 is that bank managers were incentivized by their shareholders to take excessive risks. This is because 1) shareholders are pretty shortsighted and 2) managers suffer comparatively little personal conseq…

>bank managers were incentivized by their shareholders to take excessive risks.

Which is no different than supplying money to a market below cost. Any market failure that leads excessive lending will lead to asset inflation and reinvestment of that money in speculation.

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#36

Post by pvnick »

Henry Hazlitt, one of the economists quoted in the article, wrote a book called Economics in One Lesson [1]. It is a brilliant, and very approachable, piece of writing that should be read by everyone interested in the basics of economic theory.

[1] https://www.amazon.com/Economics-One-Lesson-Shortest-Underst...

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#37

Post by AmIFirstToThink »

ThomPete wrote: post #32
pixl97 wrote: post #27

Earlier quoted context omitted.

You will fail (almost all of the time). People tend to forget that when talking about waste. Almost every project, company, idea will end in failure. Pointing at the successes around us is a case of survivorship bias. Government projects fail all the time. Company projects fail all the time. Personal projects fail all the time. So, looking at failures is really useless, it tells us nothing. In the end we have to look…

Agree completely, however companies tend to have better feedback loops to point to lack of ROI.

Better or shorter?

Must-solve, long shot things like GPS, Internet, Modern Weaponry require resolve behind it to make it happen.

I am sure those programs had hundreds offshoots trying things out to solve problem, to see if it works, within the umbrella of that major effort e.g. GPS.

ROI measured in terms of money results in drug companies chasing chronic pills than cures. That need not be the only measure.

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#38

Post by padobson »

stephen_g wrote: post #22

Classic Austrian economics. There's a clear misunderstanding throughout the whole article about how money works, which is typical of the entire school. This sentence is illuminating: "... monetary expansion, the latter of which causes prices to go up and the purchasing power of the dollars in my pocket to go down." That is not necessarily true, and in fact is often false. That is called the 'quantity theory of money'…

>For price rises to be the case, the economy must be both at full capacity and full employment.

Who's using intuition now? Stagflation in the 70's is a pretty jarring counter-example.

We're living in an interesting economic time where Keynesian policies seem intuitively more effective than Austrian economics. Afterall, the Fed has been printing money like mad for the last 20 years, and there's no worrying inflation to be found.

But there's an argument to be made that prices should be much lower than they are - that the scale of automation and globalization that we've seen has put enormous downward pressure on prices, and the currency devaluing effects of Fed monetary policy have put upwards pressure on prices without resultant inflation.

So we can still afford a loaf of bread without having to push a wheelbarrow full of greenbacks up to the register, but the problem has manifested itself in different ways. Most obviously in the growing wealth gap, where those who are most capable of taking advantage of the Fed's cheap currency (the financial industry) have gotten all of the gains from automation and globalization, while the rest of us are stuck with a devalued currency.

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#39

Post by Robotbeat »

otalp wrote: post #15

Interesting that he mentions Elon Musk when his companies are literally kept alive by billions in government subsidies and contracts. I don't like the binary view of "Give all power to corporations, with no government intervention" and "Let the state control all means of research and access" The ideal is clearly in between, where the state should break up monopolies and punish companies that have detrimental external…

"Interesting that he mentions Elon Musk when his companies are literally kept alive by billions in government subsidies and contracts."

Your point would be stronger without this falsehood. Both SpaceX and Tesla could do business without subsidies and government contracts. There were times during the worst parts of the Great Recession when this WAS true (and both businesses benefited from the technology and general environment enabled by government investment), but it's not "literally" true any longer that they're "kept alive" by government subsidies or contracts. Most of SpaceX's are non-US-govt satellites now, and SpaceX doesn't receive launch support subsidies like ULA. Tesla would still sell a lot of cars without the EV tax credit (which goes to the consumer, not Tesla, by the way... and is a bigger proportion of their competitors' car value than their own). Both companies would need to pull back growth without govt contracts and incentives, but to say they are today literally kept alive is blatantly false.

And your false claim undermines your central point, actually. If innovative corporations need government subsidies indefinitely to literally stay alive, then government-funded innovation isn't competitive and all government is doing is propping up industries instead of making R&D investments that pay off in long-term growth.

Re: Debunking “America has become so anti-innovation – it's economic suicide”

#40

Post by pvnick »

AmIFirstToThink wrote: post #14

Government does engage into efforts/projects that end up being wasteful. But, market forces should not be heralded as panacea of there being no-waste. Every private sector bankruptcy is wasteful for its investors. Yahoo, HP, Former Dell, Anderson Ton of examples of failed efforts, pure waste, nepotism, bribery and downright illegal (civil/criminal) behavior in private sector. I look at it this way... The will of the…

Companies that waste too much go out of business and are replaced by organizations that are more efficient.

Governments that waste too much suck up ever more of your taxes or go bankrupt and cause misery for all.

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