Live data from Hacker News

We have socialised the risk of innovation but privatised the rewards

blogs.lse.ac.uk

51–60 of 133 posts

Re: We have socialised the risk of innovation but privatised the rewards

#51
post #44

I so very much hate socialism. The state, with the money it took from all of us through taxes is presented as a benefactor because it gives small amounts of those money back to research. And she wants the state to have more share from successful research. The state, any state, is a very bad administrator of funds, because the so called state are basically a bunch of people spending other peoples money on things that…

"a bunch of people spending other peoples money on things that they dont understand and they dont really care about"... That sounds like it describes the purchasing department in any big corporation, or the got-the-job-through-nepotism nephew or cousin of the owner in a small business. You know what they say, right? Capitalism works...in theory.

Yep, the cognitive dissonance here is pretty strong.

What is a public corporation, but 'a bunch of people [C-level,VP-level,Manager-level] spending other people'[sic]s[shareholder's] money on things that they[shareholder's] don'[sic]t understand and they[shareholder's] don'[sic]t really care about[shareholders seem to only care about 'ROI' and/or 'ROE']'.

Re: We have socialised the risk of innovation but privatised the rewards

#52

> When Google received funding for its algorithm from the National Science Foundation (NSF), is it right that after it earned billions nothing went back to the NSF Serious mental gymnastics. Page and Brin doing research with NSF grants isn't even remotely the same thing as Google, their future company, getting a check directly from the government. Page and Brin produced publicly available research with NSF money. The…

>> Taxes are paid out of those new dollars

Interestingly, here in Belgium, the press often states that Google pay his taxes as requested by the law. And that Google have some very expert accountant who read the law in suach a way that those taxes are close to zero.

I'm afraid Google doesn't pay his taxes like we, the tax payers, think it should...

Of course, that's totally proof-less, but well, I've heard that quite often (cf. intérêts notionnels)...

Re: We have socialised the risk of innovation but privatised the rewards

#53
The article is a lot better than the title! (I only skimmed, rather than read it though.) People should read it. I agree with a ton there.

But the article's author has a huge blind spot - if you search the article for "tax", you will see just a couple of occurrences, and the author basically dismisses the mechanism. It's almost as though the author had no idea how the state even gets money - the author just thinks the state's role in innovation is underplayed.

That may be true, but the size of the state depends (obviously) on the size of the economy. It's obvious that if the state invests in innovation that causes a 1000x rise in productivity, hugely increasing the size of the economy, then the state also becomes larger, through the usual mechanisms.

Taxes are how anything is socialized - the author almost behaves as though the state's money comes out of nowhere.

Another good example of applying the title incorrectly would be public education. People generally go to elementary and high school for free. They can then go off to work, sometimes even founding companies, which they could never do if they're illiterate. You could consider education a "risk" on these entrepreneurs: not everyone who becomes literate can create a ton of value in private enterprise, either as a founder or someone working for a good salary at a company; but nobody needed to take a risk on these people in elementary school (with 10 years+ until payoff), the state does it. In fact it's mandatory.[1]

So could we say, "We have socialized the risks of education but privatized the rewards?" (in that you're a free person who is now educated.) Well, yes. But who pays for all that public schooling - everyone does. The author perhaps fails to see the relationship between a state causing an increase in society's private benefits - and the fact that that the state is in a position to do so due to the latter.

All the state is, is a percentage of the economy, which is public. It has a good and important role - but that role comes from being a percentage. The Thatcher quote is appropriate: "The problem with socialism is that eventually you run out of other people's money to spend." That never happens if the state remains 20%-30% of the economy. The size of the economy can simply increase indefinitely.

It's not possible (which may surprise the author) for this to happen in a way that doesn't cause the state to also increase in size. So while I agree with the main contention, it bears pointing out that it is a two-way street: private enterprise (and private citizens) get 'free' public goods from state spending, that they don't have to pay for. But the state gets a 'free' percentage of all private enterprise (and private earnings) - in fact, set at whatever it wants. The state can literally tax whatever level it wants and in whatever ways it wants.

So it is, in fact, a two-way street.

[1] see compulsory education - since the 1800's, "Fines were imposed on parents who did not send their children to school and the government took the power to take children away from their parents and apprentice them to others if government officials decided that the parents were "unfit to have the children educated properly"."

Re: We have socialised the risk of innovation but privatised the rewards

#54
post #42

Earlier quoted context omitted.

In fact, some economists argue that corporate taxes are fundamentally inefficient, because corporations are just a mechanism for producing either individual income or capital gains for their shareholders, so it would be better and fairer to tax the actual humans profiting from the business rather than the corporate straw man itself.

I'm familiar with the theory, however I've never seen a good treatment of how this works with multiple countries. The income and capital gains taxes only apply to shareholders residing in the US. Maybe some of the corporate tax could be considered a fair "rent" price for using the nations resources? But I'd have to see a real model to be sure. It's still unclear to me whether (a) nations have conflicting goals when i…

It's clearly complicated, and something that might have different equilibria. If you had a corporate tax of 0, you'd be foregoing some taxes that would otherwise not end up in the local coffers because the money would flow out of the country and be taxed elsewhere. OTOH, that kind of arrangement would be very attractive for foreign investors, who would be more likely to send their money to your country, which would likely have many positive effects.

Re: We have socialised the risk of innovation but privatised the rewards

#55
post #52

> When Google received funding for its algorithm from the National Science Foundation (NSF), is it right that after it earned billions nothing went back to the NSF Serious mental gymnastics. Page and Brin doing research with NSF grants isn't even remotely the same thing as Google, their future company, getting a check directly from the government. Page and Brin produced publicly available research with NSF money. The…

>> Taxes are paid out of those new dollars Interestingly, here in Belgium, the press often states that Google pay his taxes as requested by the law. And that Google have some very expert accountant who read the law in suach a way that those taxes are close to zero. I'm afraid Google doesn't pay his taxes like we, the tax payers, think it should... Of course, that's totally proof-less, but well, I've heard that quite…

Since when is Google a he? Perhaps it is some quirk of your language that makes the direct translation take masculine form?

Edit: Sorry if this came off as rude, was not intended.

Re: We have socialised the risk of innovation but privatised the rewards

#56
post #52

> When Google received funding for its algorithm from the National Science Foundation (NSF), is it right that after it earned billions nothing went back to the NSF Serious mental gymnastics. Page and Brin doing research with NSF grants isn't even remotely the same thing as Google, their future company, getting a check directly from the government. Page and Brin produced publicly available research with NSF money. The…

>> Taxes are paid out of those new dollars Interestingly, here in Belgium, the press often states that Google pay his taxes as requested by the law. And that Google have some very expert accountant who read the law in suach a way that those taxes are close to zero. I'm afraid Google doesn't pay his taxes like we, the tax payers, think it should... Of course, that's totally proof-less, but well, I've heard that quite…

> Google UK Ltd, and other subsidiaries across mainland Europe, pay little tax because they are designated as providers of marketing services to Google Ireland Ltd, the Dublin-based subsidiary whose name appears on invoices to most non-U.S. clients.

> Google declares little profit in Ireland because the unit there sends almost all of the profit earned from the non-U.S. clients to the Bermudan affiliate, in the form of licence fees for the use of Google intellectual property.

http://www.huffingtonpost.com/2013/09/30/google-taxes-overse...

> Google Inc. avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenues into a Bermuda shell company, almost double the total from three years before, filings show.

http://www.bloomberg.com/news/articles/2012-12-10/google-rev...

Re: We have socialised the risk of innovation but privatised the rewards

#57
post #52

Earlier quoted context omitted.

>> Taxes are paid out of those new dollars Interestingly, here in Belgium, the press often states that Google pay his taxes as requested by the law. And that Google have some very expert accountant who read the law in suach a way that those taxes are close to zero. I'm afraid Google doesn't pay his taxes like we, the tax payers, think it should... Of course, that's totally proof-less, but well, I've heard that quite…

Since when is Google a he? Perhaps it is some quirk of your language that makes the direct translation take masculine form? Edit: Sorry if this came off as rude, was not intended.

Instead of just criticising, maybe you could suggest how parent should improve? I'm always very confused about what personal pronoun to use for organisations or companies.

Re: We have socialised the risk of innovation but privatised the rewards

#58
post #8

> When Google received funding for its algorithm from the National Science Foundation (NSF), is it right that after it earned billions nothing went back to the NSF Serious mental gymnastics. Page and Brin doing research with NSF grants isn't even remotely the same thing as Google, their future company, getting a check directly from the government. Page and Brin produced publicly available research with NSF money. The…

The NSF grant played a minor role but the OP is exagerating it's importance to support her political viewpoint of how the world should be run. More background here: http://www.politifact.com/georgia/statements/2012/jul/09/bar... Also the $504,000 SBIC investment in Apple actually returned $44 million apparently to it's sponsoring bank. In fact the program is exactly what the author is against as the frequent losses e…

What if Apple had failed ? This is what she is trying to say. The risk is taken by the public. And the rewards mainly goes to the private entities.

Re: We have socialised the risk of innovation but privatised the rewards

#59
post #57

Earlier quoted context omitted.

Since when is Google a he? Perhaps it is some quirk of your language that makes the direct translation take masculine form? Edit: Sorry if this came off as rude, was not intended.

Instead of just criticising, maybe you could suggest how parent should improve? I'm always very confused about what personal pronoun to use for organisations or companies.

The singular impersonal "it" when talking about Google as a corporate entity (its component personnel would likely be "Googlers"). So "Google pays its taxes" and "Google doesn't pay its taxes".
Post reply on HN