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We have socialised the risk of innovation but privatised the rewards

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

#71

Post by adaml_623 »

Quanticles wrote: post #12

"Economists think this will happen via tax (from the jobs created, and from the profits of the companies), yet so many of the companies that receive such benefits from state funding, bring their jobs elsewhere, and of course we know they also pay very little tax." He makes it sound like the USA would be just as well off if big tech companies weren't here. The US government is basically a ~15% shareholder in all US co…

Two assumptions you seem to be making: 1. That profits are paid out through salaries. They aren't. They are moved via clever financial mechanisms to large shareholders and as retained funds. This is why the existence of so many tax havens is a big problem. 2. That Mariana is a male. The person in that interview is quite clearly male.

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

#72

Post by zo1 »

She just described one of the main benefits of having a state. It allows people to flourish. Of course, excluding obvious scenarios of nefarious uses of public money for personal profit.

The state creates an environment that allows individuals to make profit in a safe way (contracts, violence, laws, etc). An underlying bit of information that is ignored is that the individual profiting means that we all profit, in small and not necessarily measurable ways. And sure why not, why can't the public be the one to bear the risk in the examples stated? It does for everything else. Isn't this the "collective" way?

And I have seen this line of thinking elsewhere, particularly when discussing the merits of having a state at all. The idea that somehow we "owe" the state for all these nice things it gives us beyond what we already pay in personal taxes.

"Go live in Somalia", they would tell me, if you don't like paying taxes.

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

#73

Post by roel_v »

frownie wrote: post #52
brandonmenc wrote: post #7

> 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…

That's orthogonal to this discussion. Google never received Belgian research funding.

(I'm Belgian)

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

#74

Post by EliRivers »

spikels wrote: post #33
nl wrote: post #10

The title of this piece is terrible, and detracts from what is actually a thoughtful discussion. Mazzucato points out how the government is actually good at funding very high risk work, with a low chance of pay off (think DARPA research in the US). She does say the sentence used in the title, but the context is very important: What this means is that we have socialized the risk of innovation but privatised the reward…

Mazzucato provides no real evidence the government is good at funding commercially viable innovation. If you look into the details the two examples she offers were more blind luck than thoughtful investment. While it's easier to make the case for basic research the governments attempts to sponsor commercial innovation have almost always ended in failure or turned into subsidies for politically connected companies and…

Mazzucato provides no real evidence the government is good at funding commercially viable innovation.

She does. Just not here. The piece is called "Five minutes with..."; her arguments that government funds commercially viable innovation are easily found.

I suppose the most obvious commercially viable innovation funded by governments (both directly and through various defence department funds) was computing.

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

#75

Post by bsbechtel »

nmridul wrote: post #58
spikels wrote: post #8

Earlier quoted context omitted.

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.

>>What if Apple had failed?

What if the Federal Government subsidizes mortgages causing a housing bubble and subsequently making our entire financial system to collapse costing hundreds of thousands of jobs? What if California spends $6B+ on a high speed rail system and no one uses it?

I understand what you (and by extension, she) are trying to say, but remember that every government action has risk and reward, just like every action taken by the private sector. It would be nice if we could keep the risks/rewards of the two sectors completely separate, but that would entail moving to either a completely communist or completely anarcho-capitalist model of society, which might be nice to think about in theory, but will never happen.

It's important to note that even if Apple and Google send all their profits and jobs overseas, their investors still have had to pay out $100B+ in capital gains taxes over the years. This has more than paid back any investments the gov has made in them.

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

#76

Post by rtpg »

philwelch wrote: post #41
swatow wrote: post #17

Earlier quoted context omitted.

I'm not an expert in taxation, but corporate taxes are just one piece of the pie. There is no way for employees to avoid income tax, and as far as I know, no way for US based shareholders to avoid paying capital gains/dividends taxes.

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.

this is an argument that only works on an infinite time scale. Just like many other taxes on assets, taxing profits works to avoid hoarding (see Apple).

Money is meant to be spent, not hoarded.

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

#77

Post by Symmetry »

tomp wrote: post #61
masklinn wrote: post #59

Earlier quoted context omitted.

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".

Isn't "they" used sometimes as well? At least it's frequently used for "police"...

You would use "they" to refer to the class of people who are police but "it" to refer to organizations like a police department.

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

#78

Post by tessierashpool »

cafebeen wrote: post #11
brandonmenc wrote: post #7

> 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…

Then why does Stanford own the PageRank patent instead of Page and Brin?

Stanford is a private institution.

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

#79

Post by tessierashpool »

bsbechtel wrote: post #75
nmridul wrote: post #58

Earlier quoted context omitted.

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.

>>What if Apple had failed? What if the Federal Government subsidizes mortgages causing a housing bubble and subsequently making our entire financial system to collapse costing hundreds of thousands of jobs? What if California spends $6B+ on a high speed rail system and no one uses it? I understand what you (and by extension, she) are trying to say, but remember that every government action has risk and reward, just…

This is the common theme in the comments on this story:

The argument we have socialized risk but privatized the successes is invalid, because when those successes pay off, the taxes paid by those success stories repay the individual investments in those individual success stories.

That is not what the term "risk" means. "Risk" also includes all the investments which did not pay off.

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

#80

Post by tessierashpool »

brandonmenc wrote: post #7

> 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…

Page and Brin produced publicly available research with NSF money. They started a company based on that public research. That company created untold billions of dollars of value out of thin air. Taxes are paid out of those new dollars, some of which go to fund the NSF.

You left out the part where Stanford patented the results of the research, thereby monopolizing it.

Likewise, Google did not create untold billions "out of thin air." Google created untold billions by leveraging NSF-funded research, and the patent which Stanford licensed to them, in the midst of an explosion of new opportunities which was created when the NSF lifted commercial restrictions on the use of the Internet (which had also been built with public funding).

I know Americans like to imagine that even acknowledging the public sector exists is the same thing as surrendering to the USSR, but the USSR doesn't even exist any more, and there's actually a lot of merit in being aware of history and being honest about how economies work.

Just like putting a man on the moon, the Internet was a massive public research project which succeeded wildly. As OP says, America likes to tell a "hands off the market" story about how its government relates to its industries, but that story doesn't match the reality.

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