A simple solution would be for the government to fund more fundamental research. Research results should be public goods. It seems hard to encourage companies to do public research, as they have no short / middle term interest to do so
Companies have at least as much interest to do research as they have to do any other charitable activity. The private sector does plenty of charity. Not sure the government should be involved. Not because basic research ain't great---in an ideal world we'd all get ponies from the government---but because budgets are finite and there are other opportunities some of them with more definite benefits. (Like eg funding ed…
Plenty? How would you quantify that? Certainly in the scientific area it's a tiny part of total funding.
> in the counterfactual with less government expenditures
In this counterfactual the Axis would have outspent the Allies and perhaps won the war.