[flagged]
No science, no startups: The innovation engine we're switching off
111–120 of 528 posts
Re: No science, no startups: The innovation engine we're switching off
#112> In the 20th century, U.S. companies put their excess profits into corporate research labs. Basic research in the U.S. was done in at Dupont, Bell Labs, IBM, AT&T, Xerox, Kodak, GE, et al. This changed in 1982, when the Securities and Exchange Commission ruled that it was legal for companies to buy their own stock (reducing the number of shares available to the public and inflating their stock price.) Very quickly B…
> I'm not seeing how you get from share buybacks to a shift in priorities in corporate research.
pretty easily: stock buybacks allow you to directly reward executives and funnel profits back to shareholders (by increasing share prices), making the company appear more valuable (further driving investment)
research brings long-term benefits, and immediate outcomes don't show up in 10-Qs
Re: No science, no startups: The innovation engine we're switching off
#113Earlier quoted context omitted.
Can you make this argument more rigorous? I’m just not following the connections here. It seems like your assumption is that a stock buyback is a short term gain. One of your arguments is that the strike price for options is set based on a certain amount of stock in circulation, and decreasing that amount will “artificially” raise the stock price, making the options more valuable. I agree that higher stock price bene…
[flagged]
[flagged]
Re: No science, no startups: The innovation engine we're switching off
#114Earlier quoted context omitted.
But dividends also result in a concrete financial reward for all shareholders, yes?
> all shareholders That's the key phrase, they benefit all shareholders. Buybacks on the other hand only benefit the following shareholders: 1. those with regularly vesting stock options and stock grants - basically employees. For non-tech companies especially, this only means high-ranking employees 2. those who intend to sell - that is, soon-to-be-ex shareholders 3. those who borrow against their stock - typically h…
What is your definition of "benefit"? Assuming a buyback increases share prices, why would shareholders in general be indifferent?
Re: No science, no startups: The innovation engine we're switching off
#115Universities spend ~$109 billion a year on research. ~$60 billion of that $109 billion comes from the National Institutes for Health (NIH) for biomedical research, National Science Foundation (NSF) for basic science, Department of War (DoW), Department of Energy (DOE), for energy/physics/nuclear, DARPA, NASA.
Let's talk about the other $49B.
I read or heard someplace that at many universities tuition paid by students in the social sciences is effectively subsidizing the STEM fields, as the history department or psychology professors are unlikely to require huge investments in new buildings, specialized equipment, etc., yet they pay the same tuition fees as STEM majors. Families/students paying full freight at a private university are looking at undergraduate degrees that cost $250k-$400k all in.
That can't be the whole picture, as money also flows from rich donors, corporate partnerships of various types, and at some schools such as MIT licensing fees.
It doesn't seem like tuition can keep growing at the rates that it has to make up the shortfall from government research cuts, but what about the other areas?
Re: No science, no startups: The innovation engine we're switching off
#116Earlier quoted context omitted.
Not why it can’t be done so much as why it isn’t done. Share buybacks allow companies to reward executives directly as their compensation is tied to stock price. If we started not doing that, the priorities might shift, but those executives like things the way they are. Before Tim Cook Apple had never done a buyback - Jobs was always thinking Apple could do better with the money in R&D than paying off shareholders. W…
But dividends also result in a concrete financial reward for all shareholders, yes?
dividends and capital gains are taxed differently
Re: No science, no startups: The innovation engine we're switching off
#117There's something odd in this argument. If you come at it from a Canadian perspective Canada seriously spent on neural network computer science when almost no one else did (many in AI considered the entire thing discredited and impossible), now the (financial) gains from that are almost entirely in a foreign country. The US science establishment was all about buying and utilizing Russian rocket engines until he-that-…
I’m blind, and participate in a lot of research projects to create accessible technology, which are mostly done by universities. What I have noticed as a foreigner participating with US based universities is that, a lot of this research while very high-quality and very well done does not actually result in anything that the intended audience gets to use or experience. And a lot of this is due to the amount of red tape, as well as a lack of risk taking. This means that without trying to go commercial a lot of these projects end up shelved and many potential users simply never see the benefits.
Re: No science, no startups: The innovation engine we're switching off
#118> In the 20th century, U.S. companies put their excess profits into corporate research labs. Basic research in the U.S. was done in at Dupont, Bell Labs, IBM, AT&T, Xerox, Kodak, GE, et al. This changed in 1982, when the Securities and Exchange Commission ruled that it was legal for companies to buy their own stock (reducing the number of shares available to the public and inflating their stock price.) Very quickly B…
Not why it can’t be done so much as why it isn’t done. Share buybacks allow companies to reward executives directly as their compensation is tied to stock price. If we started not doing that, the priorities might shift, but those executives like things the way they are. Before Tim Cook Apple had never done a buyback - Jobs was always thinking Apple could do better with the money in R&D than paying off shareholders. W…
Unfortunately CEOs have to do buybacks at every opportunity, because otherwise shareholders will sue them for failing to maximize shareholder value.
> Jobs was always thinking Apple could do better with the money in R&D than paying off shareholders. Wall Street did not approve of this position, but Jobs wasn’t one to listen to anybody, so it did not matter.
(Head spins) wait what?! No! You’re not supposed to do that! If you fail to always maximize short term profits, people might start thinking CEOs actually have agency, and they won’t be able to hide behind the “maximizing shareholder value” excuse!
Re: No science, no startups: The innovation engine we're switching off
#119Earlier quoted context omitted.
> all shareholders That's the key phrase, they benefit all shareholders. Buybacks on the other hand only benefit the following shareholders: 1. those with regularly vesting stock options and stock grants - basically employees. For non-tech companies especially, this only means high-ranking employees 2. those who intend to sell - that is, soon-to-be-ex shareholders 3. those who borrow against their stock - typically h…
Can't group #2 sell 4% of their holdings, thereby remaining shareholders, and delivering to themselves the tax-advantaged equivalent of a 4% dividend?
Yes. This is correct. Share buybacks are financially equivalent to a dividend from the company's perspective, and slightly better from the shareholder's perspective because they can choose when to take the dividend and pay capital gains tax instead of income tax on it.
Re: No science, no startups: The innovation engine we're switching off
#120> In the 20th century, U.S. companies put their excess profits into corporate research labs. Basic research in the U.S. was done in at Dupont, Bell Labs, IBM, AT&T, Xerox, Kodak, GE, et al. This changed in 1982, when the Securities and Exchange Commission ruled that it was legal for companies to buy their own stock (reducing the number of shares available to the public and inflating their stock price.) Very quickly B…
Nothing against research universities as good stuff does occur there, but it just seems like it was such a a huge loss seeing those corporate labs disappear. I think it helps to have scientists and engineers closer to the problem and who don't have to spend a huge amount of their time writing grants and training grad students.
> it was such a a huge loss seeing those corporate labs disappear.
A loss for whom? Society? Of course, and that's exactly why they don't happen anymore -- because while they were a boon for society they were a terrible bet for the company. And when a company has a choice between doing good for their bottom line or doing good for society, 100% of the time they choose their bottom line.
I mean, look at the legacy of Xerox Parc from Xerox's perspective. They invited this guy in, Steve Jobs, and he commercialized their ideas. Today Xerox is worth pennies on the dollar compared to their height, doing none of what Xerox Parc researched. Apple ate their lunch. The ROI for Xerox Parc was terrible for Xerox.
For all the amazing stuff they did, they were not rewarded by the marketplace for it, they didn't produce better products for themselves, they just did other companies' R&D.
That's where universities come in, and where they are vital. If you take them out, their role will not be filled by corporations, because corpos can't stomach the kind of dollars needed to do fundamental research. Only the government can stomach that, and if somehow the voters are convinced all this isn't worth funding, it just won't happen at any level.