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We have socialised the risk of innovation but privatised the rewards

blogs.lse.ac.uk

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

#21

Post by adevine »

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…

I think Fareed Zakaria makes a good argument from this article in 2011: http://www.washingtonpost.com/wp-dyn/content/article/2011/03... . Basically, the share of taxes that go to productive investment (like the Interstate Highway System, GPS, ARPANet, basic research, etc.) is shrinking compared to entitled consumption spending (Social Security, medicare). The current political system in the US makes it exceedingly difficult to either (a) increase government investment spending or (b) decrease entitlement spending.

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

#22

Post by cafebeen »

brandonmenc wrote: post #14
cafebeen wrote: post #11

Earlier quoted context omitted.

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

I'm not sure what you're getting at. Could you clarify?

Just pointing out that the reality is more complicated. The research wasn't "publicly available", rather it was licensed (exclusively) from Stanford. There is legislation that applies to the ownership of federally funded research, e.g.

https://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act

It's also worth pointing out that before this was passed in 1980 federally funded research was typically owned by the gov't.

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

#23

Post by reagan83 »

roymurdock wrote: post #16

Do subsidized projects such as Tesla earn any returns for the government?

Yes, but with low margins. The $465m DOE loan extended to Tesla was repaid, almost a decade before the maturity date, with an effective interest rate of 2.6% (approx $12m).

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

#24

Post by DodgyEggplant »

Better title would be when the "modern capitalism is rewarding value extraction over value creation" argument. Think twitter, starting with "do good" argument attracting devs when they need them, then shutting them out later. Who benefits the value of the IPOS? the public?

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

#25

Post by anaolykarpov »

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 they dont understand and they dont really care about. What they care about is building their own public image with those money in order to be reelected.

I'd feel much more confortable in having to pay lower taxes and let the private investors do the investment, because VCS actually care about how their money are spent.

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

#27

Post by justicezyx »

anaolykarpov wrote: post #25

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…

The state, any state, is a very bad administrator of funds

Can you explain how China managed to accelerate its development speed through "state-managed funding" on all and everything?

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

#28

Post by timtas »

We've all seen quite clearly in recent years that governments regularly socialize risk with bailouts of supporters and favorites. The worst part is the way they tip their hand in advance (e.g., The Greenspan Put [1]) incentivizing the the most reckless and morally hazardous behavior.

But the article does not aim at this real problem. Rather it's just a basket of plausible sounding but totally unsubstantiated claims and deliberate ignorance of inconvenient facts. For example, we're supposed to view China's giant investments "environmentally friendly technologies" as destined for success. We won't question the competence of the government that has so recently built several cities (yes whole cities, yes plural) which are completely empty while peasants subsist in garbage heaps on their outskirts.

Polemicals like this equate corporatism and cronyism with capitalism and free markets. Then with the straw man destroyed, it's not hard to guess what the solution will be.

[1] http://en.wikipedia.org/wiki/Greenspan_put

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

#29

Post by hkmurakami »

hcarvalhoalves wrote: post #18
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…

Not to mention, what actually makes money is AdWords...

Without search quality, adwords would be nothing.

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

#30

Post by nl »

dmfdmf wrote: post #20
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…

> The title of this piece is terrible... I agree but not for the same reasons I am sure. This title is an old saw from the socialists and has been around for decades. The implicit conclusion is that to make things "fair" we should socialize risk AND reward. How convenient for the socialists. No. The discussion we should be having is; What is the proper function of government? What is your standard? > Her argument app…

I think you might have a useful point in there somewhere, but using overly emotive terms ('the socialists', fascism, communism and freedom) isn't useful.

Its worth pointing out that 'the end of the road' is an implication that the extreme end of a political system is a goal. It's not, and it is rare anyone would argue that a hybrid economic system isn't the most sensible.

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