The state needs to do only one thing, don't disturb private initiatives
We have socialised the risk of innovation but privatised the rewards
91–100 of 133 posts
Re: We have socialised the risk of innovation but privatised the rewards
#92Earlier quoted context omitted.
I'd feel less comfortable without NASA, NIH, and DARPA, since I have benefitted a great deal from the work they sponsored. I doubt very much I would have had those benefits so soon without these grossly inefficient agencies that have no idea what they are doing carelessly spending other people's money on creating the space age, the Internet age, and the age of genomics respectively. I don't believe for a second that…
Of the three, I think private investment would have done better than the first two. Even DARPA is notable for a handful of home runs that may have been just luck.
You realize that is exactly the model of VC? :) You bet on a lot of very long shots, but the few mega successes pay off sufficiently to make it all worth it.
Re: We have socialised the risk of innovation but privatised the rewards
#93Earlier quoted context omitted.
remember that time GE paid basically 0% in taxes? the 30% number is only in theory (there is the salary breakdown but I don't think 30% is the number that ends up hitting)
GE paid 0% tax because the US govt decided to subsidize certain things that it wanted (mostly green energy related things), and implement that subsidy through the tax code via tax deductions and tax credits (because direct subsidies are politically unpalatable). GE promptly went and did exactly what the government wanted, which was invest in those nice expensive things, up to the point where all their taxes were wipe…
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Re: We have socialised the risk of innovation but privatised the rewards
#94The 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.
I don't think this is her point. Either way, I agree with you.
I also agree that private enterprise is much, much better at commercialising research.
I think her point is that basic research - which the governments are generally pretty good at funding - doesn't provide a good return on investment.
I have some sympathy with this argument, but at the same time I don't think she provides a viable solution for the problem.
As a specific example: DARPA kick-started the entire set driverless car technologies with their well-funded competitions in the early 2000s. This involved both prizes, and direct funding of robotics labs.
One can argue that this was done to seed a solution in the 20-year timeframe, and the fact that we'll probably see a decrease in combat deaths from IEDs in a future war in 10 years as driverless trucks come online is reward enough.
One can also argue that society should see some financial return on that - very risky - seed investment.
Both arguments have merit, and I remain unconvinced either way.
Re: We have socialised the risk of innovation but privatised the rewards
#95Earlier quoted context omitted.
The research is publicly available. You can go read it right now and learn from it. You're confusing the difference between the research they did being publicly available, and Stanford holding a patent on PageRank . http://ilpubs.stanford.edu:8090/422/1/1999-66.pdf
The paper is publicly available, but we're not allowed to implement the system they designed in their research because it's patented. The cost of developing PageRank was paid for by the government, but the rewards - a Government-granted monopoly on the use of it and all the income from licensing it - went entirely into private hands.
The same is true with public schools. You went to public school learnt how to write and read, maybe how to code and now all of that is monetized by you in your private hands!!! Oh horror!!!
Re: We have socialised the risk of innovation but privatised the rewards
#96Earlier 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…
That's orthogonal to this discussion. Google never received Belgian research funding. (I'm Belgian)
The Belgian case may be irrelevant, but more broadly it is very relevant - Google reduces their US tax burden in the same way.
The fact that corporate entities are able to shift their profits to places with favorable tax regimes mean that the calculations about the assumptions about increased tax receipts from business activity generated by publicly funded research are at least partially wrong.
Re: We have socialised the risk of innovation but privatised the rewards
#97Do 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).
Presumably, there is also the public good of having more electric vehicles, which was the rationale for such subsidies in the first place.
Re: We have socialised the risk of innovation but privatised the rewards
#98> 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 "o…
> 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).
You say it as if it was easy. Like they had it handed to them. Clearly a lot of tumblers fell into place, but that doesn't mean the NSF is due a share of the profits. Would you claim Harvard is due a share of Microsoft if it gave Bill Gates a scholarship?
> 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.
What are you getting at? I have no idea what you're trying to say here.
Re: We have socialised the risk of innovation but privatised the rewards
#99Earlier 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…
Multiple countries is the primary reason that corporate income tax doesn't work. International corporations just report profits in the countries with the lowest taxes. Corporate profit doesn't have any physical existence, it's just numbers in a spreadsheet, you can trivially move it to any country you like.
The only way to tax an international entity is to tax them on the things that actually exist in your country: Customers, employees, property, etc. But that's not corporate income tax anymore, it's sales tax, personal income tax, property tax, etc. The closest thing you can get to corporate income tax that actually works is VAT.
Re: We have socialised the risk of innovation but privatised the rewards
#100Earlier 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…
The corporate strawman itself could also be resident in another country, as in the famous Double Irish with a Dutch Sandwich setup.