What the Steve Jobs Movie Won’t Tell You About Apple’s Success

Yves here. Mariana Mazzucato’s recent book, The Entrepreneurial State, makes a bold and well documented case that government has played the key actor in promoting innovation, largely because private interests lack the risk tolerance and long time horizon needed to create foundational technologies. She goes through numerous industries in the US and abroad to make her case. I can give one from Australia: Oz is the leader in viniculture technology, and that’s because it was one of the areas given priority in government funding through CSIRO, the Commonwealth Science and Industrial Research Organization.

By Lynn Parramore, a Senior Research Analyst at the Institute for New Economic Thinking and a Contributing Editor at AlterNet. Originally published at the Institute for New Economic Thinking website

Mariana Mazzucato is Professor in the Economics of Innovation at the Science Policy Research Unit of the University of Sussex. Her widely-acclaimed book, The Entrepreneurial State: debunking public vs. private sector myths, reveals the critical role that we, the taxpayers, play in the creation of the most exciting innovations of our time through publicly-funded investment. (The new U.S. edition hits the shelves October 27th). Mazzucato debunks common myths about how innovation works and shapes a new narrative on how to grow a robust and inclusive economy. Think that iPhone in your pocket is simply a product of Silicon Valley magic? Think again! (Join Mazzucato in New York for a talk and conversation with Time Magazine’s Rana Foroohar and The New School’s Mark Setterfield on October 28: details here). *This interview was originally posted on the blog for the Institute of New Economic Thinking.

Lynn Parramore: We constantly hear that anything to do with government is incompetent and inefficient. Yet as you show, many of the industries and products that make our lives better wouldn’t exist without government-funded research. The whole process of economic growth is hugely interdependent with governmental action. What about something like the iPhone? Is it a product Silicon Valley magic and the genius of Steve Jobs? Or is there more to the story?

Mariana Mazzucato: Economists have recognized that government has a role to play in markets, but only to fix failures, like monopolies, for example. Yet if we look at what governments have done around the world, they have not just stepped in to address failures. They have actually actively shaped and created markets. This is the case in IT, biotech, nanotech and in today’s emerging green economy. Public sector funds have not only supported basic research, but also applied research and even early-stage, high-risk company finance. This is important because most venture capital funds are too short-termist and exit-driven to deal with the highly uncertain and lengthy innovation process.

I often use the iPhone as an example of how governments shape markets, because what makes the iPhone ‘smart’ and not stupid is what you can do with it. And yes, everything you can do with an iPhone was government-funded. From the Internet that allows you to surf the Web, to GPS that lets you use Google Maps, to touch screen display and even the SIRI voice activated system —all of these things were funded by Uncle Sam through the Defense Advanced Research Projects Agency (DARPA), NASA, the Navy, and even the CIA!

These agencies are all ’ mission driven’, which matters to their success, including who they are able to hire. The Department of Energy (DoE) was recently run by Steve Chu, a Nobel Prize-winning physicist, who wanted the Advanced Research Projects Agency-Energy (ARPA-E) to do for energy what DARPA did for the Internet. Would he have bothered leaving academia to join the civil service just to ‘fix’ markets? Surely not. That’s boring.

LP: So what Steve Jobs and his team did was not central to the greatness of Apple?

MM: It’s not that Steve Jobs was not a genius—of course he was! But the problem is that the narrative we tell around entrepreneurs like him, Bill Gates or Elon Musk is so unbalanced. We pretend that government at best was important for some infrastructure and basic science behind their empires. We see the new Steve Jobs film, which is based on a 600-page book where not one word mentions any of the public funding behind Apple’s empire. But the real iPhone story — or the story behind biotechnology — reveals a very different narrative in which government-funded research made the most exciting innovations possible. The same could be said of Elon Musk today —Tesla and Space X not only benefit from government-funded basic research through agencies like the DoE and NASA, but they have also, as companies, received high-risk investments by the public sector. Just one example is the $465 million guaranteed loan received by Tesla by the DoE. As recently shown by an LA Times article, the entire Musk empire has received close to $5 billion in direct and indirect support.

Do we hear about that? No. Is that ‘story’ helpful for future innovation? No.

LP: You make the case that if taxpayers fund research responsible for the success of many private sector enterprises, then we deserve something back. What might a fairer system of the distribution of rewards look like? Have any countries done better at this than others?

MM: Government support is not only investing in upstream areas like basic research, but also in downstream areas like applied research and early-stage financing for the companies themselves. This means there are great risks.

When government provided Tesla with that guaranteed loan, it was a success. On the other hand, Solyndra got roughly the same amount ($500 million to Tesla’s $465 million), but it was a failure. Any venture capitalist will tell you that this is normal: for each success there are many failures. But what the venture capitalist has that the government does not have is the ability to use some of the upside to cover the downside and the next round of investments.

Economists argue that the government gets that upside through taxes paid by the companies benefitting from the investments; and by economic growth, which should generate higher tax receipts more broadly; and also through the spillovers from the investment into other areas, which helps the economy. But those mechanisms are limited, because of decreased corporate tax rates (and abundant loopholes), as well as the fall in what the top 1 percent pays. Also, patents are increasingly blocking the ability of spillovers to happen since the upstream tools for research are being patented (this is a new trend as patents used to be mainly for downstream products, not the science itself). And of course the globalized nature of production and innovation means that the benefits don’t necessarily stay in the country where the investments are made.

So yes, I’ve been arguing for a more realistic approach to the risk-reward problem. Once we admit that the public sector takes an immense amount of risk along the entire innovation chain, it becomes crucial to find ways to share both risks and rewards. This can be done through retaining a golden share of the intellectual property rights; through equity stakes or shares; through income-contingent loans (we do it with students, why not with business?); or through the price mechanism itself. Prices we pay for a product could reflect the public contribution.

Some countries are more courageous about this than others. In Israel, the very successful public venture capital fund Yozma retains royalties. In Finland, the public innovation fund Sitra, which backed Nokia, retains equity. And let’s not forget the obvious way to also get a return: insist that company profits generated from such investments are reinvested into production and innovation, and not spent on share buybacks or hoarded.

LP: Let’s look at pharmaceuticals. If I want a breakthrough drug to treat cancer, which is more likely to deliver it to me, the National Institutes of Health (NIH) or a multinational pharmaceutical company? What do you think the role of the companies is likely to be in such cases?

MM: In 1980, the Bayh-Dole Act allowed publicly-funded research to be patented. The idea was to facilitate the ability of science to affect commercialization—getting it out of the ivory towers. The act says that the government should have the right to control the prices for those drugs that it funds. We know that most radical new drugs (such as those with new molecular structures) are funded by the NIH, which continues to spend about $30 billion a year on pharmaceutical innovation. Yet the government has never exercised this right of price control.

This is because the narrative is so skewed toward the ‘value’ and innovation produced by Big Pharma (or small biotech), that even when the government funds the innovation, it does not have the confidence to go the whole way and strike the right deal. We socialize the risk but privatize the gains. Recent scandals on the way that hedge fund managers like Martin Shkreli have gotten in this rotten game—making drug prices rise exponentially overnight—shows just how bad things are getting. We need to build innovation eco-systems that are more mutualistic and less parasitic.

So how should things work ideally? I think it’s only to be expected that it will be mainly public funds that invest in the research part of R&D, but if Big Pharma mainly invests in the development part, that’s fine as long as they don’t pretend that they are the main innovators and charge crazy prices for that reason. The actual division of labor must be reflected in the division of the rewards (and prices, which is the way the consumer gets rewarded).

Companies cannot have it both ways! It’s also important that public funds be spent in research directions that are pushing market frontiers rather than working in existing areas. This means funding research not only on drugs but also on areas like life-style changes, even if the profit potential is lower for Big Pharma as you cannot sell that change as you can sell a medicine.

LP: Six years past the financial crisis, we find ourselves with a sluggish economy. Can more public sector investment help? How do you evaluate claims that innovation has slowed down in the U.S. in recent years? Do you think large firms enhance or work against innovation on balance now?

MM: The economic crisis that followed from the financial crisis is still being felt strongly across the world. There’s an insinuation that somehow the lower growth is inevitable or due to factors out of our control. But look at the increasing financialization of business (seen in the high rate of share buybacks emphasized by economist William Lazonick) and the fact that companies are hoarding profits at record levels — that points to a serious investment crisis.

It’s not about lack of opportunities. It’s because businesses are choosing to hoard profits or to use them to simply prop up stock options (and hence executive pay). That is bad for innovation and there is nothing inevitable about it. At the same time, governments are being asked to cut back with the austerity craze that continues to plague many nations. So we have a crisis of investment on both the private and public side.

But it’s not only New Deal-type investment programs that we need, but also better deals between government and business. Where did Bell Labs come from? It came from pressure by government on AT&T, which was a (government-granted) monopoly, to reinvest its profits back into the real economy — back into innovation and big innovation. And they did. Where is that pressure today?

Innovation policy itself should be seen as part of the deal: the NIH could say: look, we will continue to spend on innovation, but only if you, Big Pharma, also increase your investments along the whole chain. Instead, Big Pharma gets its way and is able to do record-level share buybacks while lobbying for regressive tax policies, falling regulation, and a parasitic patent system which is blocking future innovation.

LP: Why are countries so slow to learn the lessons of the entrepreneurial state? Have things improved or gotten worse since the first edition of your book?

MM: Unfortunately things are getting worse. Companies are increasingly financialized and spending less on basic research; governments are increasingly cutting back and becoming less able to do long-term thinking and be ‘mission driven’; and the vicious narrative around public debt is stronger than ever. It was private, not public debt that produced the financial crisis, yet while governments saved the day, they were then blamed! Politicians and policy makers did not have the vocabulary, and the courage, to defend themselves. Very little was done to explain to people how public debt rose after the crisis precisely due to the bailouts, and also due to the fall in tax income caused by the crisis and foolish austerity programs.

Even when government does make wise investments, it does not know how to talk about them. We have to change the frame of the debate from ideology to evidence about how markets are created — as a collective process. The mission of my book is to not only tell the history of Silicon Valley as it really was, so as to create more intelligent policies in the future, but also to enable policy makers to have a new vocabulary through which to talk about their own role—and more courage to strike the right deal. So that smart, innovation-led growth can also be inclusive growth.


Print Friendly, PDF & Email


  1. Alexandre Hanin

    Errr… Well… Actually, the iPhone would be much better if the fascist government hadn’t perverted technologies that should have been born in the Independent Mind of the Entrepreneur (IME). Because of useless civil servants (who don’t have the IME and insist on destroying our freedom), the iPhone is but an ersatz of what it could have been.

    Written from my iPhone.

      1. Alexandre Hanin

        It could (among other things) have an app able to create a credible explanation as to why any problem in the world is the result of government meddling and any advance in the world is the result of the IME, allowing me not to doubt my Austrian beliefs.

        Not that I doubt my Austrian beliefs anyway (that would be silly, I would never ever do that), but inventing those credible explanations on my own is a pain and a waste of time.

        1. theinhibitor

          I’ve yet to read about any significant technology created by an ‘entrepreneur’.

          Almost every highly engineered product you see around was at one point created in a government funded laboratory.

          Great article. Clearly highlights the need for R&D over short term, profit driven strategies.

          1. frosty zoom

            people say, “the military gives us great inventions!”

            seems to me that we could invent the things anyway..

            do we really need to melt people in order to create hair gel?

            1. Ignacio

              We don’t, but apparently we are so stupid that we need the excuse of maintaining the ability to be more efficient at killing a group of “other humans” to invest the money into it (otherwise we are always ‘running out of money’, except when is for military/police-state spending).


          1. futility

            Your irony detector is severely malfunctioning and is in urgent need of repair. This is obviously tongue-in-cheek.

        2. AndrewG

          >> It could (among other things) have an app able to create a credible explanation as to why any problem in the world is the result of government meddling and any advance in the world is the result of the IME, allowing me not to doubt my Austrian beliefs.

          Wait, wait … there isn’t an app for that??

    1. Vatch

      The transistor was invented by researchers at non-entrepreneurial monopolistic quasi-governmental AT&T’s Bell Labs, and much of the early development of the computer was funded by the government. Later, the internet was developed as a government project (or series of projects). Yes, entrepreneurs and private inventors have created many useful things, but they’ve also often been heavily assisted by government.

      In the real world, simple ideological explanations are usually wrong. There’s a lot of complexity out there, and sometimes government messes things up badly, and sometimes it is absolutely essential for progress.

      1. Thure Meyer

        Also, if one reads the first two paragraphs in the Wikipedia article “History of the transistor”…

        Besides not referencing previous relevant work; “The Bell Labs work on the transistor emerged from war-time efforts to produce extremely pure germanium “crystal” mixer diodes, used in radar units as a frequency mixer element in microwave radar receivers”

      1. tegnost

        No, not really,…but I really was curious because we’re all here trying to get craazy his 10 bagger

      2. Vatch

        I’m glad you were joking. I was fooled, in part because I really have encountered people with the rigid sort of opinions that you were satirizing.

      3. vlade

        it was clear from the moment you used word ersatz (admittedly right at the end ;) ). Too educated…

  2. pmorrisonfl

    Steve Blank, a long-time figure on the SV startup scene put together a fascinating presentation, ‘The Secret History of Silicon Valley’ [1]. He shows how heavily the SV of today is influenced by (often top-secret) government investment since the 1940’s. Well worth a look if this is your neighborhood.

    [1] http://steveblank.com/secret-history/

    1. Eddie Torres

      Was just about to post exactly this link, Steve Blank’s material is outstanding. Deeply researched, full bibliography, etc. The foundations for Silicon Valley were built by Fred Terman, Bill Draper Sr., Stanford U., the Navy, the Air Force, and the NSA. And, indirectly, the airborne version of the cavity magnetron (microwaves) which came over in WWII from the British gov’t.

  3. Bill.CA

    Was all set to snark about YS’s deep desire to de-bunk popular mems with uber-bunk, but this article is quite good!

  4. MrColdWaterOfRealityMan

    The private sector is nothing if not hugely self-congratulatory. Because most mass media is private, these myths about its superiority tend to perpetuate themselves through that same mass media. Evidence is not necessary for a good narrative, as any politician knows.

    1. MyLessThanPrimeBeef

      There is a different private sector, away from the Big Business private sector.

      While the government was instrumental in the examples cited, the one key essential, not merely sufficient, but necessary actor in the drama is the consumer.

      Without all the consumers who bring with them the economy of scale, none of these would be as pervasive as they are today.

      So, when a billionaire says, “I made my fortune,” he’s wrong. His customers made that for him.

      And a smart customer can always say to an ungrateful billionaire, “I am not buying.”

      All those potential, smart customers can be found in the private sector.

      And our salvation will be found in that billionaire-defying private sector.

      Long Live Less Consumption!!!

  5. jgordon

    It won’t even be acknowledged otherwise so I’ll just go ahead and say it: iphones suck and we’d all be better off without them.

    For that matter, personal passenger vehicles, television, synthetic chemistry, and I’d even say the internet have made our lives much crappier than they otherwise would be. If we honestly add up all the damage to the environment, along with the human suffering/alienation/profligacy, that these technologies engender then we’d see that these are all deductive technology that detract from the quality of our existence.

    There’s an insinuation that somehow the lower growth is inevitable or due to factors out of our control.

    That is not an insinuation. That is a reality and should be regarded as such. Economic growth does not come from human innovation; it comes from the rate at which we extract finite resources from the environment and convert those resources into infrastructure and consumer products: the faster we extract those finite resources, the more economic growth we have (and consequently the higher the ongoing maintenance costs of society). Aside from useless consumer toys and the occasional useful technology such as antibiotics (which have been misused and squandered to such an extent that they are increasingly becoming not useful anymore), all of our research and innovation for the past 200 years has gone towards extracting and using resources at an ever faster rate.

    Yes, antibiotics, firearms, shortwave radios and railroads are all tremendously useful technologies that some lucky and/or prepared societies may have access to going forward, but a society that is so irresponsible as to not fully account for the costs and maintenance requirements of a technology before it is widely inflicted on the populace, or worse a society that deludes itself with fantasies about endless growth and material prosperity (the adult version of Santa Claus), isn’t a society that’s going to last very long. In that regard I see the trends towards privatizing and eliminating research as a tremendously positive development.

    Not that all research as bad; I just don’t think Western industrial powers, as they are currently configured, are capable of the sort of research that actually would be beneficial to humanity, such as research aimed at reducing consumption and infrastructure needs. For example, research with the intent to place inexpensive solar passive water heaters on the roof of every house in America would be endlessly beneficial to our society–insanely more beneficial than say mandating improved engine performance in SUVs, yet would cause innumerable special interests to scream bloody murder. So it’s just not going to happen until those special interests have been dispensed with. Brutally. But you can be damned sure that there’s plenty of research going into making SUVs even bigger and badder than ever now that oil is suddenly cheap again. Yeah, that’s exactly what we are as a people. It’s why we deserve what we’ll get.

    1. frosty zoom

      The United Nations noted that when the UN Human Development Index is combined with the per capita ecological footprint of 182 nations, only one country has a genuinely sustainable economy. That country is Cuba. In other words, Cuba is the only country in the world that has met the basic needs—food, housing, health and education—of all of its citizens in an ecologically sustainable manner.

      my wife and son read the article and felt guilty. i told them we were already living like cubans anyway.


      my brother-in-law and sister both said cubans are very poor. i asked them if they would rather live in cuba or haiti?


      a friend pointed out that cubans have no free speech. i told him that free speech means nothing if no one listens.


      if we all lived like cubans, wouldn’t we all be better off? i bet we could all live like portugese, or say, thais, easy.

      1. MyLessThanPrimeBeef

        a friend pointed out that cubans have no free speech. i told him that free speech means nothing if no one listens.

        That’s what I have been saying. But no one listens.

        1. MyLessThanPrimeBeef

          Too many TV channels, reality shows, great circuses.

          Brain washing so good, so addictive, one craves for more of it!!!

          “What did you say? I am sorry. I wasn’t listening.”

    2. fresno dan

      I tend to agree
      A fantastic amount of capitalism/consumerism is constant hype. Always bigger, better, faster, etc…
      There are many, many things during my lifetime that have gotten demonstrably worse.
      Other than people believing the iphone is better than a Samsung, what objective things can it do that are really worth the markup? People buy Ferrari’s instead of Honda’s, even though the speed limit is 65 and the Ferrari can’t fly you over a traffic jam. Yeah, most of the “improvement” is style.

      “When government provided Tesla with that guaranteed loan, it was a success.”
      As I understand it, the technology for the batteries is pretty standard lithium. I am not sure that allowing the 0.1% the ability to buy super expensive cars is all that worthwhile a use of government resources….
      Doesn’t the Nissan Leaf do the same thing for much, much, much less???

      Confronted on a beach in January 1971, hours before the kickoff of Super Bowl V, a mob of media members asked the Cowboys’ superstar why he was sunbathing and not squirreled away in a film room, psyching himself up for the Baltimore Colts.

      “Don’t you know,” said one, “that it’s the ultimate game?”

      Duane’s reply, which says more about the Super Bowl than any single line ever uttered:

      “If it’s the ultimate, how come they’re playing it again next year?”


    3. Crazy Horse

      jgordon, thanks for stating the obvious that few will acknowledge. “Smart” phones have joined television and religion as the most insidiously destructive drugs in the history of human mental development. Heroin and crack are pablum in comparison. Can anybody seriously believe that billions of people tethered to their “smart” phones every waking hour, seeking “community” and “friends” that they will never meet to the exclusion of actual human contact is a healthy condition for the addicts?

      Had Steve Jobs died in childbirth it would have indeed been a benefit to the human race.

      1. MyLessThanPrimeBeef


        “Hold infinity in the palm of your hand, and eternity in an hour.”

        Unfortunately, there is no infinity in that smartphone in your palm, though indeed, one can see the world in a grain of sand (of silicon).

        But with someone you love, one can experience eternity in an hour.

        1. MyLessThanPrimeBeef


          ‘Infinity of profit for the phone-peddler in the palm of your hand’ is quite possible.

      2. Irrational

        And most people seem to have to get the latest fix… errrr, I mean model every 2 years or so…

      3. tongorad

        Smartphones are causing me to question how long I can stay in the public school teaching biz.I reckon the impact of smartphones on children’s learning cannot be overstated.
        On my bitter bad mood days I find myself asking dreadful questions such as “why are my students so boring?” How can inspire kids who are so screen-captured?

    4. MyLessThanPrimeBeef

      Research already done can be helpful enough.

      Like, low caloric intake and weight lifting – both good for living a long, healthy life.

      In practice, that means

      1. Less consumption
      2. working with one’s hand, physical labor.

      In fact, I think life as a Zen monk working as a weight-lifting personal trainer is a good way to go.

      Maybe the government can fund a World Peace Through Weight Lifting Corps.

      But we seem to discard simple and beneficial research results like these, so we can get more money to research on something more impressive.

    5. dana

      And then there’s the issue that often goes unmentioned: planned obsolescence. It used to be — until roughly the 70s-80s — that appliances were made to last. Indeed, manufacturers used the ‘durability’ argument to promote sales.

      There are quantities of refrigerators from the 50s and 60s which are still functional, for example. The same can be said for computers. An Apple II I bought in the mid-80s is still functional, according to the friend to whom I gave it …

      Planned obsolescence [PO] has made the volume of extraction of raw materials literally skyrocket.

      And where does all of that obsolete junk go? It’s dumped back into the environment, most often onto poor countries, by the hundreds of voluminous tons per year.

      No one is addressing this pressing issue, as the production of durable goods would pull the rug out from under multitudes of markets. …

  6. washunate

    When government provided Tesla with that guaranteed loan, it was a success. On the other hand, Solyndra got roughly the same amount ($500 million to Tesla’s $465 million), but it was a failure.

    This mindset is pretty much exactly what is wrong with a lot of leftist intellectualism. Public-private partnerships are terrible. Government should not be picking winners and losers.

    More generally, what is interesting about the iPhone is not the government funded parts inside it. What is interesting about the iPhone is that it is more than the sum of its parts. Everyone was making terrible cell phones because no one cared about the user. That’s the interesting sociological question. What is about large incumbents that allows them to care so little about the people using their products? Why is it so incredibly disruptive when a company actually makes something that users want to use?

    Unfortunately, that answer goes back to government, too.

      1. washunate


        All the more reason to prefer activity that involves standard procedures – like social insurance programs – over activity that requires significant managerial discernment and judgment – like financing individual companies or jobs programs.

  7. digi_owl

    If Jobs was a genius at anything it was spindoctoring.

    Everything else was a massive case of standing on the shoulders of giants.

    1. theinhibitor

      He was a genius at finding trends.

      His biggest achievement, IMO, was iTunes. He realized that everyone would rather buy songs online, except burning them to CDs was a pain (he witnessed Napster and other illegal ways of downloading songs). Cue iPod -> touchscreens -> modern look etc.

      His biggest downfall was allowing Apple to become a fashion-tech/software giant rather than a R&D hardware giant. With that 600 billion in cash, they could have essentially completely vertically integrated.

      Chip manufacturing might have been a bit much, but I would have definitely had a huge R&D laboratory for mat science at the very least. Pretty much all Apple hardware is just a nice screen and glass protector with minimal everything else. They should have bought that Sapphire glass maker and taken a loss and done it themselves. Think about how many markets they could dominate if they made superior screens.

      They should have also gone in material tech targeting various polymers from those that don’t lose grip have high shock absorption (for phones), to heat conduction polymers for their ipads and laptops. Ive seen some polymers out there today that look and feel like aluminum, but are actually plastic. That would be another big area.

      Basically, I would have been looking at a future with 5-6 super tech companies all competing for a shrinking market. The only way to truly differentiate is through tech, not design. All the phones look the same nowadays anyways, largely because they have the same mat tech/screens/chip tech.

      But thats IMO.

      However, as the article states, Apple is driven by individuals with not a thought on their mind besides what the next QE report will look like.

      Eventually, Apple will become a Microsoft

      1. MyLessThanPrimeBeef

        Good at finding trends.

        Each of us has greatness within.

        All of us can be good or genius at something.

        That’s why it’s sad people would get songs online when they should be writing and singing their own music.

        “There is no creativity in choosing my songs that are commercially available. No creativity in selecting my wallpaper or couch from a store to decorate my room. Mentally it’s quite barren.”

        Thus, the geniuses of our age continue to rob people of their souls.

      2. Mark P.

        ‘Eventually, Apple will become a Microsoft’

        One of the secret mysteries of the tech business is that Microsoft has quite often had very worthwhile, even visionary R&D going on over the years, but those projects never turn into anything that reaches people.

  8. Eric Patton

    We always fete the rich and powerful. But what do we think when we see janitors, garbage collectors, maintenance men, Wal-Mart cashiers, or people who work at McDonalds? No one makes movies about them. They do not exist.

  9. David

    Federal law also requires that US licensed inventions be made “substantially” in the US.

    A Federal agency shall normally grant a license…to use or sell any federally owned invention in the United States only to a licensee who agrees that any products embodying the invention or produced through the use of the invention will be manufactured substantially in the United States.

    If this requirement was enforced, how many jobs would this create?

  10. Whine Country

    The author is merely describing a subset of our system of privatizing gains and subsidizing losses – a feature and not a bug to our elites.

    1. Chauncey Gardiner

      No kidding!… and the hidden subsidies often go far beyond the mezzanine stage for the anointed to the point where the USG is effectively sponsoring and subsidizing extreme wealth concentration for particular individuals, who frequently in turn participate in the political contributions feedback loop.

      But to me the point of this article was to demonstrate government technological and research competence, which it does.

  11. kevinearick

    Recursion: Tautological Search & Rescue

    Funny, when you begin with generalization and symptomatic specialization, and then focus toward communism and fascism; you are left with feminists and effeminate passive-aggressive males forming the consumer majority, with stupid reactionary males as the scapegoat, always with a queen walking through the wreckage to the throne, all assuming life. Blaming the bankers, for taking advantage of the resulting booms and bust in the volatility racket, to print, extract and sell derivative options on the labor of future children, is a waste of time. Turning the tables and leaving the critters to assume crucifixion was just an example, not a refutation, of nature.

    Yes, I have said the same thing 600 times, for kids moving through every social event horizon. US Government is being kicked to the new world order, same as the old world order, communist curb, just as Hitler crossed Europe and Alexander the Continent, because no able male will defend it, because it is just the latest and most fashionable communist regime, and because its navy is a sunk cost., like Great Britain before her. And like Great Britain, she is an old sterile woman, living in the past, with nothing better to do than manipulate those stupid enough to enter her trap with no means of escape, the voluntary prisoners dilemma of communism and its beholden child, fascism.

    Just because a group of Jews, or any other arbitrary artifice, is very good at banking is no reason to employ the others as human guinea pigs, much less assume that the results of that experimentation will bear fruit, as the foundation of healthcare in America. All communists eat your fruit, their fruit, your seed, and their seed, before killing each other. That’s History.

    Nor is it fruitful to accept the empire’s definitions, for labor, communism or anything else. The universe is physics, separated only by the relativity of perception, a counterweight of counterweights. Humanity is only a monolith for the majority, always trying to twist individuality into a commune, which is a poor excuse for a community. In 5000 years, what has changed about communism, other than the words it uses to pretend it is something it is not, the dress on the a different frame?

    Everything inconsistent with communism in the empire is considered an invective diatribe by the court of courtiers, always autologically trapped in prisoners dilemma, replicating stupid, willful ignorance. Of course they must ultimately resort to kidnapping your children as the foundation of their make-work infrastructure, always from and to nowhere. And no, I do not have patience for automatons kidnapping children for communist indoctrination with the excuse of an empire job, borrowing from the future to ingratiate themselves today.

    Whether the Soviet Union lost, Russia won, or both are irrelevant depends upon when and how long you take the snapshot. Invest accordingly. Labor simply cannot afford to care if communists choose to kill each other over an artificial island. Whether chef, or chef of chefs, what ends up the table, meat or artificial meat, health or cancer, is a choice, and most choose the latter, over time. Don’t interfere with child birth and blame the victim, expecting a happy outcome, or not.

    Even now, the communists are investigating where my ideas originate, in their own black hole, like Alice in Wonderland, first in extortion, and then in prosecution, repeating the cycle, all they know. Good luck with that. Everyone is better off dealing with Pollyanna, because the cliff is on the other side. It’s just the news, worth no more than 15 minutes of your time, when you have nothing better to do than watch a sh-show.

    1. kevinearick

      “We live in a sad society. Succeed – that is the advice which falls drop by drop from the overhanging corruption….In passing, we might say that success is a hideous thing. Its false similarity to merit deceives man. To the masses, success has almost the same appearance as supremacy. Success, that pretender to talent, has a dupe – history….Win the lottery and you are an able man….They confuse heaven’s radiant stars with a duck’s footprint in the mud.”

      1. kevinearick

        Government, crack me up, and in the same breath rail against the corporation as an individual. Funny, I spent a lot of years watching ‘government’ play 52-card pickup, only to interrupt on matters of security…

        Does anyone want to argue that Russian women were not duped by Family Law, long before the Swedes, on their way to NIRP and cashless ‘chainblock,’ an algorithm already destroyed?

        The same people arguing against State are arguing for State, if they are placed in control. What does that remind you of?

  12. griffen

    Quiz…how about Henry and his model T.?

    Let alone his automation assembly line. I’m sure gubmint could have, or might have, somehow positively influenced the man’s biz success but doubtful many others failed where Ford eventually did suceef.

    It is a curious angle to think of.

    1. MyLessThanPrimeBeef

      The Chinese were practicing some form of assembly line blue-and-white porcelain production in government-run Jingdezhen hundreds of years ago, with different workers for each stage or phase of the ceramic manufacturing process.

      One team to gather clay, one to sift, wash and prepare clay, one to prepare color pigments, one for glazing, one for throwing/constructing the pieces, one for painting, one for signing the imperial reign marks on the bottom, one for trimming, one to tend the dragon kiln as the pieces fired, etc.

      So, in this case, the credit goes to a foreign government.

    2. horostam

      one of the great ironies here is henry ford’s influence on stalin

      course no one wants to talk about that…

  13. Thure Meyer

    Just a question.

    I read the 1st Edition and agree its the best I’ve ever seen on this subject. Is this new edition different in any significant way?

  14. Jim Haygood

    Besides inventing the internet and the iPhone, government also invented nuclear power. And it’s going GREAT:

    In South Carolina, the Savannah River Nuclear Site is home to one of the biggest government boondoggles in recent memory: the Mixed Oxide Fuel Fabrication Facility, better known simply as MOX.

    Right now there is no demand for MOX fuel – literally, there are zero customers lined up.

    In 2004, the National Nuclear Security Administration estimated construction of the MOX facility would cost $1.6 billion and be complete by 2007. Come 2007, the cost jumped to $5 billion and the start of operations pushed to 2016. In 2013, the administration released a draft estimate of $24.2 billion for all costs to complete the mission to dispose of surplus weapons-grade plutonium. The new start date is closer to 2020.

    In February, an internal Department of Energy review of the project reportedly estimated that the ultimate cost would run $25 to $30 billion more than what the department has already spent. The facility is a favorite of South Carolina Sen. Lindsey Graham, who has fought hard to keep it going.


    $70 billion or bust!

    1. Adam Eran

      …and don’t forget, fracking was a government invention. There’s a shadow to all that shiny new stuff, no?

  15. YY

    One huge area of government inaction/non-participation that is a key to success of apple in the 21st century is the change to lax enforcement of anti-trust. Apple would be nowhere had it not had such easy time with retail price maintenance and vertical integration of its distribution, allowing for previously unimaginable profitability from such a sparse lineup of products. All its competitors whose previous success relied upon what then was the normal retail environment could not because of “legacy” commitments meet the challenge and were caught asleep as well. Apple’s success owes a lot to the legal environment, design (as in looks), extremely well controlled marketing/sales. Technology of Apple is the most overrated component.

    1. washunate

      I am curious what specifically you have in mind on anti-trust. I don’t want to whitewash problems with a company the size of Apple, but holding Apple up as an example of lax enforcement strikes me as quite divorced from reality. Apple is one of the least-bad offenders in all of corporate America. It’s no comparison to other industries, like finance or agribusiness or oil, and even within tech, Apple is more in line with its users than preying upon them compared to other behemoths.

      In fact, it’s particularly ironic, because Apple has been the subject of government regulation in ebooks and publishing even though Amazon was (and is) the dominant force. It’s also ironic because it was IP law that allowed Microsoft and Intel to drive nearly every company out of the computer business in the 1980s and 1990s. Apple was one of the lone survivors, barely hanging on. The greatest anti-trust issues in contemporary corporate history is the reinforcing dual monopoly of Windows and Office. It was Microsoft’s monopoly in MS-DOS that allowed them to convert users to Windows in the first place.

      And as far as current Apple products, the Mac has a small marketshare. There are many competitors to iPhone. It was Tower Records and BIg Box electronics and discount stores that put mom and pop retailers out of business, not iTunes or Apple stores. Etc.

  16. Newtownian

    A possible missing element in this story is that it could becoming harder than in the past to exploit innovation R&D results …. a ‘law of diminishing returns’ if you like. And so government and business are disillusioned with basic research.

    One ‘thought leader’ in the exploration of this issue is Joseph Tainter who greatly proceeded other analysts in this field such as Jared Diamond. Below I’ve reproduced an abstract of his that relates to sustainability but also bears on creativity (research and its products) and progress (typically equated to economic growth).

    Dont get me wrong. I emphatically support more R&D but the complexity issue raises the question of whether we will continue to see revolutions of the kind favored by capitalism or government i.e. ways to produce more stuff to sell to people and keep them fat and contented and driven to buy still more.

    A separate issue is the matter of energy availability and price which has powered changes in the past. Leaving aside the peak oil debate, one thing for sure is its not getting cheaper or more abundant to any great degree.

    I’m personally open minded here and wouldnt like to say which way things will go in the future. But certainly any discussion of whither economic growth in the future should also look at other constraints like those of interest to Tainter.

    In the cosmology of Western industrial societies, “progress” results from human creativity enacted in facilitating circumstances. In human history, creativity leading to progress was supposedly enabled by the development of agriculture, which provided surplus energy and freed people from needing to spend full time in subsistence pursuits. Applying this belief to the matter of sustainability today leads to the supposition that we can voluntarily reduce resource use by choosing a simpler way of life with lower consumption. Recent research suggests that these beliefs are deeply inaccurate. Humans develop complex behaviors and institutions to solve problems. Complexity and problem solving carry costs and require resources. Rather than emerging from surplus energy, cultural complexity often precedes the availability of energy and compels increases in its production. This suggests that, with major problems converging in coming decades, voluntary reductions in resource consumption may not be feasible. Future sustainability will require continued high levels of energy consumption.

    TAINTER, J. A. 2011. Resources and Cultural Complexity: Implications for Sustainability. Critical Reviews in Plant Sciences, 30, 24-34.

  17. Newtownian

    ps here is another of Tainter’s articles precisely on this return on investment issue.
    TAINTER, J. A. 2006. Social complexity and sustainability. ecological complexity, 3, 91-103.

  18. Rodger Malcolm Mitchell

    Excellent article, except for one small detail. Federal taxes do not fund federal spending. So all the talk about “taxpayers funding research” simply is wrong.

    Federal taxpayers do not fund anything with their tax payments. (State and local taxes DO fund state and local spending, but federal taxes fund nothing.)

    I’m amazed that Yves doesn’t remember the basics of Monetary Sovereignty.

    C’mon Yves, get with it.

  19. McKillop

    Have your students read aloud to small groups or the class as a whole their efforts. Assign, say, twenty minutes for the first exercise, and as long as endurable for the second. I’d guess the students will recognize their own inanity in the remarks. Assign a particular topic once in a while for variety (he ha ho).
    I have pity for those who teach currently but students are often boring by definition.
    People who use their phones everywhere remind me of the Jews who I see on television praying at the Wester/Wailing Wall in Jerusalem.

  20. rodger malcolm mitchell

    “But what the venture capitalist has that the government does not have is the ability to use some of the upside to cover the downside and the next round of investments.”

    No, no, no, no, no.

    The whole point is: The federal government has what the venture capitalists don’t have: The ability to risk any amount of money.

    Neither taxes, nor any other income, supports federal spending, which is paid for ad hoc. Federal spending itself creates dollars.

    And taxpayers neither are punished nor benefit from federal “profits.”

Comments are closed.