Great Success = Private sector + government?
 

A lot of people take a binary approach to their thinking about the private and government sectors. What I mean by that is answers are always only either A or B. Said another way, I find that most people tend decide one of the two is "the bad guy" and, by default, the other is "the good guy."

"Government always does everything less efficiently and worse than the private sector" or "the private sector is always crooked and greedy."

Previously, I would have considered myself in the first group. Now, I tend to find positives and negatives in both. What I find more interesting is the interaction between the two - when the private sector is able to leverage government sponsorship of some form.

I'd love to see some responses to this article on "case studies in American innovation."

Example: The space shuttle program vs. Rutan/Virgin Spaceship One

Space shuttle - We're going to make this work even if it costs a bazillion dollars! (because it's not our money)
Rutan/Virgin - How can we make this work without it costing a bazillion dollars? (because it's our money)


To the article: Good can come when a need is determined and government puts up a prize for a solution, no doubt (although that is for the most part not a legitimate function of government under our Constitution). The counterpoint that the article fails to address is how often advances and achievements are stifled by government backing the wrong horse or regulating in such a way to cause infeasibility of advancements. Did you know it is possible to receive internet connectivity over your household power lines?

Yeah. It gets tricky when you start moving toward counterfactuals, such as: would Rutan/Virgin have the knowledge base and have seen a profit motive if not for government-based innovation?

Also, your example is sort of the Space Shuttle program is like "government" vs "private sector." Where I think the best success could originate is the "government plus private sector," such as more recent NASA R&D work with private sector partners or most of the examples in that article.


I think you make a great point about the potential to stifle or cronyism in terms of specific industries and companies. I'll have to stew on it a bit more over the weekend.

After all, you can't let the possibility of corruption be the arbiter because virtually everything suffers from that malady.

I'll be shocked the day that the Fed gov't stops billing all their programs through the USDA Department of Agriculture; just because they happened to be the first program with their own payroll system. But it will be a private contractor that will eventually provide this service :)

I don't have a complete answer or opinion ready for this topic, but another point to be discussed:

How often does government activity in a given field crowd out private enterprise?

Since we're thinking about NASA already, consider the work of those people involved. Perhaps private enterprise wouldn't have gone to the moon. Perhaps space exploration would be 20, or even 50 years behind where it is currently.

But what other things might those people have accomplished in the absence of NASA? Why do we assume that in our hypothetical NASA-less world, we lose out on everything that NASA accomplished, but we don't gain anything in return from those freed-up resources (both in terms of physical resources as well as the energy and effort of the people involved)?

Granted, there's no way to compare these two possible worlds directly. But I think it's still worth noting. Too often the argument is presented that "without NASA, we wouldn't have Product A or Technology B or Material C." But those on the other side of the debate don't have the luxury of naming things we already have and value; they can merely suggest that while we don't know what we might have gained in return, nor if those things would make our world better, worse, or basically the same, it's a reasonable speculation to think that we would get other cool stuff instead.

You mean like flying cars and support infrastructure, or a national high speed rail system?

Sure, or 60" flat panel TV's for $100, or turbos that spool at 300 RPM, or pens that can write at any angle, even underwater.

:bowrofl::bowrofl::bowrofl:

Fisher Space Bullet Pen Chrome | Gadget Plus Online Store Buy

:bowrofl::bowrofl::bowrofl:

Seems like "if we didn't have the space plan, we wouldn't have a pen that writes at any angle, even underwater...."

http://im.ft-static.com/content/imag...144feab49a.img

Potential opportunity for public-private partnership?

The Bakken is a major shale gas play in North Dakota and the light you see is natural gas being burned off because it's so cheap in the USA that it can actually be more economical to burn it off than to store it with the current backlog of energy transportation and storage infrastructure.

"The volume of gas flared in the US has tripled in just five years, according to World Bank estimates and is now fifth highest in the world, behind Russia, Nigeria, Iran and Iraq."

Shale gas boom now visible from space - FT.com

Edit to above: That light given off at the big Eagle Ford and Bakken plays is actually probably a combination of flaring and all the activity taking place there, not solely from the flaring.

I'm with mgeoff's post #6.

There is a common implicit assumption that a bunch of bureaucrats and politicians can make better decisions as to where R&D money is best spent, than entrepreneurs and business people, who have their own money on the line, can. There is a definite "crowding out" effect. Brain power and money are finite resources - if gov't redirects a bunch of brain power to weaponry, there's less brain power available for stuff that consumers want, such as slimmer TV's, the Internet, better cars, and 3D porn.

There is a tendency for technology to "develop at its own pace". Many discoveries are made independently by different people within months of each other. I myself have experienced this many times when filing for patents - often I find that someone just filed the same idea few months earlier.

Any given new tech needs a lot of supporting science and tech behind it. If you try and bring something to fruition say, 10 years earlier, it is much more costly, as all the supporting tech has to be developed as well. The space program is one example. Launching a satellite cost $X in the 1950s. If left to the private sector it may have happened 10 years later, but at much reduced cost - i.e. when the supporting tech allowed costs became low enough to make satellites commercially viable. In the meantime, other technologies, such as perhaps the transistor and the IC, may have become commercialized earlier and all the succeeding technologies that were dependent on it, such as the Internet, may have come earlier.

That's the problem with counterfactuals. "If left to the private sector it may have happened 10 years later, but at much reduced cost - i.e. when the supporting tech allowed costs became low enough to make satellites commercially viable."

And maybe they would never have developed because they never would have seen the commercial applications for things like satellites. Likewise the interstate highway system.

Likewise a robust hydroelectric system or nuclear power generation system.


Maybe they would and maybe they wouldn't, but some innovations definitely did benefit from a public-private partnership (what I would argue is a subtle distinction from "a bunch of bureaucrats and politicians can make better decisions as to where R&D money is best spent").

Commercialization of communication satellites was obvious since before Arthur Clarke. Ditto the interstate.

The basics of a robust computer network was envisioned before DARPA sunk a bunch of money into it. Ditto GPS and the military.

Hydro has been around since B.C.

V.C.'s are capable of setting up consortiums and huge investment money as long as there is payback.

Hoover Dam? Would cost 0.1% of Exxon Mobil's yearly revenue, in today's dollars. 0.25% of Apple's.

The gov't usually only succeeds in bringing technology in earlier, at great cost, as opposed to enabling technology that wouldn't otherwise have been developed at all (with maybe the exception of advanced weaponry).

If governments hadn't poured money into nukes, nuke power would have been developed later, probably using Thorium instead of Plutonium and Uranium (governments used the latter because they were principally interested in weaponry). And we'd probably be better off today, with more nuke plants using Thorium.

Again, who in the gov't gets to make decisions as to where to direct R&D money? How are they any wiser than the distributed "collective" known as the private sector?

I will invert the question: Let's say gov't didn't direct R&D today... and then you propose the new idea, "let's get gov't to levy add'l taxes from everyone, to put into R&D". How do you sell the idea, that those with the power to choose where to put the money into, make the right decisions and make humanity better off as a result?

But you understand that this cuts both ways, right? If you are free to speculate about certain technologies never developing for lack of private investment, then Jason and I are equally free to speculate that the technologies that did result as a consequence of government intervention may not outweigh the technologies we've lost out on with the loss of those resources.

Of course, you have a natural advantage: government did intervene, so you can point to concrete examples of technologies that developed out of NASA/weapons programs. Jason and I have a tougher assignment, in comparison: we can only meekly suggest that we are poorer for having traded the collective forces of the market for the firm controlled hand of government bureaucrats. The PR battle is firmly within your grasp.

I'll make one further point. When you say --

-- you are merely restating the argument. Nobody is disputing that certain technologies have benefited. Nobody would dispute that TANG benefited, or that Parker Space Pens benefited, or that foil emergency blanket manufacturers benefited. That's clear to anyone. What is not clear, what is being disputed, is that these technologies (and collectively, all the technologies that developed from NASA research) were more efficient uses of scarce resources than the private marketplace could have accomplished without government intervention (that is to say, economic coercion).

Can you expound on the last point? There were already private companies willing to build the public interstate system and saw a significant enough return on investment that they would have done so without government spending?


A) I will make a nuanced rejection of the idea that additional taxes would need to be levied to initiate R&D spending.

B) That's an excellent question. I don't know the precise best answer to that, although I have some ideas. See my remarks to Mark below.

That's my point. I was equating speculating about whether some technology would have been created later, but cheaper and better by private business with the speculation of whether the technology never got invented at all without government participation. I'm not really interested in either.

We could speculate what the Earth would look like had the dinosaurs not died out when they did, had Hitler never been born, etc. You guys have fun with that.

I'm more interested in the fact that there have been lots of successful innovations that involve private-public partnerships (read the article originally linked for non-NASA examples) and see my earlier examples on current NASA private partnerships in the rover thread (like the CT scanning improvements that came from solar flare research). There will always be pitfalls, opportunities for wasteful spending, corruption in the process, etc.

That doesn't mean perfect should be the enemy of good. The US Federal government has some unique advantages over a private corporation: they have a much longer term time horizon and their profit can be measured in non-GAAP ways. For example, the US interstate highway system would very likely have to have been setup as toll roads if the private sector was solely responsible for them in order for a corporation to see ROI.


I acknowledge that:
* there is a possibility that the private sector alone would have come up with all of the advances and innovations listed in the original article, possibly later but better
* government support of research can be misspent
* government support of certain projects could redirect efforts away from possibly better uses of those resources
* human beings are fallible

I do not find those compelling reasons to reject all government support of public use projects and research and development.

Investing in technologies 10-20 years before their prime is the reason why our military is 10-20 years more advanced than the overwhelming majority of the remainder of the industrialized world. Only a handful of countries can claim that they have *individual* technologies that exceed ours, and probably only two or three of those countries actually have the capability of inflicting grave damage to our forces in a symmetrical war...

So to throw a wrench into this equalateral triangle of meshed gears, without the space race, we might all be dead or subserviant to the Fins... where is this corporate investment if that's the case?

https://www.miataturbo.net/attachmen...ine=1359551431

There are plenty of toll highways around the world that were built by private money. (Albeit through a probably corrupt bidding process in gov't) GM in the 20's(?) in L.A. recognized that roads and cars were potentially superior to railways.

If a 4-lane highway cost $15M per mile to build and a car uses it every second, the amortized cost after just 1 year is 5c per mile per car. That's cheaper than gassing up a Prius. The time horizons and costs are very doable by the private sector.

Companies like 3M and IBM do a lot of pure research with unknown time horizons. A lot of discoveries that come out of that with no known applications end up in scientific papers for everyone to read.
And how does concentrating decision-making power in the hands of a few fallible human beings yield better results?

Here's a very important concept:
The Use of Knowledge in Society - Wikipedia, the free encyclopedia

In most fields, knowledge is spread diffusely throughout society such that it is not possible for a small group of "wise" individuals to match that knowledge, be granted decision-making power, use that knowledge, and as a result of that power and finite knowledge they have, produce better results for society than if society were left alone.

Note the following:
- only governments and megalomaniacs are hell-bent on amassing military power.. (the arguments mgeoff and I laid out show how military R&D spending would make society poorer than if governments weren't so militant)
- the presence of enemies of course justifies *some* military R&D spending... but my arguments remain valid for non-military R&D spending

So, best to leave the scientific R&D and public infrastructure works to the largest, oldest and most established corporations that have amassed large enough resources that they can spend a small portion of it on projects with no probable ROI at the outset?

Rather than supporting academic resources that worked together with the private sector, better to wait until someone like Archer-Daniels, Cargill or Monsanto comes along and can justify the spending?

Aren't you the one always talking about how the second most prolific position for sociopaths is the executive suite of major corporations? :)

This is a bit of a straw man. Many of the illustrated examples are not a few beauracrats sitting in a conference room deciding the final outcomes. There is a diffusion of knowledge.

I almost feel silly for even asking, but did you even bother to read the article?

Yes I read it.

ALL tech companies do R&D, not just the largest ones.

Lots of research is done at universities with private donations. The small company I used to work for donated equipment to a nearby university lab where PhD students and professors did their research. The only thing the company got out of it was so graduating students would think of sending us their resume.

Even large projects such as the Hadron collider could be funded by donations from the public and from corporations. It cost ~$20B to build. In just 2012 just ~200 corporations that responded to a corporate donation survey donated that much in cash and product.

As for infrastructure, yes I agree, it's the proper role of gov't to build infrastructure where the free market competition wouldn't work well because free entry of new competitors is difficult (i.e. electrical distribution network, roads). I wrote about roads just as a counterpoint. But you can right away see that gov't doesn't care about cost/benefit to society (long timelines notwithstanding). Look at California's hi speed rail project - its cost estimate continues to grow, it will never be cheaper nor faster than flying, it won't be cheaper than improving the airports, the initial leg will go from nowhere to nowhere, yet it continues to be justified in Sacramento "just because". No cost/benefit comparison against alternatives. The reality is it's fueled by corruption - too many pigs have their mouths in the troughs already.

The problem with corporations is when they use gov't psychopaths to write laws that reduce competition (aka "gov't regulation")or protect them from lawsuits when they injure individuals. Steve Jobs arguably had psychopathic tendencies yet he did more good than harm because he was in an industry that had little gov't regulation. Apple made money not by reducing competition via gov't but by making desirable products. (LOL that seems to be starting to change tho)

Public R&D spending implies that politicians and bureaucrats get to decide *where* to spend other people's R&D money is my beef - as opposed to VC's and investors doing same when *their own money is on the line*. The former is a highly corruptible process, featuring moral hazard.

It's kinda like welfare. If you wanted to spend money to help the poor, would you prefer to donate money to a charity of your own choice, or write a check to the US Treasury?

There's also the moral issue. Where is the moral justification for pointing a gun to all taxpayers and demanding "money for R&D"? Why not a voluntary donation website for "public R&D" projects? You think people won't give enough? If they don't, why should you point a gun to them and just take the money anyway? Because it's "for the common good"? If so, then again you have to answer my earlier hypothetical question. As I pointed out I don't buy the argument "if gov't didn't do it only the Cargill and Monsanto types would". Remember that the evil those guys do is because they are protected by gov't itself.