Government Spending on Innovation

June 5, 2020

Some argue that we need government spending to fund “innovation”. Too bad most of that “innovation” is sought to further the ends of the “war state.” This argument attempts to focus on results: “See we spent all this money and we got computers”, or whatever. This is poor reasoning and obscures that fact that taxpayer money was forcibly extracted from the population to perform this “research”. What might the people of the population have done with that money had it not been taken from them and devoted to government “research” projects? An example of such a project is virus GoF studies, which may have led to the COVID-19 pandemic.

This is from an article posted in 2015:

“University of Sussex Professor Mariana Mazzucato is making headlines with her 2013 book The Entrepreneurial State, which argues that government, not the private sector, ultimately drives technological innovation.”

We also need to consider that the Federal government has a virtually limitless supply of “money” via Treasury bonds and its partner, the Federal Reserve. Many believe in something called “liquidity”, which means being able to buy and sell things without disturbing market prices. This obviously is a fantasy, especially when it comes to a “fat finger” like that of the government. When the government “jumps into the pool” it is like an elephant jumps in and it makes huge waves and splashes a lot of water out.

The New York Times offered this opinion:

“Fundamental innovations such as nuclear power, the computer and the modern aircraft were all pushed along by an American government eager to defeat the Axis powers or, later, to win the Cold War. The Internet was initially designed to help this country withstand a nuclear exchange, and Silicon Valley had its origins with military contracting, not today’s entrepreneurial social media start-ups. The Soviet launch of the Sputnik satellite spurred American interest in science and technology, to the benefit of later economic growth.”

It is ironic that post World War II, a war supposedly fought to defeat fascism, our country became increasingly fascist. See Wikipedia:

“Fascists believe that liberal democracy is obsolete and regard the complete mobilization of society under a totalitarian one-party state as necessary to prepare a nation for armed conflict and to respond effectively to economic difficulties.[9] Such a state is led by a strong leader—such as a dictator and a martial government composed of the members of the governing fascist party—to forge national unity and maintain a stable and orderly society.[9] Fascism rejects assertions that violence is automatically negative in nature and views political violence, war and imperialism as means that can achieve national rejuvenation.[10][11] Fascists advocate a mixed economy, with the principal goal of achieving autarky (national economic self-sufficiency) through protectionist and interventionist economic policies.[12]”

Here is the support for the notion that our country has become the very thing it allegedly fought in World War II:

“The Second World War changed the nature of scientific research as well. After the war, large-scale federally-funded laboratories devoted to practical applications for new research replaced the small academic laboratories that had existed before the war. Naturally, these new laboratories were geared toward producing new technologies that the federal government wanted, and scientists flocked toward these jobs and new well-funded facilities.
It’s true that many (though not all) of these technologies were developed — typically not invented, but refined — by government scientists working on military projects. The question nevertheless remains as to whether or not this model of innovation benefits society at large. Is this a “good side” of war?”

I think this is actually pretty self-evident. How many billions were spent on the “space race” after Soviet Russia put up sputnik? What sorts of innovations might have come out of the private sector, if that money had been left to private citizens to spend or at the very least was not used to suck brilliant minds into government employ?

Here is more support for fascism:

“We can see these distortions in the effects of the work of Vannevar Bush, the initiator of the Manhattan Project. Bush was chairman of the National Defense Research Committee (NDRC), and later director of the Office of Scientific Research and Development (OSRD), in the Second World War.

Bush wanted a peacetime successor to the OSRD and pushed for creation of the National Science Foundation, which was established in 1950. The NSF was controversial (one proposal was vetoed by Truman in 1947) because of the lack of accountability. A key figure was Senator Harley Kilgore of West Virginia, who initially opposed Bush’s plan to distribute the money through universities (he preferred the government to own the labs) but later agreed to Bush’s model. As Kealey describes it, Kilgore’s goal was not to generate new knowledge. Rather,

‘Kilgore wanted to create a reserve of scientifically trained personnel who could be mobilized for strategic purposes. … The National Science Foundation, therefore, was created in 1950, in the same year (and for the same reasons) as the National Security Council.1’”


Remember these “agencies” had budgets that probably dwarfed anything in the “private sector” and they were not subject to rigorous profit and loss weeding. You cannot argue against this, because that is Mazzucato’s thesis – private industry is not willing or able to fund “innovative” research.

Remember Betamax versus VHS?

“There is no doubt that military spending had a substantial effect on technological innovation. But was it a good one? Military spending distorts the efforts of scientists and engineers, and redirects them to particular projects, ones that do not necessarily generate benefits for consumers.

Military-funded R&D, like any government-funded projects, does not have to pass any kind of market test, so there is no way to know if it is actually beneficial to consumers. We cannot rely on the judgments of government scientists and scholars to say what are the “best” technologies. Remember Betamax? The experts told us that Betamax technology was superior to VHS tapes, from an engineering point of view. Yet, in the end, VHS proved to be economically superior in that consumers ultimately chose VHS over Beta. Betamax failed the market test in spite of its arguably superior technology.”

Putting “experts”, “scientists” in charge of government and its spending and market influence is anti-Democracy. Your greatest “democratic” expression is carried out daily in the market place when you “vote” with your money, your feet and your eyes. When your “disposable” income is diminished by government taxation your “voting” power is reduced!

When will we decide that we have had enough of the war machine and end it?

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