Wednesday, February 23, 2011

It's the Government, Stupid, And It's Good!

There wouldn't be any computers or any Internet if it wasn't for the government. And what would the cars drive on if it wasn't for the federal and local funding of highways and roads. Kenneth Flamm showed this in his two volumes about the computer industry (Targeting the Computer, 1987 and Creating the Computer, 1988). Fred Block, a professor at the University of California, brings the discussion up to today in his new book State of Innovation: The US Government’s Role in Technology Development.

Watch an interview with Block from the Institute for New Economic Thinking (INET):

Here is a quote from INET's site:

"Block, a professor at the University of California, Davis, lays out a strong case that in the modern era government has provided essential support at the crucial early stages of all fundamentally new technologies – despite the rhetoric of those extolling the wonders of the free market. In Reagan’s era, government played a central role in the development of information technologies and, of course, the Internet.
But even today the central role of government in technology development is the norm. Fortune 500 companies have outsourced most core technology innovation, and almost all businesses rely on the government and nonprofit universities for supporting fundamental research, and taking on the initial risks of getting new technologies working. Even storied VC firms frequently point entrepreneurs to government funds to get their embryonic ideas to the point where the private sector can invest.
Government – both in the US and around the world - is also critical in getting many technologies from the commercialization phase to the more difficult mass production phase. This is particularly true now in clean energy technologies that require large economies of scale for large-scale adoption.
Looking forward, Block makes the case that even more sustained government investment and intervention is needed in this global era of climate change. For example, he talks about the idea of creating a national innovation fund that would spread the costs of core technology innovation across many businesses, but also have the public share in the upside that eventually comes."

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