Government often gets smacked around for bureaucratic incompetence and wasting money on ill-conceived projects – think $600 hammers (a myth, by the way). But Sussex University Professor Mariana Mazzucato is out with a new book that says the government bashing has got it backwards. The sexiest sorts of private sector innovation, she argues, would never happen but for government-backed research.
One reason: Demands for overnight results, a rush that led the owners of Solyndra to pull the plug prematurely. Another: private-sector unwillingness to invest in basic research. Or, to put it another way, the need for government to invest in sectors where the benefits can’t be captured as private intellectual property. At its best, she says government shapes and creates markets through its research investments. Among the good things that started in government labs — touch screen technology and HTML coding for websites.
We’re not convinced that government should be in the business of shaping markets because it is so vulnerable to capture by private interests. But we’re all for government funding of basic research. And, Mazzucato is right to worry that innovation can be shorted out by pressure to hit short-term financial targets. In any event, by making the case for now out-of-fashion industrial planning, Mazzucato advances thoughtful discussion about what government should and shouldn’t do.
Receive the latest news, research and insight from Regulation2point0.
SIGN UP »