Economics: What might work, what should work, what has worked (command v. open market)

[Ser Scot A Ellison]

So, Felice suggests we should give the State complete control over venture capital arguing that people shouldn’t make money based solely on money lent.  I objected that limiting venture capital to the State will necessarily create a bottleneck because there would only be one source of venture capital.  I like a hybrid where the State exists as a nonprofit source of capital and private sources of capital also exist.

To clear this from US Politics I offer this thread as a source for discussion.

[Alarich II]

29 minutes ago, Scott de Montevideo! said:

I like a hybrid where the State exists as a nonprofit source of capital and private sources of capital also exist.

Actually this hybrid already exists in a way (at least here). There are many government sponsored innovation programs: some offer interest free or low interest loans, others will subsidise investment in certain types of equipment, some will subsidise education and training of employees. Some are just favorable tax regulations for research and development costs or tax loss carry-forward. Most of these programs are aimed at areas that are high on the political agenda. The thing is: None of these programs evaluate the quality of the idea, they just create a set of objective criteria you have to meet to get the ressources. And they attach a ton of strings. So basically what the state considers desirable get's a headstart (if they can live with the strings attached) and the rest will just have to succeed on their own.

[Ser Scot A Ellison]

LtI,

But compare what NASA has done in 70 years to what SpaceX has done in 10.  Which culture truely fostered innovation?

[Mr. Chatywin et al.]

6 minutes ago, Scott de Montevideo! said:

LtI,

But compare what NASA has done in 70 years to what SpaceX has done in 10.  Which culture truely fostered innovation?

Advances in technology......

Read up on what happened in the 1960's due to Kennedy's push for putting a man on the moon. It was a boon for both public and private enterprises. 

[Ser Scot A Ellison]

1 minute ago, chiKanery et al. said:

Advances in technology......

Read up on what happened in the 1960's due to Kennedy's push for putting a man on the moon. It was a boon for both public and private enterprises. 

No argument.  Hence my advocacy for the hybrid.  Making the State the only source for venture capital seems, to me, to be a terrible idea.

[Mr. Chatywin et al.]

12 minutes ago, Scott de Montevideo! said:

No argument.  Hence my advocacy for the hybrid.  Making the State the only source for venture capital seems, to me, to be a terrible idea.

I agree. It can work in a small, homogeneous society, but not a large, diverse one like ours.

[Altherion]

11 minutes ago, Scott de Montevideo! said:

But compare what NASA has done in 70 years to what SpaceX has done in 10.  Which culture truely fostered innovation?

This is not a fair comparison. If you look at what NASA and its Soviet counterparts did over their first decade and a half or so (SpaceX is currently 16 years old), it seems almost incredible given how little they had to work with in terms of computing and materials science. The first space flight, the first manned space flight, the first moon landing and the first manned space station came in such quick succession that if I had lived back then, I'd be confident that visiting other planets would be possible for ordinary people in my lifetime.

There's no doubt the government and government funded entities can innovate -- you can see this not only in NASA, but also in the many national labs and institutes as well as at most American universities (where scientific research is funded primarily via government grants). The problem (as you allude to with the statement about 70 years) is that even the most innovative programs eventually ossify, lose personnel, lose funding and must be replaced by something else... but when they're funded by the government, they have too many stakeholders to simply go out of business the way most (but not all!) private corporations would. Note that this is not specific to the government: the same applies to the "too big to fail" investment banks, car companies and everyone else who got bailed out during the Great Recession.

[SeanF]

1 hour ago, Scott de Montevideo! said:

So, Felice suggests we should give the State complete control over venture capital arguing that people shouldn’t make money based solely on money lent.  I objected that limiting venture capital to the State will necessarily create a bottleneck because there would only be one source of venture capital.  I like a hybrid where the State exists as a nonprofit source of capital and private sources of capital also exist.

To clear this from US Politics I offer this thread as a source for discussion.

Why would one wish to make the State the sole source of venture capital?

[Ser Scot A Ellison]

8 minutes ago, SeanF said:

Why would one wish to make the State the sole source of venture capital?

She said it’s wrong for people to make money from money.

[Jace, Extat]

Give all the money to Jace.

You will be happy then.

Because all the money given to Jace will go to producing messages telling you how happy you are to have given your money to Jace.

Problem solved, bitches! This economy thing ain't complicated after all.

 

[SeanF]

16 minutes ago, Scott de Montevideo! said:

She said it’s wrong for people to make money from money.

People have always made money from lending, or investing, money.  No economy could function otherwise.  Even in the Soviet Union, investment in some private businesses was allowed.

[Ice Queen]

1 hour ago, Scott de Montevideo! said:

LtI,

But compare what NASA has done in 70 years to what SpaceX has done in 10.  Which culture truely fostered innovation?

SpaceX didn't have to develop their technology from scratch. They're building on 70 years of NASA's innovation and research . In other words, they're not doing anything NASA can't already do. 

If you've never been to Kennedy Space Center, go. You'll see just how primitive their technology was and how little they had to work with. There are orders of magnitude more computing power in your cell phone than there was in all of NASA and Mission Control. 

[Jo498]

1 minute ago, Crazy Cat Lady in Training said:

SpaceX didn't have to develop their technology from scratch. They're building on 70 years of NASA's innovation and research. In other words, they're not doing anything NASA can't already do. 

Quoted for Truth. They are making a 50 yo technology cheaper, that's about it. That one could seriously believe otherwise shows that the most creative of all industries today is the PR industry.

[Ser Scot A Ellison]

6 minutes ago, Crazy Cat Lady in Training said:

SpaceX didn't have to develop their technology from scratch. They're building on 70 years of NASA's innovation and research . In other words, they're not doing anything NASA can't already do. 

If you've never been to Kennedy Space Center, go. You'll see just how primitive their technology was and how little they had to work with. There are orders of magnitude more computing power in your cell phone than there was in all of NASA and Mission Control. 

I do understand that.  Nevertheless compare the existing attempts by NASA to get back into human space flight to SpaceX’s plan and show me how NASA’s methodology is better.

[Ice Queen]

14 minutes ago, Scott de Montevideo! said:

I do understand that.  Nevertheless compare the existing attempts by NASA to get back into human space flight to SpaceX’s plan and show me how NASA’s methodology is better.

SpaceX isn't really doing so great on that front so far. 

NASA was established in 1958. They put a man on the moon 11 years later. In 16 years, Space X hasn't gotten nearly that far, never mind putting a man on Mars. 

[Iskaral Pust]

Govt as the sole source of capital is a failed idea.  Central planning alone has never worked, it just creates corruption, patronage, wasted investment on pet projects, etc.  People who object to any returns on capital are welcome to John Galt off to their own utopia to see how it goes.  I assume it will be located somewhere between Cuba and Venezuela. 

Private capital is not solely efficient either.  Basic R&D is too speculative and has too uncertain a pay back because the benefits are unpredictable even if we are pretty sure they will eventually emerge in some way.  Many of the benefits of the moon race emerged outside of space travel.  So it’s a public good that should be supported by stable state investment in general and only taken up by the private sector once specifics emerge. 

I don’t think the current US hybrid system is perfect because the state does not get much or any share of profits to recycle back into investment.  Arguably the state-funded researchers work at lower comp because they have the potential upside, which is how the govt benefits and can fund more research at lower cost.  

[Ser Scot A Ellison]

16 minutes ago, Iskaral Putsch said:

Govt as the sole source of capital is a failed idea.  Central planning alone has never worked, it just creates corruption, patronage, wasted investment on pet projects, etc.  People who object to any returns on capital are welcome to John Galt off to their own utopia to see how it goes.  I assume it will be located somewhere between Cuba and Venezuela. 

Private capital is not solely efficient either.  Basic R&D is too speculative and has too uncertain a pay back because the benefits are unpredictable even if we are pretty sure they will eventually emerge in some way.  Many of the benefits of the moon race emerged outside of space travel.  So it’s a public good that should be supported by stable state investment in general and only taken up by the private sector once specifics emerge. 

I don’t think the current US hybrid system is perfect because the state does not get much or any share of profits to recycle back into investment.  Arguably the state-funded researchers work at lower comp because they have the potential upside, which is how the govt benefits and can fund more research at lower cost.  

I’m not claiming the existing US  (ad hoc) system is a panecea.  I’m absolutely open to modifications.

[lokisnow]

4 hours ago, Scott de Montevideo! said:

LtI,

But compare what NASA has done in 70 years to what SpaceX has done in 10.  Which culture truely fostered innovation?

Space x has a pretty narrow focus, whereas larger organizations like nasa or darpa jpl have much much broader areas they are overseeing. It’s not a really great comparison. 

[Ser Scot A Ellison]

5 minutes ago, lokisnow said:

Space x has a pretty narrow focus, whereas larger organizations like nasa or darpa jpl have much much broader areas they are overseeing. It’s not a really great comparison. 

Are you suggesting a smaller agency would be better able to accomplish Human Space Flight?

[lokisnow]

No just that the innovations with space x are based on some very broad building blocks and their innovations are within a fairly narrow sphere.

something like human spaceflight has a pretty enormous amount of frontloaded innovation, advancement and capital costs. A fairly narrow team was able to innovate rocketry to deliver bombs in wwii, but it took a much broader effort to get into space and get living creatures there (and get them back down)

a narrow goal like “put a bomb a on a rocket, aim it at the enemy” can be accomplished by a smaller organization.