The Importance of Government Spending

Well, lets look at the greatest inventions in the 20th century.

The air conditioner, Willis Carrier, no government involvement. american
The neon light, George Claude no government, french
The light-bulb, straight edison, no government, american.
The vacuum tube, Lee De Forest, no government american.
The transistor, bell labs, no government american.
The LED, Nick Holonyak, prize from MIT, no government involvement except tangential, american.
Radio, Marconi, no government, on the backs of a bunch of other inventions that *also* had no (or very little) government involvement, american.
The computer was a very mixed thing, some government, some less so. Since the invention, it has proceeded almost exclusively on private funds, american/british.
The airplane, the wright brothers, no government, american.
the tractor, Benjamin Holt no government, american.
Theory of relativity, Einstein, no government, refugee to america.
Sonar, Lewis Nixon, military, american.
the helicopter, Paul Cornu, no government, french.
The assembly line, Henry ford, no government, american.
The motion picture, edison, no government, american.
The zipper, Gideon Sundback, no government, immigrant to the US.
The arc welder, Nikolai Benardos and Stanislav Olszewski, no government, polish/russian.
Insulin, Sir Frederick Grant Banting., no government, canada.
CRT (tv tubes), Vladimir Kosma Zworykin, no government, american imigrant.
Frozen food, Clarence Birdseye, no government, US.
Liquid rockets, Robert Goddard, private university, questionable government, american.
TV, Philo Farnsworth, no government, US.
Penicillin, Alexander Fleming, no government, scottish.
The jet engine, Hans von Ohain and Sir Frank Whittle, no government, brit and german.


The list goes on virtually indefinitely. Once in a while, government spending on sciences and research pays off, but normally, it is money flushed down the toilet. Private industry and research are where innovation and invention are to be found, not government.

Now, I *do* realize that many of those inventors did obtain public education, however, it is *hard* to say whether they would have accomplished more without their peer groups holding them back.

Really, there is no legitimate case to be made that government expenditures in R+D tend to be money well spent. Education frequently pays off, but even that not always. It is quite common for the areas witht he highest government expenditures on education to see very very subpar results. For instance, the US spends the third most in the developed world on education per student, and the US has the highest level of years of schooling on average in the developed world. Do you consider that money well spent? Because we have rather poor outcomes.

Money spent per student
http://www.nationmaster.com/graph/edu_spe_per_sec_sch_stu-spending-per-secondary-school-student
years of schooling

http://www.nationmaster.com/graph/edu_ave_yea_of_sch_of_adu-education-average-years-schooling-adults

math results
http://www.nationmaster.com/graph/edu_gra_12_adv_stu_mat-grade-12-advanced-students-math


I think it's pretty clear that spending is not the answer.

So.. who bought them? These things were invented. Where did the demand come from?

You only have a few options: individuals, businesses, home government, foreign government. Add the comparison curves for demand, noting whose demand it was, and you might start to see where the economies of scale kick in.

Air conditioning is for everyone, for example. The electronic computer, on the other hand, was initially bought by government to keep tax and welfare records, followed by large businesses to maintain their own accounting data.

And that's the point of the article. Government doesn't always fund the development of an invention, but government demand can often make or break a product; just look at thin-film solar cells, where the first two years' production (from the initial factory) was bought out by the government for military research and roll-out before the doors on the production facility were even open.

Ah. You have provided an excellent example of money flushed down the toilet. Thin film solar is unlikely to, at any point, provide reasonably economical electricity. At current, and for the forseeable future, it is a realm of corporate exploitation of government subsidies.

Generally, the economies of scale kick in when a product line makes the jump from public sector to private. So, yes, there have been many inventions that have gotten their legs because of government purchasing, which allowed their optimization to expand into private marketplaces, however, those privately developed products were purchased by government not as "spending programs", but because they allowed government to better serve their functions (generally warfare in the cases listed where government played a significant market role).

So, the primary thesis of this article is deeply fundamentally flawed. Government R+D has produced a *tiny* fraction of the major developments, and government purchasing has done little to nothing that larger businesses wouldn't have gotten to pretty promptly anyway.

http://www.solarbuzz.com/facts-and-figures/retail-price-environment/module-prices Certainly in terms of cost per watt, thin-film seems to be beating other photovoltaic cells. If you're buying for portable usage, that's the kind of incentive people like to hear. Also, thin-film solar cells are flexible, reducing damage from handling and impact. Hardly money flushed to the sewer since it means reduced maintenance and replacement costs in the course of hard usage, such as on the front lines of a military operation, or at a base or installation which cannot rely on local power generation and/or which may come under attack on occasion.

As this article emphasizes, certain energy technologies would be too expensive but for government-offered incentives for their use. One presumes that there are other publicly desirable technologies for which there was no initial demand, which are now widely used because of government subsidies specifically to encourage demand, whether or not those subsidies have been reduced or withdrawn entirely.

On the walking hand, of course, I'm pretty sure your personal demand is to remove all subsidies without exception and let the market eat the losers. I wonder what a market would look like wherein individuals actually have perfect information, though.

Yes. There are other uses for thin-film PV. They will be developed or not based on the effectiveness of thin-film PV for those functionalities, not the government subsidies for the construction of factories.

Thin film is beating other technologies per KWH, but is still not even close to the national mean grid price. There are examples in which thin film is competitive. They are examples of locations in which the local regulatory climate is *particularly* insane.

Solarbuzz lists the current per kwh price from PV at $.25/kwh at best. The US retail price of electricity on average is $.10/kwh. So, after *all this* taxpayer funding, after 30 years of constant subsidies, it is down to merely double the cost of conventional electricity, distributed over conventional grids, and after profit margins.

solpar cost/kwh
http://solarbuzz.com/facts-and-figures/markets-growth/cost-competitiveness

average per kwh price grid
http://www.eia.doe.gov/electricity/epm/table5_6_a.html

What is your definition of flushing money down the toilet again?

In the main, yes, I would withdraw all subsidies. Let the producers of products compete on a fair field without political selection and see where we end up. I think that the results will be better all around. Partly because subsidies have often been used to prop up inefficient and ineffective technologies long past their sell-by dates, and partly because even the few instances of beneficial applications didn't really offset the overall social costs of their implementation.

Yes, many energy technologies that do not make economic or energy production sense are in use today because of government subsidies. That is not an example of something having gone right, it's an example of something having gone badly wrong. Those technologies are a prime example of government socializing the cost of inefficient technology at great cost to those that recieve no advantage from them.

Genrally, as far as individuals having perfect information... I consider it the job of each company with a product to do their own marketting. And may the best product win. Yes, sometimes a bad idea gets more legs than seem rational (SUVs come to mind), but then, lacking perfect knowledge, you can't regulate any better than imperfectly knowledgeable people can decide.