Sunday, May 31, 2015

Government Funded Research & Development as a Factor of Inequality?

This NYT article provides an interesting discussion on if the government should receive returns on the successful R&D it funds. Would it increase or decrease innovation? How does this effect inequality?

On the one hand, the article argues: 

“’We must change the distribution of rewards to innovation,’ Professor Mazzucato told me. ‘We socialize the risks but privatize the rewards.’ This not only contributes to our persistently widening inequality, it undercuts support for scientific discovery.

Had the government received an equity share in Tesla in exchange for taxpayers’ financial support, for example, it might have paid for the government’s failed investment in Solyndra.

Had it gotten even a minute stake in Google — whose search algorithm was financed by the National Science Foundation — or in GPS, rocket development, touch-screen technology or the many drugs that flowed from its investment in basic science, the government might have a stable, richer pot to finance the next generation of scientific discovery.”

Of course, there are also concerns with governments receiving returns on investments in R&D. What if governments were to become too concerned with getting high returns? How would what R&D they invest in change? Especially if governments patented innovations resulting from their investment, there is evidence to say that related discoveries will substantially slow.

I think that at the end, the author makes a good point: “At a minimum, why not embed rules into federally funded discoveries to ensure that companies that profit from these ideas reinvest some share of their profits into additional research, rather than use it for stock buybacks?”

What do you think? Should the government be rewarded for investing in R&D that is successful  If so, how? Through direct repayment? Through agreeing to invest a certain amount of profits in R&D? Other thoughts?


  1. This is an interesting article. I understand both sides of the argument but I don't trust government in the dilemma of becoming too concerned with getting high returns. I like the idea of getting returns on investment but I think it would change they way they invest significantly. I agree with you when you say you like the ending point; at a minimum, why not embed rules into federally funded discoveries? I'm skeptical to provide too much returns for their investments.

  2. I completely agree with Cam's statement. I don't really trust the government with potentially being rewarded for their investments. I feel like this is morally incorrect. I also feel that they would change the way they spend their R&D money, and it wouldn't necessarily going towards investing in the future of our society. But I think that the companies that do receive funding could agree to maybe pay back the government or maybe promise to re-invest some of the money back into R&D themselves.

  3. This article offers a very interesting discussion. I think that it would be great if taxpayers could see some of the returns from the investment of their tax dollars, but, like Cam and Aleks, I'm a bit skeptical of how this would play out. I think that innovation stemming from more altruistic motives would better serve society than pure return seeking.

  4. I agree with all the above comments, especially Kate's in that innovation stemming form more altruistic motives would better serve society that pure return seeking. I really don't think that the government would use the revenue to necessarily benefit the well-being of the economy. But I also like Aleksis idea that the companies that receive funding should make a promise to re-invest some money back into R&D, which would further stimulate R&D competition and economic growth.