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Sunday, October 4, 2015

Thank American Taxpayers for Your Smart Phone, Not Bill Gates or Steve Jobs

Described by the business community during the Cold War as "a magic formula for almost endless good times." it was the defense and university funding that developed computers and code.  The truth is the birth of the Middle Class, and the IT revolution of today was almost entirely funded by the taxpayers.

"The federal government has played a critical role in supporting the research that underlies computer-based products and services. From less than $10 million in 1960, federal funding for research in computer science climbed to almost $1 billion in 1995. Federal expenditures on research in electrical engineering (which includes semiconductor and communications technologies—necessary underpinnings for computing) have fluctuated between $800 million and $1 billion since the 1970s. Such funding has constituted a significant fraction of all research funds in the computers" -Funding a Revolution: Government Support for Computing Research

Truman's Air Force Secretary said that government subsidies were't the right word.  "Security" was when it came to government funds developing new technologies and new products.  It's far easier to sell the subsidization of the wealthiest and corporate class if it's seen necessary to the security of the public.

"The NSF ended up funding the bulk of theoretical work in the field (by 1980 it had supported nearly 400 projects in computational theory), much of it with great success. Although funding for theoretical computer science has declined as a percentage of the NSF budget for computing research (it constituted 7 percent of the budget in 1996, down from 20 percent in 1973), it has grown slightly in real dollars.1 Mission-oriented agencies, such as the National Aeronautics and Space Administration or the Defense Advanced Research Projects Agency, tend not to fund theoretical work directly because of their emphasis on advancing computing technology, but some advances in theory were made as part of their larger research agendas." -National Academia Press

The federal government (taxpayers) has paid the tab for the last 65+ years of technological innovation - simple because quarterly capitalism can't convince temperamental shareholders that maximum return on quarterly returns aren't necessarily beneficial to the overall society.  Those in the business community know this, and shift the costs of R&D under the umbrella of defense spending.

Take the incredible apparent example of infrastructure spending with fiber optic cable - an infrastructure we know benefits communities but shortchanges investors:

"Karl Bode, an ISP industry watcher and author of a the blog DSL Reports, believes Verizon has had a change of heart. “I think ex-Verizon CEO Ivan Seidenberg was very bullish on fiber,” he says. “But after retirement, he was replaced by executives who wanted to focus more heavily on wireless, given the lower cost of deployment and the absolute killing that can be made charging users a significant amount per gigabyte.”

But he also blames the money men. “Investors in this country are simply too myopic to wait the required length of time to see adequate returns,” Bode says. “These services are certainly profitable, they’re just not profitable enough quickly enough for short-sighted investors.” -Wired

And it's no secret that companies want to stifle innovation and cheaper prices - they advertise this fact:

Kentucky had to bond the installation of fiber infrastructure out - putting the taxpayers entirely on the line for losses for example.  It's the first of it's kind across the county - and it should result in remarkable results for Kentucky - but private investors didn't fund it.

This post isn't so much to hail the system we have of State-Capitalism, but to dispute the idea of the efficiency of markets and wonders of the market.  It's as much of an illusion as the idea of the Confederacy was in 1864.  It was a Confederacy of the mind only.  The reality of both was and is much different.

Almost all of the technical innovations in IT/computer science, aerospace, biology, medicine and genetics have come out of the state sector - provided by tax payer money.  Quarterly dictated investors are just too short sighted.

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