Thursday, December 27, 2012

YES, GOVERNMENT INVESTMENTS ARE NECESSARY

This LA Times piece is one of the best op-ed articles I've read in a while. It explains the role the state has in helping markets prosper by funding and testing projects that don't always work out, but are crucial for opening investigation pathways for future thinkers.


In "Venture capital didn't build that" William H. Janeway - a private equity managing director, and author of "Doing Capitalism in the Innovation Economy: Markets, Speculation and the State" - argues that much of the economic dynamism we saw after World War II was due to government investments that market players can't, and won't, make happen. Here's a snippet:

Why has it been in the world of information technology and, secondarily, biomedicine that venture capitalists have been successful? In brief: Only in these sectors did the state invest at sufficient scale in scientific research and in its translation to working technology. In over 40 years as a working venture capitalist, I learned that my colleagues and I and the entrepreneurs whom we backed were all dancing on a platform constructed by the federal government.

I especially like what Janeway has to say because it touches on the primary point(s) I make here.

- Mark  

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