Does the private sector create wealth anymore?
 

Does the private sector create wealth anymore?
By Bob Lewis
Created 2010-01-05 10:20AM

Let's start the year wrong. Instead of useful advice, I'm going to
indulge myself by asking a question here that I posed in Keep the Joint
Running [1] this week: Does the private sector create wealth anymore
("Creating wealth for fun and profit [2]")?

Wealth -- real wealth -- isn't measured by money. If it were, printing
more money wouldn't cause inflation. It would result in more wealth.
Thus, neither money itself nor any of the financial instruments that
wreaked havoc last year have anything to do with creating wealth.

Wealth is what you can buy that you value, whether it's a ticket to
"Avatar," a piece of artwork, or a beer, not the money itself.

The column points out that no matter where you look, many or most of the
foundations of innovation came from government investment, not private
research and development. That's significantly true of our own industry
-- NASA fostered microprocessor technology; Admiral Grace Hopper
invented Cobol; the federal government created the Internet; an employee
at CERN, Tim Berners-Lee, invented HTML; and the National Center for
Supercomputing Applications developed Mosaic, the first Web browser to
gain enough visibility to matter.

Foundational research in health care is funded by the National
Institutes of Heath. The private sector does spend quite a bit to
commercialize, but relatively little at the core of things.

Other industries? Agribusiness depends heavily on government-funded
research. Energy? Nuclear comes from the Manhattan Project, fossil-fuel
generation depends on 19th-century innovations, and nobody seriously
expects the private sector to fund much green-energy R&D.

Only the entertainment business funds its own R&D, and even there,
professional sports teams expect the public sector to build stadiums for
them.

This matters, because whatever else is true of the economy, if we don't
create wealth, we won't be able to create well-paying jobs, and we'll
all suffer the consequences of that.

So here are my questions, and please post your answers as comments:

1. Am I missing something, and private-sector research and
development is actually alive, strong, and ready to carry our economy
into the future?
2. If you think I'm right, what do you think should happen next to
improve things?

- Bob

This story, "Does the private sector create wealth anymore? [4]," was
originally published at InfoWorld.com [5].

Does the private sector create wealth anymore?
 

Does the private sector create wealth anymore?
 

On Tue, 05 Jan 2010 18:35:34 -0500, wrote:

On Tue, 05 Jan 2010 18:13:31 -0500, Harry
wrote:

The government may have contracted out the internet, integrated
circuits and Tang but it was a private corporation that actually
figured out how to make consumer products that turned them into
wealth.
On the other hand if you look at the human genome project you will see
the NIH duncing around with this for 10 years and $3 billion dollars
with no real progress and a private company breaking the code in 24
months at a tenth the cost.

The government may spur innovation but they do not translate that into
wealth by promoting it.


We're talking basic research here...not products for sale.

There is plenty of research going on at Intel, IBM and the various
phone/PDA/gaming companies that translate into wealth.

i dunno that there is. i used to work for bell labs. they don't exist
any more. i used to work for texas instruments. they laid off all
their researchers and decided to buy what they need from the chinese.

Does the private sector create wealth anymore?
 

bpuharic wrote:
On Tue, 05 Jan 2010 18:35:34 -0500, wrote:

On Tue, 05 Jan 2010 18:13:31 -0500, Harry
wrote:

The government may have contracted out the internet, integrated
circuits and Tang but it was a private corporation that actually
figured out how to make consumer products that turned them into
wealth.
On the other hand if you look at the human genome project you will see
the NIH duncing around with this for 10 years and $3 billion dollars
with no real progress and a private company breaking the code in 24
months at a tenth the cost.

The government may spur innovation but they do not translate that into
wealth by promoting it.

We're talking basic research here...not products for sale.
There is plenty of research going on at Intel, IBM and the various
phone/PDA/gaming companies that translate into wealth.

i dunno that there is. i used to work for bell labs. they don't exist
any more. i used to work for texas instruments. they laid off all
their researchers and decided to buy what they need from the chinese.


Bell Labs exists under different names. I also used to work for the Labs.

Does the private sector create wealth anymore?
 

On 05/01/2010 1:47 PM, Harry wrote:

Does the private sector create wealth anymore?

What is left of it does. It is an Obamanation, everybody works for the
government, banks and corporations like GM now.

Does the private sector create wealth anymore?
 

On 05/01/2010 5:17 PM, bpuharic wrote:
On Tue, 05 Jan 2010 18:35:34 -0500, wrote:

On Tue, 05 Jan 2010 18:13:31 -0500,
wrote:

The government may have contracted out the internet, integrated
circuits and Tang but it was a private corporation that actually
figured out how to make consumer products that turned them into
wealth.
On the other hand if you look at the human genome project you will see
the NIH duncing around with this for 10 years and $3 billion dollars
with no real progress and a private company breaking the code in 24
months at a tenth the cost.

The government may spur innovation but they do not translate that into
wealth by promoting it.


We're talking basic research here...not products for sale.

There is plenty of research going on at Intel, IBM and the various
phone/PDA/gaming companies that translate into wealth.

i dunno that there is. i used to work for bell labs. they don't exist
any more. i used to work for texas instruments. they laid off all
their researchers and decided to buy what they need from the chinese.

And the Chinese are ramping up their R & D as are the Indians.

American moves statist left and the economy tanks.

China moves libertarian right and the economy is growing.

Go figure. What did the American voters miss?

Does the private sector create wealth anymore?
 

On 05/01/2010 5:53 PM, D.Duck wrote:
bpuharic wrote:
On Tue, 05 Jan 2010 18:35:34 -0500, wrote:

On Tue, 05 Jan 2010 18:13:31 -0500, Harry
wrote:

The government may have contracted out the internet, integrated
circuits and Tang but it was a private corporation that actually
figured out how to make consumer products that turned them into
wealth.
On the other hand if you look at the human genome project you will see
the NIH duncing around with this for 10 years and $3 billion dollars
with no real progress and a private company breaking the code in 24
months at a tenth the cost.

The government may spur innovation but they do not translate that into
wealth by promoting it.

We're talking basic research here...not products for sale.
There is plenty of research going on at Intel, IBM and the various
phone/PDA/gaming companies that translate into wealth.

i dunno that there is. i used to work for bell labs. they don't exist
any more. i used to work for texas instruments. they laid off all
their researchers and decided to buy what they need from the chinese.


Bell Labs exists under different names. I also used to work for the Labs.

I did too. But in 1995 I opened my eyes and could see it wasn't going
to have a future and left. Too much disfunctional management. Hell,
one technical researcher for 25 admin/management with general
incompetance. Someone inverted the oraganization pyramid so they could
more people to crap on the few people at the bottom doing the work.
Glad I left. But sure was good in it's hay days.

Does the private sector create wealth anymore?
 

On Tue, 05 Jan 2010 18:05:07 -0500, wrote:

On Tue, 05 Jan 2010 15:47:04 -0500, Harry
wrote:

Does the private sector create wealth anymore?
By Bob Lewis
Created 2010-01-05 10:20AM

Let's start the year wrong. Instead of useful advice, I'm going to
indulge myself by asking a question here that I posed in Keep the Joint
Running [1] this week: Does the private sector create wealth anymore
("Creating wealth for fun and profit [2]")?

Wealth -- real wealth -- isn't measured by money. If it were, printing
more money wouldn't cause inflation. It would result in more wealth.
Thus, neither money itself nor any of the financial instruments that
wreaked havoc last year have anything to do with creating wealth.

Wealth is what you can buy that you value, whether it's a ticket to
"Avatar," a piece of artwork, or a beer, not the money itself.

The column points out that no matter where you look, many or most of the
foundations of innovation came from government investment, not private
research and development. That's significantly true of our own industry
-- NASA fostered microprocessor technology; Admiral Grace Hopper
invented Cobol; the federal government created the Internet; an employee
at CERN, Tim Berners-Lee, invented HTML; and the National Center for
Supercomputing Applications developed Mosaic, the first Web browser to
gain enough visibility to matter.

Foundational research in health care is funded by the National
Institutes of Heath. The private sector does spend quite a bit to
commercialize, but relatively little at the core of things.

Other industries? Agribusiness depends heavily on government-funded
research. Energy? Nuclear comes from the Manhattan Project, fossil-fuel
generation depends on 19th-century innovations, and nobody seriously
expects the private sector to fund much green-energy R&D.

Only the entertainment business funds its own R&D, and even there,
professional sports teams expect the public sector to build stadiums for
them.

This matters, because whatever else is true of the economy, if we don't
create wealth, we won't be able to create well-paying jobs, and we'll
all suffer the consequences of that.

So here are my questions, and please post your answers as comments:

1. Am I missing something, and private-sector research and
development is actually alive, strong, and ready to carry our economy
into the future?
2. If you think I'm right, what do you think should happen next to
improve things?

- Bob

This story, "Does the private sector create wealth anymore? [4]," was
originally published at InfoWorld.com [5].


The government may have contracted out the internet, integrated
circuits and Tang but it was a private corporation that actually
figured out how to make consumer products that turned them into
wealth.
On the other hand if you look at the human genome project you will see
the NIH duncing around with this for 10 years and $3 billion dollars
with no real progress and a private company breaking the code in 24
months at a tenth the cost.

The government may spur innovation but they do not translate that into
wealth by promoting it.

My bet is the human genome breakthroughs were based on the foundation
of research that had been laid. I do agree that entreprenurial
ventures are more likely to complete the same task in a shorter period
due to the need to create revenue.

Does the private sector create wealth anymore?
 

On Tue, 05 Jan 2010 18:35:34 -0500, wrote:

On Tue, 05 Jan 2010 18:13:31 -0500, Harry
wrote:

The government may have contracted out the internet, integrated
circuits and Tang but it was a private corporation that actually
figured out how to make consumer products that turned them into
wealth.
On the other hand if you look at the human genome project you will see
the NIH duncing around with this for 10 years and $3 billion dollars
with no real progress and a private company breaking the code in 24
months at a tenth the cost.

The government may spur innovation but they do not translate that into
wealth by promoting it.


We're talking basic research here...not products for sale.

There is plenty of research going on at Intel, IBM and the various
phone/PDA/gaming companies that translate into wealth.
That is one of the few bright spots in America's wealth building
industries even though most of the manufacturing is in Asia.
The companies in silicon valley are still searching for the holy grail
of a photo voltaic cell that makes economic sense over it's life.

So, even with a profit motive, those breakthroughs (as well as
regrowing hair) remain elusive. That does argue against enterprise
being the better of the research arms. If profit isn't within reach,
an enterprise may choose to curtail development whereas a government
funded research effort is more likely to be driven by academic
acheivement and treat products as a by-product.

Does the private sector create wealth anymore?
 

On Tue, 05 Jan 2010 23:55:06 -0500, wrote:

The current solar cell situation is just an extension of that.

I am still being courted by a solar outfit that wants to sell me a
2300 watt system for about $20,000. With all the rebates and tax
credits that gets cut by almost 2/3ds but they also say that 2300
watts only ends up being about 11 kwh a day. That is about a buck and
a half a day. Under perfect conditions that pays me back in 10-11
years assuming the money is free, nothing ever breaks and the cells
don't degrade in performance. Unfortunately they also say the cells
may be operating at 50-60% by that time. One decent hurricane and you
are wiped out.
I do give them credit for their honesty but it probably talked me out
of doing it.

As you point out, it just doesn't make sense yet for people who are
"on grid" at half way reasonable rates. At an installed system cost
of $1/watt I'll be the first to sign up however.

Does the private sector create wealth anymore?
 

On Tue, 05 Jan 2010 20:05:30 -0700, Canuck57
wrote:

On 05/01/2010 1:47 PM, Harry wrote:

Does the private sector create wealth anymore?

What is left of it does. It is an Obamanation, everybody works for the
government, banks and corporations like GM now.

Speaking of GM (and Chrysler and Ford), it looks like Ford is going
strong at the expense of the other two - again.

http://tinyurl.com/y8qhvv8

Backlash, anyone?

Does the private sector create wealth anymore?
 

Canuck57 wrote:
On 05/01/2010 1:47 PM, Harry wrote:

Does the private sector create wealth anymore?

What is left of it does. It is an Obamanation, everybody works for the
government, banks and corporations like GM now.

The next President is going to have his work cut out for him trying to
straighten out the mess we're in.

Does the private sector create wealth anymore?
 

John H wrote:
On Tue, 05 Jan 2010 20:05:30 -0700, Canuck57
wrote:

On 05/01/2010 1:47 PM, Harry wrote:

Does the private sector create wealth anymore?
What is left of it does. It is an Obamanation, everybody works for the
government, banks and corporations like GM now.

Speaking of GM (and Chrysler and Ford), it looks like Ford is going
strong at the expense of the other two - again.

http://tinyurl.com/y8qhvv8

Backlash, anyone?

What's wrong with us? The government is trying to practically give us
cars and we are turning them away. Is this a rebellion against big
government? Is government the "big business" that Krausie was warning us
about. Are high government officials the "super rich" that Krausie says
we should scorn?

Does the private sector create wealth anymore?
 

On Wed, 06 Jan 2010 08:49:59 -0500, Jim wrote:

John H wrote:
On Tue, 05 Jan 2010 20:05:30 -0700, Canuck57
wrote:

On 05/01/2010 1:47 PM, Harry wrote:

Does the private sector create wealth anymore?
What is left of it does. It is an Obamanation, everybody works for the
government, banks and corporations like GM now.

Speaking of GM (and Chrysler and Ford), it looks like Ford is going
strong at the expense of the other two - again.

http://tinyurl.com/y8qhvv8

Backlash, anyone?

What's wrong with us? The government is trying to practically give us
cars and we are turning them away. Is this a rebellion against big
government? Is government the "big business" that Krausie was warning us
about. Are high government officials the "super rich" that Krausie says
we should scorn?

Who, in the USSR, a socialist state, was rich? Either the politicians
or the mafia, take your pick.

I'll guarantee you the poor, downtrodden, inner-city dwellers didn't
win in that environment.

I think it was a Democrat who said, "If we want to keep winning, we
just have to keep them fat, dumb, and pregnant."

Does the private sector create wealth anymore?
 

John H wrote:
On Wed, 06 Jan 2010 08:49:59 -0500, Jim wrote:

John H wrote:
On Tue, 05 Jan 2010 20:05:30 -0700, Canuck57
wrote:

On 05/01/2010 1:47 PM, Harry wrote:

Does the private sector create wealth anymore?
What is left of it does. It is an Obamanation, everybody works for the
government, banks and corporations like GM now.
Speaking of GM (and Chrysler and Ford), it looks like Ford is going
strong at the expense of the other two - again.

http://tinyurl.com/y8qhvv8

Backlash, anyone?
What's wrong with us? The government is trying to practically give us
cars and we are turning them away. Is this a rebellion against big
government? Is government the "big business" that Krausie was warning us
about. Are high government officials the "super rich" that Krausie says
we should scorn?

Who, in the USSR, a socialist state, was rich? Either the politicians
or the mafia, take your pick.

I'll guarantee you the poor, downtrodden, inner-city dwellers didn't
win in that environment.

I think it was a Democrat who said, "If we want to keep winning, we
just have to keep them fat, dumb, and pregnant."


Actually, isn't that the motto of your church?

Does the private sector create wealth anymore?
 

On Tue, 05 Jan 2010 19:53:57 -0500, "D.Duck" wrote:

bpuharic wrote:


i dunno that there is. i used to work for bell labs. they don't exist
any more. i used to work for texas instruments. they laid off all
their researchers and decided to buy what they need from the chinese.


Bell Labs exists under different names. I also used to work for the Labs.

so does kentucky fried chicken....a bit of a difference

Does the private sector create wealth anymore?
 

On Tue, 05 Jan 2010 20:09:38 -0700, Canuck57
wrote:

On 05/01/2010 5:17 PM, bpuharic wrote:
On Tue, 05 Jan 2010 18:35:34 -0500, wrote:


i dunno that there is. i used to work for bell labs. they don't exist
any more. i used to work for texas instruments. they laid off all
their researchers and decided to buy what they need from the chinese.

And the Chinese are ramping up their R & D as are the Indians.

American moves statist left and the economy tanks.

actually the US is moving mercantilist right. the big companies...AIG,
BoA have transferred taxpayer dollars to the richest americans while
screwing the middle class

Does the private sector create wealth anymore?
 

On Tue, 05 Jan 2010 22:27:54 -0500, wrote:

On Tue, 05 Jan 2010 19:17:59 -0500, bpuharic wrote:


i dunno that there is. i used to work for bell labs. they don't exist
any more. i used to work for texas instruments. they laid off all
their researchers and decided to buy what they need from the chinese.

The breakup of Ma Bell was probably the biggest advance for innovation
in the history of the country

disputable. what other company, besides IBM, has won as many nobel
prizes?

.. Bell Labs invented a lot of good stuff
but the marketing model of Ma Bell made sure that there was not much
money made by anyone but Ma Bell

and now most computer chips are made overseas...along with the
technology to develop these

.. We wouldn't have a real PC/Internet
business if you needed to rent your modem from Ma and only got the
speeds they thought you needed.

now THAT may be true. but the business model hasn't died. most of the
'baby bells' have consolidated back to big companies that rivaled the
old ATT

They had lots of money tied up in old
"plant" and they had little interest in making that stuff obsolete.
All you have to do is look at the innovation we got from the end of
WWII until they were broken up. We got phones in a color other than
black, touch tone and a phone with a light in it. AT&T had a lot of
technology but management chose to sit on it. If you talked to their
management at the time they would say it was because of government
regulation.

i used to travel to europe in the 80's and 90's. our phone system
wasn't that bad compared to many other countries.


IBM suffered from the same problems but they "unbundled" themselves
and you see what happened to the PC business. This was because they
opted to sell "open architecture" machines as opposed to the way the
mainframe business and Apple did business. They did screw up by not
being more aggressive in the home PC arena but they managed the office
environment in a way that allowed them to survive.

yep. IBM embraced competition in a way that apple did not. i remember
when apple and IBM both had about equal market share. not that way
today

Does the private sector create wealth anymore?
 

On Tue, 05 Jan 2010 23:55:06 -0500, wrote:

On Tue, 05 Jan 2010 20:30:47 -0800, jps wrote:


So, even with a profit motive, those breakthroughs (as well as
regrowing hair) remain elusive. That does argue against enterprise
being the better of the research arms. If profit isn't within reach,
an enterprise may choose to curtail development whereas a government
funded research effort is more likely to be driven by academic
acheivement and treat products as a by-product.

I agree and that is why a lot of things that the government backed
research came up with have very little commercial application.

like the PC and the internet? and, given the failure of the free
market in the last year or 2, it seems the free market isn't all that
good at innovating either, except for creating financial instruments
that lead to disaster

Does the private sector create wealth anymore?
 

On Wed, 06 Jan 2010 22:13:27 -0500, wrote:

I am not sure how the government had anything to do with the PC
itself. That was really started by a couple guys in an Albuquerque who
made a kit computer (Altair) that pretty much just blinked lights.
Everything else built up from that with very little from the
government at all.

The Altair and the Z-80 bus machines were out there for a while but no
one in big business really took notice until the Apple II came along
and Visicalc spreadsheet software started showing people the real
potential for personal computing. That's what brought IBM into the
game after their sales people started running into Apples at true blue
customer sites.

Does the private sector create wealth anymore?
 

On Wed, 06 Jan 2010 20:03:46 -0500, bpuharic wrote:

On Tue, 05 Jan 2010 22:27:54 -0500, wrote:

On Tue, 05 Jan 2010 19:17:59 -0500, bpuharic wrote:


i dunno that there is. i used to work for bell labs. they don't exist
any more. i used to work for texas instruments. they laid off all
their researchers and decided to buy what they need from the chinese.

The breakup of Ma Bell was probably the biggest advance for innovation
in the history of the country

disputable. what other company, besides IBM, has won as many nobel
prizes?

. Bell Labs invented a lot of good stuff
but the marketing model of Ma Bell made sure that there was not much
money made by anyone but Ma Bell

and now most computer chips are made overseas...along with the
technology to develop these

. We wouldn't have a real PC/Internet
business if you needed to rent your modem from Ma and only got the
speeds they thought you needed.

now THAT may be true. but the business model hasn't died. most of the
'baby bells' have consolidated back to big companies that rivaled the
old ATT

They had lots of money tied up in old
"plant" and they had little interest in making that stuff obsolete.
All you have to do is look at the innovation we got from the end of
WWII until they were broken up. We got phones in a color other than
black, touch tone and a phone with a light in it. AT&T had a lot of
technology but management chose to sit on it. If you talked to their
management at the time they would say it was because of government
regulation.

i used to travel to europe in the 80's and 90's. our phone system
wasn't that bad compared to many other countries.

In the early 90's I was introduced to Minitel in Switzerland. It was
so far ahead of anything we had it was ridiculous. Lots of civic,
transportation information at the touch of a button.