I know that this will astonish you but I want to recommend Fareed Zakaria’s most recent column. It’s about the decline of new business formation in the United States and the complex interrelationships among government policy, technology, and business activity. It might be summed up by Peter Thiel’s wisecrack: “We wanted flying cars. We got 140 characters.”
The article is not without flaws. For example, in one section he sings the praises of government-funded basic research and then does a pratfall by citing something that isn’t basic research as an example:
And then there was government funding for research, which is sometimes thought of simply as large grants to universities for basic science but often was far more ingenious. My favorite example comes from Walter Isaacson’s fascinating new book, “The Innovators.†In the 1950s, the U.S. government funded a massive project at MIT’s Lincoln Laboratory, employing equal numbers of psychologists and engineers who worked together to find ways “that humans could interact more intuitively with computers and information could be presented with a friendlier interface.†Isaacson traces how this project led directly to the user-friendly computer screens of today as well as ARPANET, the precursor of the Internet.
This is what comes of having people who know little of business, science, or engineering write about business, science, or engineering. A handy rule of thumb is that if it has practical application it’s not basic research.
I have an amusing story about this. When I was in grad school I had a friend, a mathematician, whose area of study was a particularly abstract area of topology. One day I saw my friend who was looking particularly down at the mouth. “Pete”, I said, “what’s wrong?” He turned to me and replied “Somebody found a practical application for my work.”
But stick with him. He’s on a roll.
A couple thoughts and observations.
FWIW I interpreted the computer screen anecdote to mean that at times funding for droll basic research was used “ingeniously” (read: for whatever they damned well pleased) for applied research, and did not conflate the two. Hers a pin, shall we dance?
I always cringe at the recitation of a Facebook or iPhone as evidence of technological wonder. It’s nifty code writing or gadget design, but more akin to me to the invention of the roller coaster: consumer entertainment. Search engines and the ability to access data I get. Drug therapies, medical devices, GPS, engineering materials, electronic miniaturization etc I get.
Older (perhaps even family owned widget makers!) and bigger companies become risk averse, rigid with less innovation? You don’t say. PE comes under a lot of scrutiny and criticism mostly for being lucrative, and by those not understanding the difference between change agents and some ginormous hedge fund. Some valid, some idiotic. I’ve said it many times. PE as change agent is what the vast majority of what real PE firms do, and government standing in the way through regs or taxation changes is counterproductive. (Let me guess. I’m crying like a baby because of Glass Steagall or fractional reserve banking or something).
As for the solutions, I certainly think regulatory relief is in order. I hear a lot about high tech immigrants and their visas just being used to tamp down salaries. Could be, but I’ve never seen it. Anyway, immigration woes are largely about gardeners and Ag workers and different considerations. Internet fundraising is one of the stupidest things I’ve ever heard of for material efforts. Anyone hear of blue sky laws and accredited investors, or see the Wolf of Wall Street? As for universal health care, do we file this under never let a crisis go to waste? And do we just ignore the other issues, believing this is the big issue in innovation? I don’t think so.
Not to mention that for larger companies rent-seeking is a proven, inexpensive, and low risk approach to boosting the bottom line.
Microsoft’s paying lower wages to its H1-B employees is well-documented. By definition that is tamping down salaries.
I think we actually have two distinct problems with immigration that require distinct strategies. My proposal for a central clearing house for jobs for which H1-B visas are being sought is a recognition of one of those problems. My other proposal for a greatly increased number of work visas available to Mexican workers (coupled with strict workplace enforcement) addresses the other side of the coin.
And I don’t believe I’ve ever discussed the abuse of L-1 visas (something of which I also have firsthand knowledge).
My experience and observation is that rent seeking is really for what I call mega-businesses. Kind of like your comment awhile back, big government likes to deal with big business, not Florence’s Most Excellent Florist Shop adventure.
I should have said re: h1bs “seen it in large quantities. Do you know how many of those are issued compared to low wage workers? I don’t, but suspect it’s small. Of course if you are a software code writer……..
“…… Abuse of L1 visas……”
(In best Tom Smothers mode). Yes, we truly have a consumer credit problem. Sorry, man.
To those who aren’t tuned in to the different kinds of work visas the U. S. has many different kinds. The sort you hear about most frequently is the H1-B visa.
The H1-B visa is a work visa issued to individuals who possess essential skills that aren’t available in the domestic labor market. At least that’s what it’s supposed to be. No one really believes that any more.
An L-1 visa is a visa issued so that international companies can bring their present overseas employees into the country. So, for example, if an Italian company wants to bring somebody from headquarters to work in the U. S. they’ll need to get an L-1 visa for him or her.
However, holders of L-1 visas aren’t supposed to be subcontracted out. That has become extremely common.
C1 or C2 visas are the permanent resident green cards you’ve probably heard about.
“The H1-B visa is a work visa issued to individuals who possess essential skills that aren’t available in the domestic labor market. At least that’s what it’s supposed to be. No one really believes that any more.”
Admittedly haven’t thought about it in depth, but I’d be hard pressed to identify ANY such individuals. Acupuncturists and exorcists?
“However, holders of L-1 visas aren’t supposed to be subcontracted out. That has become extremely common.”
In other words, what looked good on paper has been completely bastardized. Sounds like stimulus programs or this health insurance thingy I’ve seen in the news.