From: rwojcik@snake.tc-suns (Richard Wojcik,snake)
Newsgroups: talk.politics.misc
Subject: Re: Concentration of Wealth (Was: Is this a socialist county?)
Date: 14 Aug 92 19:25:04 GMT
Reply-To: rwojcik@snake.tc-suns
Organization: Sun Microsystems

In article 92Aug13062537@splinter.coe.northeastern.edu, jturner@splinter.coe.northeastern.edu (Jeffrey Turner) writes:
>In article <1992Aug10.014137.1076@access.digex.com> steve-b@access.digex.com (Steve Brinich) writes:
>>   Er, the development of new technologies *is* part of "the market".

>	Sure.  It's amazing how much comes out of government funded
>research and how little out of private R&D.  What's more amazing is
>how quickly libertarians forget or ignore this.

I don't think that most libertarians forget or ignore the role of government in
supporting R&D.  They just never understood it in the first place.  Other countries
have funding agencies that pour money into industrial R&D on the grounds that 
market forces tend to be very shortsighted.  If a country is to remain competitive
over the long run, then it needs to take a longer view of research and development
than ephemeral market forces would allow.  One excellent example of how governments
can bootstrap private development is Europe's Airbus consortium, which has only
recently begun to make anything approaching a profit.  In theory, the subsidies should
lessen as Airbus grabs more market share.  Meanwhile, Airbus has grown to become the
world's second largest manufacturer of airplanes.  This never would have happened
without direct government subsidies.

Traditionally, American companies have had nowhere to turn for government funding
except the military.  Companies not only receive government contracts, but
they are able to get fully or partially reimbursed for much R&D effort.  They just 
have to prove that it meets military needs as well as their own.  European and 
Japanese companies receive similar funding, but they only have to prove that the R&D
meets industry needs.  In both America and abroad, government has played a central
role in pushing and directing long term R&D efforts.

America faces a serious challenge from the collapse of the Soviet Union.  With a
lessening of tension, there has been something of a collapse in the defense industry.
That endangers much of the funding that America has traditionally supplied industry
for long term R&D through the military.  Eventually, the US government will have to
copy the European and Japanese leads in funding R&D through civilian agencies, but
there is no psychological mechanism in place now that would allow America to support
industry in this way.  We are simply losing our ability to spur industry to work on
problems whose solution is too far off to yield profits in the short term.  American
companies know that they need to fund such R&D, but they must compete with companies
that do not have to reduce profits in order to undertake the risks.

Libertarians and free traders can scream about the injustice of it all, but there
isn't a prayer that they will convince foreign governments to change what is obviously
a successful formula in world competition.  I suspect that foreign governments will
be very understanding and sympathetic, however, as American economic power continues
to decline. 

-----
Disclaimer:  The opinions expressed above do not represent those of my employer.

    Rick Wojcik   (rwojcik@atc.boeing.com)   Seattle, WA
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