Advocates of federal research funding argue that the private sector will do too little because of market failures resulting from firms' free riding on others' research. There is no evidence that government will triumph or that markets will fail. Politicians, facing the impossible job of assigning priorities to a myriad of research projects, tend to choose those with the greatest number of supporters or those helping their local constituencies. On the other hand, private-sector scientists and entrepreneurs are guided by price signals and choose research projects that, if successful, would be the most profitable and the most likely to meet human needs. Markets and price signals permit superior targeting of research projects and resources, and private firms can earn large rewards by solving important problems.
Privatization is overdue for federal research facilities.
The task of linking research with human needs is not suitable for a political bureaucracy. That's why the private sector hasn't been much interested in what the federal labs create. Reducing Federal Technology Transfer Activities With the passage of the Stevenson-Wydler Innovation Act of 1980 and the Federal Technology Transfer Act of 1986, all Federal labs were required to develop programs for transferring technology to the private sector and to state and local governments. This legislation was amended in 1996 by Public Law 104-113, which created incentives and encouraged the commercialization of technology created in federal labs. This is unsurprising.