Nearly everyone recognizes the role of entrepreneurship, private capital, and free and open competition in fostering innovation and bringing new products and services to market. Some critics, however, think that the free market has been given too much credit and that the role of government in creating innovation has not been appropriately appreciated. A lengthy review essay by Jeff Madrick in last month's New York Review of Books argues that many important innovations like the iPad, many important drugs, communications, equipment and so on owe their origins to government-funded research and development and that government, not the free market, deserves much of the credit for innovation and economic growth. Entrepreneurs and venture capitalists while playing an important role, according to Madrick step into the game rather late, he says, after governments much more daring, basic research and patient investment of capital. Venture capital, he goes on to say, cuts and runs too rapidly to be trusted and also encourages short-term success that may not be sustainable, the better to entice financial market investors. This kind of criticism runs through a much of the recent commentary on the role of government in promoting economic growth. Private actors, it's argued, pursue short-term gains and look at short-term return on investment as their main criterion, whereas government actors take a longer-run perspective and are more willing to take the big risks that are needed to come up with great new things. Government is capable of doing a lot of things. An investment and government projects and programs create lots of goods and services, some of them useful, some of them not so useful. But who should make the decisions about how to allocate scarce capital and time? Bureau crats, planners and others who have little incentive to get it right and lack the expertise to make good decisions or private market participants, investors, entrepreneurs, executives, those who are putting their own resources at stake who pay the penalties as well as bearing the costs and who are able to work things out in the free market by competing with each other and negotiating with customers, suppliers and so on. I'd much rather have private market participants making these decisions than government bureaucrats, even though bureaucrats like everybody else may get lucky once in a while.