The Government as Entrepreneur

Mariana Mazzucato argues that the idea that entrepreneurship is confined to the private sector is wrong. In fact, while often considered "inefficient," the state is among the shrewdest investors in innovation-and deserves its fair share of the rewards.
Who should get the fruits of innovation? Today, the gains are hoarded by corporations like Apple or Tesla. But University College London professor and INET grantee Mariana Mazzucato has a different answer: The state should reap the returns that its massive investment in innovation has generated.
Mazzucato argues that the state, often dubbed “lender of last resort,” should instead take an unabashed role as “investor of first resort”-acting as a proactive investor in major innovations, and getting returns on that investment. That's because governments are capable of the patient, long-term, strategic approach to finance that's essential for innovation. In taking a “mission-oriented” approach, the public sector should work with the private sector and civil society to build a portfolio of innovation projects that better meet the challenges of our times.

[@magnumopus8202]

One of the best interviews I've seen on here in a long time

[@Travelteez]

Great advice. Nothing beats being your own boss...

[@NewYork-ILDIKONYARI]

She raised an interesting perspective on public policy and the public sector, mainly in relation to innovation and growth, and being problem centered. On public sector, my view was, till now, that it’s a boring sector filled with people who were not good in school, and non-performers, without passion and drive, with inefficient procedures and ineffective outcomes. In short, only the less good people go to non-profits. The brainy with excellence and drive goes to profit organizations, because (I thought) that is where they can create the most value. But, she made some very interesting points arguing the large-scale benefits of the public production as opposed to the level of distribution of benefits made by a profit-oriented organization. I actually listened/watched it three times. It is definitely a thought-provoking argument. It’s worth picking up her book … Well, Theodore Roosevelt was determined not to go into the private sector (to the money makers), rather to the public sector, which was perceived to be unprofessional and low-class; but Theodore Roosevelt thought otherwise. It is where the real power is. And perhaps, to her question on ‘who should think up the mission’, is demand driven originating from the public (bottom) but defined into mission and strategy by the top providing directionality. And she also pressed interesting issues with the share buyback and equity, where the goal should be on long-term public benefit and not on shareholder/VC value. Definitely an interesting viewpoint. However, at the end isn’t it all rest with where the real money is or ‘maybe’ where the value is? … thank you.

[@yintercept4612]

Yep, when one looks at the list of billionaires, almost every billionaire has very close ties to the government. The billionaires have government contracts and insider deals with regulators which give them advantages over the people on the outside. What percent of the US economy is directly owned by the government? What percent is directly regulated by the government? The figures I see is that about 70% of the economy is directly or indirectly controlled by the government. Yes, you hear people on the outside of the government screaming that we need less government. They are never heard. As I recall there has not been a single year since 1950s in which the growth of the government did not out pace the growth of GDP. An unexpected spurt in economic growth in 2000 got us close to one year where the economy grew faster than the government. In your opinion, what percent of the economy should be owned or directly owned or directly regulated by the government? 80%, 90%, 95%?

[@kylequest]

Quantifying the "size of Government" by spending volume is flawed. As Government spending and actual "ownership" are two separate things entirely. Besides the fundamental fact that Government spending is private sector savings.

[@dallasweaver4061]

She sounds good. Her claims that the government can make wise innovations raise questions about the depth of her knowledge of technological innovation (does she understand enough technical details for an informed opinion). For example, she claims of the government inventing the internet goes back to the original contracts to create a network to tie together the supercomputers of the day. I never heard any of the players at the time (my friends and associates working on the DARPA contracts as PI's) express any vision of what has become the internet as we played with a modified electric typewriter on the kitchen table to talk with a supercomputer on campus. It was directed research for a specific very narrow goal that required inventing/using package switching. If there was a vision of the present-day internet, I can assure you that the security of the basic system against "man in the middle attack" and other security issues would have been built in, but the initial vision was between trusted computers. These innovations are evolutionary systems and most claims of accurate visions of the future were made after the fact. The human (vertebrate) eye is such a system that started backward and ended up evolving as a stupid design with blood and neurons between the lens and the sensors creating blind spots that our brain fills in. The other big difference between Angle Investors (AI) and Venture Capital (VC) investors in technical areas relative to government institutions of all types is how fast they kill ideas that don't work out. For example, she uses Solindra which was a good idea at the start when the price of solar-grade silicon was about 20 times higher than the production cost because of the huge German expansion of solar power. Solyndra used thin film technology with no silicon. However, the expansion of solar silicon production in the West was blocked by NIMBY activists but all you need to make solar silicon for solar cells is quartz, carbon, electricity, and human knowledge which all major countries had and China build multi-billion dollar production facilities in a little over a year while the West required a decade just for permission. Solyndra should have been killed when the solar silicon shortage crashed in about 2008 and not waited for bankruptcy in 2011. I created a small company whose innovation stayed ahead of a government-sponsored/funded non-profit with million of earmarked dollars for R&D. They had at least 10 times more R&D budget, but I didn't have to do detailed preplanning, proposals, contracts, and annual reports on my R&D and when it looked like a different research direction was required I just shifted with no permissions. My ability to rapidly change or kill projects allowed me to cover more of the possibilities and solutions in much less time and money. Since she misses the details on innovation, perhaps her general views are also wrong and are too contaminated with her beliefs in wise central government leaders and her hope that the government can get the best and brightest to work for bureaucrats. I know bureaucrats and they aren't the same as AI's and VC's that I also know.

[@henrycunha8379]

The government of Lower Saxony owns 12% of Volkswagen shares and 20% of the voting power. And they aren't about to give up the hundreds of millions of euros in dividends.

[@lennycarlson1178]

Direction is given by Geopolitical competition.

[@jenniferspurlock4953]

How does the taxpayer pay twice? Through State and local taxing? We know Federal taxes do not pay for Federal Spending., right?

[@NS-pj8dr]

So she said that when she was discussing pharmaceutical research, and she's pointing out how the public has "paid once" in the form of taxes which go towards research and development of new drugs, but when these drugs are then patented and sold to private companies who now have a monopoly over that drug (this is U.S. specific I would imagine) they drive up the price exorbitantly (a vial of insulin in the U.S. can cost 10x as much as in Canada), you then pay a "second" time for the drug you already paid to fund via taxes. I think that's the basic idea.

[@jenniferspurlock4953]

@@NS-pj8dr What I'm saying is that at the federal level taxes aren't paying for research. It is public funds appropriated fiat created currency. All nations with a monopoly on their own currency does this. For example, the countries who use the Euro can't because they do not own the currency. Therefore, they really do have tax or barrow i.e. Greece. Taxes in a monetary sovereign nation that actually fund things only come from the state and local levels. It's fact.

[@NS-pj8dr]

@@jenniferspurlock4953 That's interesting I hadn't considered that, although I find it hard to believe the government uses no tax money to fund services - the military budget, social security, and medicare cost trillions per year if I'm not mistaken. By "public funds appropriated fiat created currency" what exactly do you mean? Public debt issued as bonds to banks who grow the money?

[@jenniferspurlock4953]

@@NS-pj8dr I mean that at the federal level creating fiat currency whether to banks or for social spending doesn't come from taxes. Taxes are only used to value the dollar i.e. force the use of the dollar by demanding taxes and curb inflation by offsetting spending by removing currency out of circulation. Those taxes are deleted. Not needed to spend. State and local taxes are different. They are used for spending. The federal government doesn't have to sell bonds. It just chooses to. We could stop and it wouldn't be an issue. I'm not sure why they don't. And I don't know why Congress gave this duty of managing the monetary policy and function to the Federal Reserve when they could roll that right back under Congress and the treasury. When we (western world) went to neoliberal economics really set in by Reagan and Thatcher she stood and said "there are no public funds there are only taxes" and we've believed them ever since so they could cut and send social programs and everything else to the "free" market that shaped our industry to manage illness rather than cure it at an extreme cost.

[@jenniferspurlock4953]

@@NS-pj8dr Yes.

[@thomasd2444]

Date : 2020 APR 02nd - - Time : 05 :40 :10 (-5 GMT) - -

[@petersilva037]

fabulous interview... to "innovation doesn't just have a rate, but a direction" perhaps sprinkle in weinstein... "economists use scalars where the appropriate model is a field"

[@janezhang5192]

Of course, this would apply perfectly to some highly authoritarian countries.

[@ToadalSimplicity]

Who's keeping people like this secret? It makes me sad that nuanced policy discussions aren't the status quo. Too bad having reasonable, informed policy discussions isn't as entertaining as fighting ideological strawmen opponents with black and white thinking.

[@siszi6]

give her a netflix show please

[@persianfantasy2070]

lol

[@123axel123]

This is one of the most interesting left-wing economists. But I don't like her dogmatic Besserwisser style.

[@PoliticalEconomy101]

Blah Blah Blah less talk and more action please. If you want to reduce income and wealth inequality here is how: 1) reduce I&W inequality between households, 2) reduce income inequality in the labor market (superstar salaries), 3) reduce the oligopolic structure of firms and competition, 4) reduce the size of large firms, 5) change the ownership structure of firms to stakeholder ownership (workers, government, communities, NGOs) and make them democratically accountable, 6) confiscate the massive cash reserves businesses, nonprofit foundations, and local governments, are sitting on and put them to good use, 7) change the role of government from favoring the capitalist class to the disadvantaged, 8) get direct control over the I&W distribution through government or democratic control rather than let the invisible hand of the rich and powerful determine the I&W distribution, 9) nationalize the Fed allow the Fed to print money the government can use to create and guarantee high wage jobs to those who need them, 10) public banking or stakeholder ownership for banks involved in the money supply process, 11) have the government through the media, education, and propaganda promote an anti-liberal socialist culture which promotes the values of equality, solidarity, obligation, community, stability, and security Simple Keynesian taxation and redistribution is NOT enough

[@Todavaina1]

Nationalize the Fed? What does that even mean?

[@Todavaina1]

Confiscating the large cash reserves is theft. Those firms and organizations earned that money and what you're proposing is giving it to an entity that has time and time again proven to be inefficient.

[@jamespotts8197]

How can one person say so much without saying.......saying that much at all. A bunch of "high-tech" academic theory economically based slight of hand fast-talk? Here is an example: "The institutional relationship between market place economic development as well as growth that's supported by techniques such as high-end tech development and biosphere distribution of the classic Marxism trading type of economy, is scaring our fundamental economic development that is far out weighed by such said development, behaving out of stride in reality that's basically in tuned with a fundamental proposal for............see, I can talk like that!!!!!!!!!

[@NS-pj8dr]

or you could actually take a quote of hers and analyze to make a real argument about the topic, instead of parroting her language and pretending you understand anything she's saying

[@Skyscraper21]

That's what I thought. Why not actually Bring up a real quote

[@Rob-fx2dw]

This is an example of how wrong this person is in her thinking. She makes a point of saying instead of looking at market failures they look at problems of inequality, problems of climate change, problems of secular stagnation as a problem of lack of real market shaping, market creation process and alack of better deal between public private and also third sector and civil society. A complete word fest based on an arrogant grandiose belief that they know better without having any evidence at all of having achieved anything in reality.