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Saturday, April 20, 2019

Brainiacs who don't understand capitalism

WGBH interviewed a couple of MIT economists about their new book, "Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream."

Ike Eisenhower warned us against such men.

One of the authors is Jon Gruber who gave the world Romneycare, and then Obamacare. The latter is so bad that no Democrat seeking the presidency is calling for restoring it.

The other author is Simon Johnson who warned us of the 2008-2009 recession.

In 2010.

Despite a 50-year low in unemployment and economic growth, the two say America is in the decline.

There is only one entity that can save it.


Johnson said, "We need growth [and] we need productivity, everyone across the political spectrum recognizes that. The question is: How do you get it? And the answer is not just the private sector or just the government, it’s the partnership.

"We need government strategic investments to develop the basic science — recognize there’s a lot of spillover effects — and we need to make it easier for private businesses to build on that and spread it around the country."

Yes because if there is one thing government is known for, it is efficiency,

Then Mr. Romneycare/Obamacare piped in: "Real innovation isn’t done by any one private company because a private company is interested in their bottom line."

Tell that to Henry Ford, who came up with the movable assembly line, which allowed him to produce more Model T's faster, cheaper, and better than anyone else. He drove the price of cars down, and wages up.

Tell that to John Davison Rockefeller, who came up with the pipeline which allowed him to move more oil faster, cheaper, and safer than a railroad could. It was one of his many innovations. Within 25 years, he had cornered the market on kerosene by dropping the price from 25 cents to a little over 8 cents.

He also ended the dumping into the river of a waste product from oil refining. The byproduct was a highly volatile chemical. He decided to use it in the internal combustion engines that ran his refineries.

It was called gasoline.

The bottom line drives innovation and productivity. The government wastes it.

The federal government already blows $7 billion a year on science through the National Science Foundation alone. The EPA, the military, and all the other agencies also hand out research grants like cotton candy.

And we subsidize all sorts of alternate energy nonsense that supports inefficient uses of resources to produce energy.

I am not saying the government has no role, but I am saying that if you don't understand capitalism then you are not an economist.

The bottom line is that Gruber sneered at what  actually drives innovation and increased productivity: the bottom line.

Ford and Rockefeller became two of the richest men in the world through their innovations -- without a research grant from the government.

Ike Eisenhower warned us about government research grants.

In his farewell address as president, he said, "Today, the solitary inventor, tinkering in his shop, has been over shadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers.

"The prospect of domination of the nation's scholars by federal employment, project allocations, and the power of money is ever present and is gravely to be regarded.

"Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite.

"It is the task of statesmanship to mold, to balance, and to integrate these and other forces, new and old, within the principles of our democratic system-ever aiming toward the supreme goals of our free society."


Statesmanship alas is in short supply.


  1. Here all this time I thought the purpose of government was for corporate givers to enable the stiffeling of small business start ups.

  2. Large companies spend huge amounts on R&D to gain a competitive advantage over their competitors. The two MIT “you did t build that” economists can go sit and trade theories with Paul Krugman.

  3. Hey Jon and Simon: Here’s a quarter, call someone who cares.

  4. Dear Old Dad was a 40 year man at AT&T, primarily with Bell Laboratories. Back before the gummint decided that AT&T was an evil monopoly, AT&T was able to afford pure research. Some of the fruits of this effort led to such breakthroughs as the transistor, lasers, communications satellites, solar cells, and cellular telephone technology. Two of their scientists discovered the cosmic background radiation which provided clues to the theory of the origin of the universe.
    I used to visit Dad at his Labs office in Holmdel, NJ and after being allowed past the Pinkerton guards I would pass various private offices where I would sometimes see the occupant simply staring at the ceiling, thinking. That was his job.
    Dad was a BSEE guy who worked on B-29 radar systems during WWII and could fix just about anything. I asked him one time what he thought about the "eggheads" around there, to which he mused that they were pretty much ok people but they didn't know which end of a hammer to use. I'm rather glad that Dad didn't live to see what became of his beloved Bell Labs.

  5. Government subsidizes research on solar panels. Government subsidizes the purchase of solar panels.
    When that doesn't work, government mandates the purchase of solar panels.

  6. The Left doesn't trust Energy Company scientists because they're paid by Big Oil. I agree; I don't trust Climate. Inc. scientists who are paid by Big Government politicians, to Eisenhower's point.

    He famously warned of the Military-Industrial Complex. I think we can expand that to Big Surveillance, Big Media and Big Tech, too.

    We see the Deep State rigging elections, the Media pushing the Big Lie and Big Tech jumping in to censor conservatives and exploit everyone's privacy.

    That's why Zuck wants government regulation. Not because it will increase competition, ensure privacy and stop censorship of conservatives--but because it won't.

  7. we need to make it easier for private businesses to build on that and spread it around the country.
    Most liars also include some true statements. The above is true, we need fewer regulations for private businesses to build on.
    And we need lower taxes so business has more to spend on building their businesses.

    We do NOT need more gov't. Not even in basic research, tho tax breaks for research are helpful.

    The huge amounts of gov't money in academia have not resulted in more reasonable college educated people, able to disagree peacefully about facts, and have alternative opinion analyses of the actual facts.

    Lower taxes and less nat. debt would be better than continued gov't subsidizing college indoctrination.