Did Steve Jobs Really Build That?

The conventional wisdom is that only the private sector can marshal the entrepreneurial energy to create innovation and growth, while government can do little more than shift around the wealth that the private sector creates.

But is that really true? A new book by Mariana Mazzucato, an economist and professor of science and technology policy at the University of Sussex, says it is 100% wrong. She posits that The Entrepreneurial State, as the title of her new book calls it, provides most of the risk-taking energy and investment behind innovation.

I know many readers will rise in disbelief, perhaps even in anger at this statement, but Mazzucato is right. Most of the bedrock technological innovations of the last 70 years can be traced directly to U.S. and European government programs.

Furthermore, Mazzucato is correct to indict tax-avoiding and tax-opposing beneficiaries of these government programs for denying the government the funds it needs to pursue its vital entrepreneurial role.

To round off her paradigm-busting message, Mazzucato argues for establishing ways the government can reap rewards for creating innovations and taking risks. She writes that if the public sector – i.e., the taxpayer – were paid a fair return on the government’s farsighted investments, it would be “immediately logical for there to be a more collective distribution of the rewards.” This would help solve the U.S.’s economic inequality problem.

Anyone who has worked for a U.S. government research laboratory, as I have, knows that our government is deeply involved, not only in research and development of innovative technologies, but also in their commercialization. The National Institutes of Health, the National Science Foundation, the National Aeronautics and Space Administration, the Department of Energy, the Small Business Innovation Research and Advanced Technology programs and the complex of government agencies comprising the Department of Defense – especially the Defense Advanced Research Projects Agency, which developed the Internet – have funded and created most of the fundamental innovations that have brought modern industrial society to where it is today.

Government has dynamically and aggressively pushed innovative technologies. On the other hand, as Mazzucato points out, “There are plenty of ‘bureaucratic’ and inertial businesses“ in the private sector. “There is nothing in the DNA of the public sector that makes it less innovative than the private sector,” according to Mazzucato.