Government Is a Lousy Venture Capitalist

By Kenneth P. Green

While government has a legitimate and valuable role in basic science, technology, engineering, and mathematics research, it is a lousy venture capitalist and is largely incapable of picking winning technologies in the market.

 

In their article, “Lessons from the Shale Revolution,” Ted Nordhaus and Michael Shellenberger suggest that the success of hydraulic fracturing validates the idea that government “investment” is a reasonable and effective way to advance technology and to outperform market actors in finding and bringing cool new things to fruition. President Obama made the same argument in his 2012 State of the Union address, giving almost complete credit for hydraulic fracturing to Uncle Sam:

The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy.  And by the way, it was public research dollars, over the course of 30 years, that helped develop the technologies to extract all this natural gas out of shale rock–-reminding us that government support is critical in helping businesses get new energy ideas off the ground.

Read more: http://www.american.com/archive/2012/february/government-is-a-lousy-venture-capitalist