Berniewood Hogan
IT'S BERNIE SANDERS WITH A STEEL CHAIR!
http://scholarlykitchen.sspnet.org/...ate-debunking-public-vs-private-sector-myths/
Apple has been fashioned and generally understood as the epitome of Silicon Valley creativity and drive. And while there is a lot to praise, Mazzucato’s chapter entitled, “The State Behind the iPhone,” provides a salutary reminder that it was not Apple that invented, funded, or sustained experimentation for the Internet, GPS, touchscreen technologies, Bluetooth, and more. In fact, Apple’s expenditures on R&D as a percentage of revenues have fallen from a high of 8.02% in 2001 to 2.24% in 2011. This is a far lower percentage than Microsoft (13.8%) or Google (12.8%), and poses the question captured in a figure caption — “Productive R&D or free lunch?” How did Apple become so wildly successful given these discrepancies? Because Apple is a technology integration company, not a technology innovation company. Taking a tour of an iPhone proves instructive as to the amount of public-funded research these devices rely upon:*
All this dependence on public funding would make for better corporate citizens, you might think. Not so fast. As Mazzucato writes about Apple:
. . . nearly every state-of-the-art technology found in the iPod, iPhone and iPad is an often overlooked and ignored achievement of the research efforts and funding support of the government and military. . . . we ask whether the US public benefited, in terms of employment and tax receipts, from these major risks taken by such an investment of US tax dollars? Or were the profits siphoned off and taxes avoided?
Apple is not alone. Google developed its algorithm through public funding, yet profits tremendously and avoids paying US taxes by creating holding companies in tax havens.
Manufacturers like Apple have systematically socialized risk and privatized rewards over the past 30 years while employing the term “open innovation.” (I’m beginning to think “open” is actually a proxy term for “socialized.”) “Open innovation” has allowed manufacturers to dump the former methods of private innovation epitomized by Bell Labs, Xerox PARC, and Alcoa Research Labs – where risks and rewards were better balanced – and instead take government-funded research on board, either directly through licensing or through the acquisition of small firms doing initial trials of government-funded R&D.
Apple has been fashioned and generally understood as the epitome of Silicon Valley creativity and drive. And while there is a lot to praise, Mazzucato’s chapter entitled, “The State Behind the iPhone,” provides a salutary reminder that it was not Apple that invented, funded, or sustained experimentation for the Internet, GPS, touchscreen technologies, Bluetooth, and more. In fact, Apple’s expenditures on R&D as a percentage of revenues have fallen from a high of 8.02% in 2001 to 2.24% in 2011. This is a far lower percentage than Microsoft (13.8%) or Google (12.8%), and poses the question captured in a figure caption — “Productive R&D or free lunch?” How did Apple become so wildly successful given these discrepancies? Because Apple is a technology integration company, not a technology innovation company. Taking a tour of an iPhone proves instructive as to the amount of public-funded research these devices rely upon:*
- Hard drives – Initial research funded by France and Germany, with refinements funded by US agencies (Department of Energy [DOE], Defense Advanced Research Projects Agency [DARPA], Department of Defense [DOD]).
- Silicon-based semiconductors – Initial research initiated as a public-private endeavor, with major expenditures by the US Air Force (USAF), Navy, and DOD to purchase and refine semiconductors and lower their costs, with the DOD starting the Strategic Computing Initiative (SCI) and investing $1 billion in their improvement, ultimately founding a consortium it funded to the tune of $100 million per year over many years.
- Capacitive sensing technologies – British, Swiss, and US funding agencies supported the major research into this technology.
- Multi-touch screens – The National Science Foundation (NSF) and CIA provided initial funding through the University of Delaware. Apple bought the resulting company.
- Internet protocols (HTTP, HTML, TCP/IP) – DARPA, NSF, and CERN all had a funding hand in their development.
- GPS – The DOD and the USAF played major roles in conceptualizing and deploying the satellites and protocols that make GPS possible, and the USAF still supports it to the tune of more than $700 million annually.
- SIRI – DARPA asked the Stanford Research Institute (SRI) to develop a “virtual office assistant,” and SRI created a 20-university consortium funded by DARPA. A voice-recognition system emerged, was spun off as SIRI, and sold to Apple in 2010.
- LCD displays – Developed at Westinghouse but funded almost entirely by the US Army. When management at Westinghouse sought to shut down development, the chief scientist sought support from other technology companies, but was refused. DARPA came to his rescue with a $7.8 million contract, allowing him to spin off the company that ultimately commercialized the displays.
- Lithium-ion batteries – DOE and NSF funding for the basic research and development.
All this dependence on public funding would make for better corporate citizens, you might think. Not so fast. As Mazzucato writes about Apple:
. . . nearly every state-of-the-art technology found in the iPod, iPhone and iPad is an often overlooked and ignored achievement of the research efforts and funding support of the government and military. . . . we ask whether the US public benefited, in terms of employment and tax receipts, from these major risks taken by such an investment of US tax dollars? Or were the profits siphoned off and taxes avoided?
Apple is not alone. Google developed its algorithm through public funding, yet profits tremendously and avoids paying US taxes by creating holding companies in tax havens.
Manufacturers like Apple have systematically socialized risk and privatized rewards over the past 30 years while employing the term “open innovation.” (I’m beginning to think “open” is actually a proxy term for “socialized.”) “Open innovation” has allowed manufacturers to dump the former methods of private innovation epitomized by Bell Labs, Xerox PARC, and Alcoa Research Labs – where risks and rewards were better balanced – and instead take government-funded research on board, either directly through licensing or through the acquisition of small firms doing initial trials of government-funded R&D.
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@ their innovation