Government Innovations and contributions for Society and Business

Opponents of Government blame it for everything. Even supports of government programs sometimes say every major innovation to society has been a result of government. Here we examine technologies that have come from government, and how government has allowed us all to become wealthier. Governments contributions are literally mind boggling, and when pressed in a debate to answer “What have Government ever done for me?” it’s like asking “What have my legs ever done for me?” It’s actually a hard question because the answer is so overwhelming. However, once you have first the list of incredible accomplishments, the data to support them, then the moral arguments to support the government – the Libertarian finds himself with a wrecked position.

Joe from Melissa and Joe said “Government only gets in the way.” When you meet such a ridiculous statement unexpected, it’s hard to even answer. With this info, opponents like Joe will be overwhelmed by data. There will be no hope.

Interstate Highway System

Massive Report of Evidence

Without a first class system of interstate highways, life in America would be far different — it would be more risky, less prosperous, and lacking in the efficiency and comfort that Americans now enjoy and take for granted. People would be crowded into more densely packed inner cities, intercity travel would occur less often and be more cumbersome; freight charges would be higher and, as a consequence, so would prices. Vacation travel would be more restricted. The Dwight D. Eisenhower System of Interstate and Defense Highways is in place and celebrating its 40th anniversary, must surely be the best investment a nation ever made.

Consider this:

  • It has enriched the quality of life for virtually every American.
  • It has saved the lives of at least 187,000 people.
  • It has prevented injuries to nearly 12 million people.
  • It has returned more than $6 in economic productivity for each $1 it cost.
  • It has positioned the nation for improved international competitiveness.
  • It has permitted the cherished freedom of personal mobility to flourish.
  • It has enhanced international security.

 It is not an exaggeration, but a simple statement of fact, that the interstate highway system is an engine that has driven 40 years of unprecedented prosperity and positioned the United States to remain the world’s pre-eminent power into the 21st century. While it is not typically thought of in this way, the system is in reality a gift from one group of people — highway users — to the nation as a whole, which has reaped a gain of at least $6 in benefit for each $1 spent in construction. And that’s just the beginning — there are additional benefits such as higher employment rates and greater economic opportunity that are simply beyond quantification. Fortunately, the group of people who paid for the interstate highway system is sufficiently large that it’s difference from the nation as a whole is virtually without 3 distinction. But it is a worthy difference to keep in mind as a backdrop for public policy deliberations over future funding of highways.

Public Education

The Contribution of Higher Education to Economic Development

It is very difficult to even begin with the evidence demonstrating the profound, monstrous, incomprehensibly massive contribution to our well being and development that an educated populace has. Realistically no one will deny the importance of education so you will not need to spend time on any techniques for debating someone making the claim “Education isn’t important in economic growth.” The distinction is going to take place between the issues of public education and private education. Between an education system where everyone is guaranteed the opportunity to meaninglessly take part in society through the freedom of empowerment and knowledge, or a system where education, and thus freedom itself are left up to private purchasing power and prior market outcomes of the parents of the children.

Rural Electrification 

The Rural Electrification Act (49 Stat. 1363) was one of the most important pieces of legislation during the era of President Franklin D. Roosevelt’s New Deal. It allowed the federal government to make low-cost loans to non-profit cooperatives (farmers who had banded together) for the purpose of bringing electricity to much of rural America for the first time.

President Roosevelt set the stage for the act’s passage on May 11, 1935, when he issued an executive order that created the Rural Electrification Administration (REA). The REA was part of a relief package designed to stimulate an economy still in the grip of the Great Depression. On May 20, 1936, Congress passed the Rural Electrification Act, making the REA’s promise of long-term funding for rural electricity a reality.

The act addressed a serious need. When President Roosevelt created the REA, only 10 percent of rural Americans had electricity. This lack of power prevented farmers from modernizing their facilities. It also forced some people to live in unhealthful conditions. Many rural Americans, for example, lived in inadequately heated homes with poor sanitation. Most farmers had no running water and little means to store their food.

Nevertheless, privately owned utility companies, which provided power to most of the country, were not eager to serve the rural population. These companies argued that supplying rural areas with electricity was not profitable. The lack of attention from private companies led farmers to form non-profit cooperatives to implement electrification even before the REA. But, without the government’s assistance, these organizations lacked the technical and financial expertise they needed to succeed.



Satellites – More than it is hard to even mention at any one time.


The contribution of airports is massive.

(Add countless others)

4 Government Programs That Drive Innovation

Steve Jobs was the ultimate entrepreneur.  As Walter Isaacson noted in his biography, Jobs revolutionized seven industries and created the most valuable company in the world.  We revere people like him, because they help create the future.

However, they do not do it alone.  One fact that often gets lost is that the basic technologies that Apple AAPL +2.33% products are built on  (and those of all tech firms), from the chips, to the Internet, to GPS, to the software protocols, were all supported or wholly developed by government programs.

As Bruce Upbin pointed out in a recent article in Forbes, while we like to think of daring entrepreneurs and venture capitalists taking all the risk, they are more akin to the “last mile,” building on top of technological infrastructure built by the public sector.  Government programs are often a crucial ingredient in the growth of the private economy. Here are four:

  1. DARPA

In 1939, Leó Szilárd sent a letter to his friend Albert Einstein about the possibility of a mysterious device that could level entire cities.  Einstein, in turn, passed it on to Franklin Roosevelt who, acutely aware that this otherwise unlikely idea had the sanction of the world’s most famous scientist, put the wheels of government in motion.

The result was the Manhattan Project, the most consequential government science program ever, which gave an enormous advantage to America and its allies.  After the war, the military looked for ways to keep scientists involved and in 1958 President Eisenhower authorized DARPA (Defense Advanced Research Projects Agency).

Since then, DARPA has been a mainstay of technological development, funding development of the Internet, GPS and even Apple’s Siri, just to name a few.  More recently, ARPA-E has been created to support similar development in energy.

  1. NIH

We often fall into the trap of thinking about technology as mainly gadgets and gizmos.  However, some of the most important innovations happen in the life sciences, much of it funded by the NIH (National Institutes of Health), a vast effort whose 2014 budget exceeds $31 billion.

The impact of the NIH cannot be overstated. Researchers there have discovered vaccines for infectious diseases and innovative new treatments.  A Congressional study found that as many as 60% of important drugs would not have been discovered without NIH support and that economic returns range from 25% to 40%.

It also funded the Human Genome Project, a $3.6 billion undertaking that has not only revolutionized medical science, but whose economic benefits have been estimated to be nearly $800 billion as of 2011 and will likely multiply many times in the future.

  1. In-Q-Tel

Government procurement is notoriously inefficient, especially with regard to military contracts, because there are multiple points of failure.  First, specifications need to go through a cumbersome bureaucratic process, then bids are solicited and assessed not only on their merits, but amidst a political and greed ridden morass.

In the case of technology, the problem is especially acute.  Much like large corporations, government bureaucrats are ill equipped to judge the value of nascent technologies and, by the time they are finished wrangling through the procurement process, the technology is often already out of date.

That’s why the CIA created In-Q-Tel, a government funded VC that invests in startup companies focused on cutting edge technology such as big data analytics and quantum computing.  Rather than fully funding research programs, they can partner with entrepreneurs like Jeff Bezos and pursue a number of approaches.

The In-Q-Tel program has become so successful that it is seen as a stamp of approval for start-ups, so it is often able to invest at attractive valuations even when a company is fully funded.

  1. SBIR

Entrepreneurs are often seen as heroic, while many observers complain that government should just get out of the way.  However, although nobody likes the regulation and red tape, the Small Business Innovation Research (SBIR) program shows that government can play an important role in helping young, innovative businesses get started.

The program has three phases.  The first is a “proof of concept” phase in which funding is generally capped at $150,000.  The second is a research phase in which grants can go up to $1 million.  In the third phase, the company is expected to either get private funding or, in some cases, can receive funding from another government program.

Qualcomm, iRobot and Symantec are just a few of the SBIR success stories. The combination of low grants (lower in fact, than most venture capitalists are willing to get involved with) and limited duration encourages entrepreneurs to embark on projects that aren’t yet developed enough to secure financing in the private sector.

The New Hoover Dams

The quintessential government project of the 20th century was the Hoover Dam, large, impressive projects that helped build the nation’s infrastructure. These were always popular because they showed a clear, tangible result even for those that weren’t directly affected by the investment.

However, building large physical structures will do little for US competitiveness in the 21st century (although much investment is needed for renovation and repair).  Ours is a technological age and the most important investments are the ones we won’t see, in smart grids and connectivity, new molecules and algorithms.

In an important TED talk (see below), economist Mariana Mazzucato suggests that the public sector has a crucial role to play in funding innovations deemed too risky for profit seeking companies, who are under intense pressure to show a return on investment before a project is undertaken.

She also suggests that austerity is counterproductive, lowering deficits in the short term, but sacrificing the future through a lack of investment.  She proposes that government programs should be transformed into innovation banks and that a equity stakes in funded companies should be plowed back into investments (Finland already does this).

Whether or not her proposals are workable, one thing is for sure:  The tired old caricatures of lazy, feckless government bureaucrats and heroic entrepreneurs is more of an excuse for rent seeking (by lazy, feckless corporate bureaucrats) than it is a serious basis for policy.