I doubt regulation plays more than a marginal role here.
The truth is that capitalism is not good at creating new technologies, only at increasing adoption of technologies that have already been developed.
Innovation on big problems is hard by definition. It takes decades and there is a very high risk of failure. The original ideas may not work out, an alternative technology may be developed which ends up dominating the market or increasingly the way may be blocked by patents.
Why would an investor support such an undertaking, especially when very good returns can be obtained in well established areas like social networking (at least if you spread around your investments) and finance ?
The only exceptions to this general picture are those very rare companies with practical monopoly power which have been able to fund developments of this nature. Examples are Google and pre-deregulation AT&T. But such behemoths represent only a small fraction of the total economy and though some monopolies might be good for technology development it seems unlikely that increasing their role in the economy would be of general benefit. The result is that the vast majority of new technologies over the past 60 years have been spearheaded by government research (semiconductors, the internet, etc.). Even self-driving cars were made possible by government driven efforts.
Overall I think society vastly underfunds research and development compared to what would be optimal for mid to long-term enhancement of human well-being and this is primarily due to a broken socio-economic system.
Comments
I doubt regulation plays more than a marginal role here.
The truth is that capitalism is not good at creating new technologies, only at increasing adoption of technologies that have already been developed.
Innovation on big problems is hard by definition. It takes decades and there is a very high risk of failure. The original ideas may not work out, an alternative technology may be developed which ends up dominating the market or increasingly the way may be blocked by patents.
Why would an investor support such an undertaking, especially when very good returns can be obtained in well established areas like social networking (at least if you spread around your investments) and finance ?
The only exceptions to this general picture are those very rare companies with practical monopoly power which have been able to fund developments of this nature. Examples are Google and pre-deregulation AT&T. But such behemoths represent only a small fraction of the total economy and though some monopolies might be good for technology development it seems unlikely that increasing their role in the economy would be of general benefit. The result is that the vast majority of new technologies over the past 60 years have been spearheaded by government research (semiconductors, the internet, etc.). Even self-driving cars were made possible by government driven efforts.
Overall I think society vastly underfunds research and development compared to what would be optimal for mid to long-term enhancement of human well-being and this is primarily due to a broken socio-economic system.
Do you have any recommendation about essays on this subject? innovation vs capitalism.