> When Google received funding for its algorithm from the National Science Foundation (NSF), is it right that after it earned billions nothing went back to the NSF
Serious mental gymnastics.
Page and Brin doing research with NSF grants isn't even remotely the same thing as Google, their future company, getting a check directly from the government.
Page and Brin produced publicly available research with NSF money. They started a company based on that public research. That company created untold billions of dollars of value out of thin air. Taxes are paid out of those new dollars, some of which go to fund the NSF.
Page and Brin produced publicly available research with NSF money. They started a company based on that public research. That company created untold billions of dollars of value out of thin air. Taxes are paid out of those new dollars, some of which go to fund the NSF.
You left out the part where Stanford patented the results of the research, thereby monopolizing it.
Likewise, Google did not create untold billions "out of thin air." Google created untold billions by leveraging NSF-funded research, and the patent which Stanford licensed to them, in the midst of an explosion of new opportunities which was created when the NSF lifted commercial restrictions on the use of the Internet (which had also been built with public funding).
I know Americans like to imagine that even acknowledging the public sector exists is the same thing as surrendering to the USSR, but the USSR doesn't even exist any more, and there's actually a lot of merit in being aware of history and being honest about how economies work.
Just like putting a man on the moon, the Internet was a massive public research project which succeeded wildly. As OP says, America likes to tell a "hands off the market" story about how its government relates to its industries, but that story doesn't match the reality.
> Likewise, Google did not create untold billions "out of thin air." Google created untold billions by leveraging NSF-funded research, and the patent which Stanford licensed to them, in the midst of an explosion of new opportunities which was created when the NSF lifted commercial restrictions on the use of the Internet (which had also been built with public funding).
You say it as if it was easy. Like they had it handed to them. Clearly a lot of tumblers fell into place, but that doesn't mean the NSF is due a share of the profits. Would you claim Harvard is due a share of Microsoft if it gave Bill Gates a scholarship?
> I know Americans like to imagine that even acknowledging the public sector exists is the same thing as surrendering to the USSR, but the USSR doesn't even exist any more, and there's actually a lot of merit in being aware of history and being honest about how economies work.
What are you getting at? I have no idea what you're trying to say here.
> You say it as if it was easy. Like they had it handed to them. Clearly a lot of tumblers fell into place, but that doesn't mean the NSF is due a share of the profits. Would you claim Harvard is due a share of Microsoft if it gave Bill Gates a scholarship?
A private educational institute giving a student a scholarship is very much not the same thing as a public institution granting monies for research. That isn't to say the NSF ought to receive a share of profits, necessarily, but your comparison isn't reasonable.
Moreover, it underlines the point: that the risk of research was socialized (NSF Grant), but the profits were privatized (Google). I think the debate is whether or not that's a good thing. Personally I think it depends on the context but generally I don't think that public grants should result in private profits (at least not exclusively), and it should be especially closely scrutinized if any of the resulting research work is not 100% made available as public knowledge.
> What are you getting at? I have no idea what you're trying to say here.
He's mocking the "rah rah free market! American Capitalism is awesome!" mentality that he perceives "Americans" (clearly a generalization; I doubt he thinks all, and hopefully not even most, Americans actually subscribe to that view) to have.
I can't say I disagree with his point. It's especially prevalent in the software industry, where all the programmers are Jon Galt (apologies to Garrison Keillor). It's an especially amusing thing to see given just how much the software industry is and has been, since its inception, reliant on government for its existence.
>You say it as if it was easy. Like they had it handed to them. Clearly a lot of tumblers fell into place, but that doesn't mean the NSF is due a share of the profits. Would you claim Harvard is due a share of Microsoft if it gave Bill Gates a scholarship?
These are two completely different things. A university gives a student a scholarship as a discount on a good the university provides, for which they would normally charge a price. The state funds research as an open-ended investment, and would normally not expect any fixed quantity of money or other assets in return. Since they weren't selling anything to Stanford or Page-and-Brin in the first place, they were investing, and are indeed due a share of the profits.
> The state funds research as an open-ended investment, and would normally not expect any fixed quantity of money or other assets in return. Since they weren't selling anything to Stanford or Page-and-Brin in the first place, they were investing, and are indeed due a share of the profits.
> Initiate and support, through grants and contracts, scientific and engineering research and programs to strengthen scientific and engineering research potential, and education programs at all levels, and appraise the impact of research upon industrial development and the general welfare.
The entire point of the NSF and other similar institutions is to spur innovation. They aren't investing in the way you state they are, rather they are funding. They give money away to those who they feel will continue to push the field forward.
> So, in addition to funding research in the traditional academic areas, the agency also supports "high risk, high pay off" ideas, novel collaborations and numerous projects that may seem like science fiction today, but which the public will take for granted tomorrow.
The NSF grant played a minor role but the OP is exagerating it's importance to support her political viewpoint of how the world should be run. More background here:
Also the $504,000 SBIC investment in Apple actually returned $44 million apparently to it's sponsoring bank. In fact the program is exactly what the author is against as the frequent losses end up being covered by the government. More here:
What if the Federal Government subsidizes mortgages causing a housing bubble and subsequently making our entire financial system to collapse costing hundreds of thousands of jobs? What if California spends $6B+ on a high speed rail system and no one uses it?
I understand what you (and by extension, she) are trying to say, but remember that every government action has risk and reward, just like every action taken by the private sector. It would be nice if we could keep the risks/rewards of the two sectors completely separate, but that would entail moving to either a completely communist or completely anarcho-capitalist model of society, which might be nice to think about in theory, but will never happen.
It's important to note that even if Apple and Google send all their profits and jobs overseas, their investors still have had to pay out $100B+ in capital gains taxes over the years. This has more than paid back any investments the gov has made in them.
This is the common theme in the comments on this story:
The argument we have socialized risk but privatized the successes is invalid, because when those successes pay off, the taxes paid by those success stories repay the individual investments in those individual success stories.
That is not what the term "risk" means. "Risk" also includes all the investments which did not pay off.
>>That is not what the term "risk" means. "Risk" also includes all the investments which did not pay off.
That's certainly true, but I'm not sure what you're getting at. I'd appreciate it if you could clarify.
Diversifying your investments to hedge against those that don't pay off is the foundation of modern portfolio theory. You can see it in action at virtually every level of society: individual firms have employees that don't generate returns, but they hope that the collective productivity of the entire company can generate a positive return, angel investors and VCs invest across a broad spectrum of companies hoping that a few big wins will offset those investments that don't pay off, and governments invest in a variety of projects, research, and (sometimes) companies that they hope will generate positive returns for the economy as a whole.
The risk is taken by the public and all the other investors. The loss/reward is proportional, which is something that's being glossed over.
From the look of it, the author is trying to make it seem like the public funds it, and the private people reap all the benefits. Weird scenarios aside (such as the NSF research grant stuff), we should see the "public" in the same light as all the other investors.
Interestingly, here in Belgium, the press often states that Google pay his taxes as requested by the law. And that Google have some very expert accountant who read the law in suach a way that those taxes are close to zero.
I'm afraid Google doesn't pay his taxes like we, the tax payers, think it should...
Of course, that's totally proof-less, but well, I've heard that quite often (cf. intérêts notionnels)...
> Google UK Ltd, and other subsidiaries across mainland Europe, pay little tax because they are designated as providers of marketing services to Google Ireland Ltd, the Dublin-based subsidiary whose name appears on invoices to most non-U.S. clients.
> Google declares little profit in Ireland because the unit there sends almost all of the profit earned from the non-U.S. clients to the Bermudan affiliate, in the form of licence fees for the use of Google intellectual property.
> Google Inc. avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenues into a Bermuda shell company, almost double the total from three years before, filings show.
> I'm afraid Google doesn't pay his taxes like we, the tax payers, think it should...
I am sure the same could be said of every company beyond certain size (200-300 employees comes to mind, but this is just a wild guess), regardless of industry.
This is even the same for individuals. If you try to file taxes yourself (or have your employer do it for you, if possible), you will end up paying a higher rate than if you had taken the good sense of forking $100USD to some accountant to give you some basic advice. Of course this only works if you are wealthy enough that those $100US are marginal compared with what you would end up paying in taxes using the DIY approach.
The Belgian case may be irrelevant, but more broadly it is very relevant - Google reduces their US tax burden in the same way.
The fact that corporate entities are able to shift their profits to places with favorable tax regimes mean that the calculations about the assumptions about increased tax receipts from business activity generated by publicly funded research are at least partially wrong.
Instead of just criticising, maybe you could suggest how parent should improve? I'm always very confused about what personal pronoun to use for organisations or companies.
Not criticizing, first I was confused then I realized it was likely to be a side-effect of being a native speaker of German or another language. Sorry if it came out wrong.
The singular impersonal "it" when talking about Google as a corporate entity (its component personnel would likely be "Googlers"). So "Google pays its taxes" and "Google doesn't pay its taxes".
The point about taxes is important. When a company like Google makes a lot of money, a lot of taxation occurs. This allows the government to essentially capture an ROI on that research.
Given current "financial technology," government is indeed the only entity that can make R&D investments that are both high-risk and broad-payoff -- broad-payoff meaning that they pay off unpredictably and often across the entire economy. ROI is captured through economy-wide growth via taxation. Only governments can do this because there is currently no private financial instrument that can securitize that kind of investment or capture its upside.
Is/was the public research that led to PageRank patented? If that were the case, it's the only thing I would disagree with. Public research should not be patented, or if it is it should be made available to all domestic (US tax paying) companies and individuals royalty-free. It'd be appropriate to charge foreign licensees fees, as they are not paying into the US R&D fund, but the impracticality of that makes such a national patent licensing scheme kind of dubious.
Just pointing out that the reality is more complicated. The research wasn't "publicly available", rather it was licensed (exclusively) from Stanford. There is legislation that applies to the ownership of federally funded research, e.g.
The research is publicly available. You can go read it right now and learn from it. You're confusing the difference between the research they did being publicly available, and Stanford holding a patent on PageRank.
The paper is publicly available, but we're not allowed to implement the system they designed in their research because it's patented. The cost of developing PageRank was paid for by the government, but the rewards - a Government-granted monopoly on the use of it and all the income from licensing it - went entirely into private hands.
"A patent is not the grant of a right to make or use or sell. It does not, directly or indirectly, imply any such right. It grants only the right to exclude others."
The point is to provide some temporary protection for inventors in exchange for public usage once the patent has expired.
That's the point from the inventor's perspective, yes. If an inventor wanted it publicly available, she'd just publish it. That's generally how science happens. For an inventor, a patent is a way to guarantee ownership of proceeds.
A government, however, doesn't actually care if the inventor gets paid. The government provides a patent office in order to make inventions public. In return, it provides what the inventor wants: a way to defend ownership.
Notice that you cannot patent something without making it publicly available. It's not possible. If exclusion from intellectual property was the only goal, this would not be true. You should be able to register your invention with the government and reference it in court, only divulging its details when the facts of the case demand it.
Is something "publicly available" if you can be sued for using it? That's the case for patented material for the 20 years before it expires.
There's a difference between the details of the invention being known and it being available for use. In the case of Google, it cost them $300M to license the PageRank algorithm because Stanford owns the patent (despite its inner workings being widely known).
To be clear, according to the supreme court, "It grants only the right to exclude others". So it's a misunderstanding to say "The entire point of a patent is to make it publicly available while funneling money to the patent holder". Sure, patents are often used to release details about an invention while making money off it, but that's just one use case. For example, it can just as well be used as an obstacle to slow down competitors.
"To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;"
I don't see anything about an invention being "publicly available while funneling money to the patent holder". The "exclusive right" part means the invention is legally the property of the inventor. Others can improve on it, but there is no guarantee the public can use the actual invention until the patent expires.
Serious mental gymnastics.
Page and Brin doing research with NSF grants isn't even remotely the same thing as Google, their future company, getting a check directly from the government.
Page and Brin produced publicly available research with NSF money. They started a company based on that public research. That company created untold billions of dollars of value out of thin air. Taxes are paid out of those new dollars, some of which go to fund the NSF.
This is exactly how it's supposed to work.