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“Look at the phone in your hand – you can thank the state for that”

The title of the piece by Rutger Bregman in today’s Guardian describes its main thrust well:

And just look at us now! Moore’s law clearly is the golden rule of private innovation, unbridled capitalism, and the invisible hand driving us to ever lofty heights. There’s no other explanation – right? Not quite.

For years, Moore’s law has been almost single-handedly upheld by a Dutch company – one that made it big thanks to massive subsidisation by the Dutch government. No, this is not a joke: the fundamental force behind the internet, the modern computer and the driverless car is a government beneficiary from “socialist” Holland.


Radical innovation, Mazzucato reveals, almost always starts with the government. Take the iPhone, the epitome of modern technological progress. Literally every single sliver of technology that makes the iPhone a smartphone instead of a stupidphone – internet, GPS, touchscreen, battery, hard drive, voice recognition – was developed by researchers on the government payroll.

Why, then, do nearly all the innovative companies of our times come from the US? The answer is simple. Because it is home to the biggest venture capitalist in the world: the government of the United States of America.

These days there is a widespread political belief that governments should only step in when markets “fail”. Yet, as Mazzucato convincingly demonstrates, government can actually generate whole new markets. Silicon Valley, if you look back, started out as subsidy central. “The true secret of the success of Silicon Valley, or of the bio- and nanotechnology sectors,” Mazzucato points out, “is that venture investors surfed on a big wave of government investments.”

Even the Guardian commentariat were not having that. The current most recommended comment comes from “Jabr”:

Whatever reasonable insights this article has (none of which are anything we haven’t heard before many times), they pale into insignificance compared to the one central and glaring fallacy, dishonesty, hypocrisy and absurdity at its core (and it’s remarkable that the writer seems oblivious to it): the writer is left wing. The specific branch of state activity where much US government innovation comes from is the federal armed forces of the United States, which every leftist hates more than anything. GPS wasn’t originally developed so we could find our way to the nearest organic kumquat shop – it was developed so that Uncle Sam could kill people more efficiently.

Thank goodness that leftists weren’t in charge of government investment decision-making at the time, because none of that investment would’ve been made and none of this technology would now exist – they’d have spent it on diversity coordinators and other progressive nonsense. Clicking on the writer’s profile, it says “The Case for a Universal Basic Income, Open Borders and a 15-hour Workweek.” So there we have it. I rest my case. That’s what society would’ve looked like, had the writer had his way – not a society which invested billions into military technology, but one which actively promotes indolence.

I would guess that most readers here will be closer to Jabr’s view than to Mr Bregman’s, but will not agree with either. But enough of my guesses as to what you think, what do you think?

37 comments to “Look at the phone in your hand – you can thank the state for that”

  • Watchman

    I think Mr Bregman fails to understand the difference between invention and innovation.

    He also makes no attempt to prove that if government takes say 40% of GDP it produces more or less than 40%* of inventions (or innovations). After all, if government is spending money it will (unless it is wilfully poor) come up with some new solutions to problems – the question is not whether government produces anything useful but whether it is an efficient way to produce useful things compared to the alternative. And, although I have no data (other than the low level of useful innovations in state-dominated communist societies), I suspect we know what the answer is – if someone could give us some proof that would be nice.

    *40% selected as a random number which may or may not have some resemblance to goverment share of GDP in the period in discussion across developed countries on the basis it looks more elegant than x%.

  • Chip

    Open borders + universal basic income.

    Leftists never comprehend the power of incentives.

  • Cliff Elam

    Calling Gordon Moore a “chip designer” is like saying that DaVinci was an “accomplished paint mixer.”

    I also wonder how much the rent-seeking behavior of Phillips hurt other chip manufacturing companies, and how much better off we might be if the Dutch government didn’t artificially decrease the costs of a specific manufacturer.

    But I can’t get to that wonder with the Moore thing sticking in my craw.


  • Sam Duncan

    What is seen…

    But it’s also stretching the truth. I looked some of this up the last time someone tried this stuff on, and I’m going from memory, so I might have the details wrong. However…

    While some of the early, mostly theoretical, work on capacitive touchscreens was done at, as far as I recall, the Royal Radar Establishment in the 1960s, all of the development since – and there was a lot to do in the ’70s, ’80s, and ’90s before it became a viable technology – has been by commercial operations. It’s much the same story for Li-ion batteries, although the government involvement is even smaller. Even the early theoretical work was commercially backed.

    “Hard drive”? Well, firstly, phones don’t have one. But if he’s talking about solid-state flash storage, that was invented at Toshiba and further developed by Intel. I couldn’t find any governmental involvement in its history at all.

    Lyin’ Lefties. There’s a novelty.

  • Watchman

    Sam Duncan,

    It’s not necessarily lying – that takes knowledge and competence to be able to work out what you are doing – a good lier is probably someone who has command of the material they are working with. This is just a very basic failure to understand what he is working with, probably reinforced by confirmation bias (actually add in wishful thinking and that sounds like a definition of socialism).

  • Graeme

    One of the most useful technologies has been the photocopier. Was there any governmental involvement in that? Or how about the internal combustion engine?

  • JoseM

    Sam Duncan,

    The Internet and GPS are well-known examples of government innovation/invention. Re touchscreens, do you know if there was government support for them after the RRE work, perhaps as part of a more general grant, or as part of a contract for government/military equipment that included them? Who were the principal customers of the Dutch company (Philips) responsible for semiconductor shrinking; was it some government and if so, were the specs there pushing the SOA?

  • bobby b

    July 12, 2017 at 3:37 pm

    ” . . . the question is not whether government produces anything useful but whether it is an efficient way to produce useful things compared to the alternative.”


  • Laird

    I second Watchman’s comment.

    My understanding (I could be wrong, of course) was that early touch screens, the mouse and GUI technology came out of DARPA, which certainly is Government. Certainly the Internet was government-created. But none of this disproves Watchman’s central point.

  • Mr Ed

    So we got GPS thanks to transmitters on satellites launched on rockets derived from a government programme that had its origins in the V2, so ‘but for Hitler, your smartphone would be dumb!‘.

    Is that his case, or not?

  • Sam Duncan

    Point taken, Watchman. Figure of speech.

    “do you know if there was government support for them after the RRE work, perhaps as part of a more general grant, or as part of a contract for government/military equipment that included them?”

    I don’t recall reading of any, but it’s reasonable to assume there might have been. However, I still don’t see how that translates to, “if it weren’t for the government, it wouldn’t exist”. If there were government contracts that specified them, the government was just another customer. A large and important one, perhaps, but then we’re back to Bastiat. It’s impossible to know how the technology would have developed without it, however presumably if development was already underway it would have proceeded anyway. At what pace, we can’t tell. And if the RRE hadn’t started it, who knows? It always comes back to, “what is seen and what is unseen”.

    ‘but for Hitler, your smartphone would be dumb!‘


  • fcal

    Thanks to government investment the most performing wind-mills ever dot now our land- and sea-scape. They even produce electricity when the wind is favourable. Private investment was absent in this green and very promising long-term venture.

  • We got spread-spectrum technology by way of Hedy Lamarr when engineers were looking for a way to target torpedoes such that the enemy couldn’t jam the targeting. As I understand it Lamarr didn’t do the engineering so much as ask the question “why not use multiple frequencies”. The first prototype used something like a player piano roll to change frequencies. I can only imagine how daft the government found this when presented with the idea.

    The one thing I find funny is that for all statists want the government to fund R&D, the useful stuff from government R&D seems to come almost entirely from defense R&D, and the people who call for more government R&D funding tend to be the ones who hate defense spending.

  • Robbo

    For those with long memories John Burton wrote “Picking Losers?” about the weakness of polically-driven indusrial ‘policy’.

    Or you could reflect on the British government’s letting the jet engine patents expire because they ‘knew’ it wouldn’t work.

  • PersonFromPorlock

    In the USA, the period from 1865 to 1940 was notably inventive, during a period with tiny defense budgets.

  • Eric

    Yes, Bastiat is appropriate here. We don’t know what people would have built with the money had the government left it in their hands.

    My suspicion is the internet was in the cards as soon as the microchip was invented regardless of government involvement, though the protocols and such would probably have been different. It’s hard to remember that far back, but several companies developed their own network gear and protocols. The reason ethernet and TCP/IP won out had more to do with its ubiquity in academia and the military than any inherent technical advantages.

  • Laird

    fcal*, wind technology has been around forever and has legitimate uses even today, but electrical generation from windpower didn’t arise because it wasn’t economically justifiable. For that matter, it still isn’t. It is only useful where the winds are just right, and since electricity storage (batteries) is still inefficient it’s waiting for other technologies to make it viable. And those other technologies are being diligently and aggressively pursued by private companies. So it’s a big stretch to call it “promising”, and an outright falsehood to add the modifier “very”.

    Just like almost all “green technology”, wind power is a boondoggle sustained only by government subsidies (i.e., theft from taxpayers). If and when it ever becomes economic (when petroleum prices get high enough) you can be certain that private actors will develop and improve it.

    * I would not have chosen a webname which looks like “fecal”, but obviously that’s just my irrational prejudice.

  • Adam Maas

    Calling ASML the primary driver of Moore’s law is like calling Tesla the primary driver of electric car development.

    yeah, they’re in the business and have been industry leaders for a couple of years, but they’ve only recently become a major player.

    Nikon dominated photolithography systems for years. ASML was able to knock them off the top back around 2013, largely thanks to ASML’s government subsidies (Nikon, while very tapped into the Japanese industrial system, is not subsidized and was dealing with a major drop in their primary business at the time).

    Anyways, Intel and AMD largely drive the process shrinkage that has permitted Moore’s Law to hold. ASML just sells part of the equipment used for the manufacturing process.

  • Confused ’Old Misfit

    @fcal: Surely you jest?

  • Sam Duncan

    Adam, that’s kind of what I suspected, but didn’t know enough about ASML (or the photolithography industry in general) to say. From what little I’ve been able to glean, it was only founded in 1984, 20 years after Moore (of Intel) first stated his “Law”.

    To put it crudely, this wasn’t a case of the Dutch state heroically jumping in to save Moore’s Law; it was the Dutch state muscling in on Nikon’s action.

    “My suspicion is the internet was in the cards as soon as the microchip was invented regardless of government involvement, though the protocols and such would probably have been different.”

    I find it hard to argue this one, because my suspicion is that we might not have ended up with a single internetwork protocol at all, but instead found ourselves using a number of proprietary networks. That’s certainly the way it looked to be going for commercial and domestic networking back in the ’80s before the internet was opened to the public.

    Then again, we don’t know. The awkwardness of that situation – I can’t email you because I’m on Compuserve and you’re on AOL – may have become so apparent that the industry would have worked something out. Or maybe one of the operators would have become a monopoly (see the idea behind the original abortive didn’t-see-the-web-coming MSN, for example). It’s impossible to say.

  • Eric Tavenner

    Laird, the mouse and GUI were developed by Xerox for use in their own computers. They were in the computer business from the mid 70’s to mid 80’s.

  • bobby b

    “They even produce electricity when the wind is favourable.”

    I think we all missed the {sarcasm} tag in fcal’s post. This line should have given us a hint.

  • Laird

    bobby b, that had me scratching my head, too. But the last sentence convinced me he (?) was serious.

  • Fred

    Wasn’t Alan Turing’s (and Tommy Flowers’) world-leading digital computer suppressed by the British Government, leaving IBM free to charge monopoly prices?

  • Nicholas (Unlicenced Joker) Gray

    But who knows how many secrets the British were able to intercept, because they kept the knowledge that they could break codes with a computer, secret? Talk about unknowable unknowns.

  • Fred (July 13, 2017 at 5:26 am), the same bit of the British state suppressed the discover of how large primes could be used for secure electronic communication, again allowing a later US rediscovery of the same thing to be the source of that industry. Here again, as in Fred’s example, it is precisely one of the few parts of the state that lefties hate – except when leaking against Trump 🙂 – that has the claim to some inventiveness, and another claim to suppressing the development of that inventiveness.

  • Mary Contrary

    Firstly, on the Internet. Yes, DARPA’s role was there at the very beginning. But you don’t have to get very far past the very beginning to discover universities leading the action. OK, still public funding you say, fair enough. But much more distributed development nonetheless.

    The rise of TCP/IP, its success over Token Ring and X.25 and ATM, was the story of the victory of private companies building stuff that people wanted to buy (often relatively small and entrepreneurial companies, or else the more market-oriented departments in larger blue chips, over the top-down plans of the ITU, its member governments and the global technology and telecoms behemoths of the day, who wanted to design the future on a sheet of paper, and built communications protocols based on that vision.

    TCP/IP is, when all is said and done, an internet technology (small “i”): the technology for connecting lots of little networks together. Big “I” Internet comes as a consequence of success, not a result of planning.

    In short, TCP/IP is the victory of small, distributed spontaineous self-order through market demand, over large-scale bureaucratic planning.

    There’s an awful lot of blue-chip corporates on the wrong side of that fight, including a lot from the defense industry but also highly regulated telecoms and simply those (like IBM) with huge amounts of government business. And there’s even some government work on the right side: DARPA was set up specifically to get away from ordinary defence development, because that was seen as too cumbersome to be radical. But on the whole, I think it’s pretty clear that the market throws up more on the “small and entrepreneurial” side than the State does, whatever counter-examples may exist.

  • Mary Contrary

    Secondly, on how State research that proves useful often turns out to be defense research:
    Ted Schuerzinger:

    the useful stuff from government R&D seems to come almost entirely from defense R&D

    I’ve pondered about this for some time.
    I wonder if government defense research is more successful because it’s harder to change the goalposts: in defense tech you can’t say “Oh, we weren’t aiming for something cheaper or more efficient, we were aiming for something more environmentally sustainable“. If it helps our kill their guys faster and stay alive longer themselves, it works. If not, it’s junk. No ifs, buts or maybes.

    Adherence to a common standard of truth works wonders. Especially when compared to the alternative.

  • Tim Worstall

    I always find it useful to actually accept the argument, then extend it to see where it leads.

    The argument is that we get some public goods – inventions are public goods, they’re very easy to copy, that’s why we have patents to try and make them sorta private goods – from government.

    Hmm, OK.

    Why do we have government? To provide us with those public goods which entirely private economic activity won’t produce.

    Hmm, OK.

    Government does what it says on the tin. The problem is?

  • fcal

    Confused ’Old Misfit – July 13, 2017 at 1:51 am
    @fcal: Surely you jest?
    I didn’t green anybody with the above statement regarding government investment. The latter’s investment is definitely intense green in substance and very long term. This last aspect stretches even beyond the usual electoral cycle of 4 to 6 years. One has to fear that global warming, accelerating as it is according to 97 % of all experts, could endanger this exciting investment due to the tropical nature of our future climate and the correspondily prevailing doldrums.

  • JoseM

    Overall, it looks to be a simple situation. In an environment where the companies are small and the amount of investment to get from idea to working prototype is very large, there is nobody but government to do it. In an environment where the companies are large enough to fund the amount of investment necessary to develop a useful product, government isn’t needed. Both environments exist, so why try to proclaim that only one is possible or there is something wrong with the other? We live in a diverse world.

  • Johnnydub

    “The rise of TCP/IP, its success over Token Ring and X.25 and ATM”

    Dont want to be too nerdy… But Token Ring and X.25 and ATM can all carry TCP/IP… they’re at different layers of the network stack.

    Ethernet won in the LAN, cos it was cheap, simple and scaled. Ethernet is now also pretty ubiquitous inn the WAN/carrier for similar reasons.

  • Eric

    In an environment where the companies are small and the amount of investment to get from idea to working prototype is very large, there is nobody but government to do it.

    Nobody but the capital markets, you mean. That’s why they exist. There’s no reason to need the government for this kind of funding unless whatever it is these small companies are making will never justify the investment.

  • Jamesg

    I wonder what the left would say if a private company robbed people of their money, used that money for R&D, then tested the results by killing thousands of foreigners, and then just let others commercialise any useful results.

  • Paul Marks

    Natalie reads the insane ravings of the Guardian – so the rest of us do not have to.

    But it is not worth it Natalie – it is a waste of your time.

    The Guardian is supposed to write rubbish – it is openly a socialist newspaper, it stands for everything that is depraved and demented (which is why it is the newspaper of choice of the education system).

    If the Guardian claimed to be a free market publication (as the Economist magazine falsely claims to be) I could see the point of exposing it as collectivist rubbish – but the Guardian is open about being collectivist rubbish, so what is the point of showing that it is collectivist rubbish?

  • Chester Draws

    the useful stuff from government R&D seems to come almost entirely from defense R&D

    Not once you start thinking outside the realm of inventions and technology.

    There’s whole branches of research that are entirely government funded, yet very important. Weather forecasting, for example. Mathematics as a private enterprise has been non-existent for a long time now. Since they are unlikey to be reliably profitable, such things are left to governments. Huge swathes of agricultural and medical research that are government funded and generally considered useful. Much of it wouldn’t be done if left to private companies (or would be done and kept trade secret, so benefiting far fewer).

    But is anyone arguing, contra the Guardian article, that government shouldn’t do pure research?

    Where the difference between political philosophies lies is who should be doing the market place innovation, and that’s where government sucks. The Soviet Union was actually good at some sorts of pure research, but entirely unable to produce decent consumer products.

    The Guardian always takes a curate’s egg approach to government spending. A hypocritical one too — laud the odd bit of tech research that came up trumps, then go ballistic if the government suggests moving most spending out of Humanities and Arts and into STEM.

  • Laird

    Chester, I would argue that the government should not fund (or do) even “pure research.” Granted, it’s the least objectionable part of government-funded science, but it’s still not an appropriate use of money taken by force from taxpayers. There used to be a lot of privately-funded “pure research” (see Bell Labs for starters), but why would any private company spend that money if it can off-load the cost to someone else (i.e., the government)? It’s the same problem as with private charity: once government takes over the field everyone else abandons it, and eventually people start believing that there could be no other way.

    And of course there’s the ever-present problem of deciding which research to fund. If that decision is made by politicians and bureaucrats the choices will almost inevitably be bad, and the whole program will descend into mere boondoggles, rewards for favored research/researchers, and (ultimately) politicized science (as we’ve most recently seen with the rampant fraud infesting “research” into “climate science”). I don’t know where you draw the line between “pure” research and any other kind, but in my opinion it’s not a line worth drawing anyway. The government shouldn’t be funding any of it.