Government Venture Capital: Why not?

of venture capital. So I learned a few things about how VC works, its his tory, and government influence. A few thoughts:

0, but then someone figured out that an investor could write off investment s at the current income rate (90% max in 1975), and get back income at capi tal gains rate after a year: 15%. The SCOTUS ruled that patents were deprec iable property, so was born a form of VC called the "R&D Limited Partnershi p." VC was launched.

t VC 'pays off' because an occasional hit makes up for a lot of duds.

favor this activity through tax breaks?" The way it would work is to giv e tax incentives on the front end to investors in comapanies, and then the governmentcan collect taxes later on the result, including income taxes on employees. It's just the golden goose paradigm, or the Laffer Curve, if yo u prefer.

The problem with the Laffer Curve is that it changes shape from activity to activity, and from time to time. Anybody can claim that some arbitrary tax level can be on the wrong side of the Laffer Curve, but this can always be translated into businessmen always think that they should be paying less t ax without any loss of information content.

ey said,

fit goes to the next guy in office down the road, not my boss."

So how did the tax deductible investment loophole ever get onto the books?

e plan in action. I have heard that the average income in HK is quite a b it higher than the US. Anybody know?

Not me. Hong Kong is a very strange place, politically speaking.

work, take risks, to succeed. You can't get a slave to do that. The engine er is willing to impose Darwinian success on himself, whereas a slave must be fed.

So must the engineer.

nd laugh all the way to the bank.

All societies have someone in charge who imposes taxes. The government is - first of all - the biggest protection racket in town.

Real socialists - as opposed to protection rackets who want to be seen as s ocialist - believe that the taxes collected should be distributed to maximi se the performance of the society as a whole. They are more inclined than t he average protection racket to spend money on educating new workers to hel p the engineer's business and on building better roads and bridges so that he can ship his product to customers more cheaply.

The current US protection racket isn't doing too well from this point of vi ew. They are spending hugely on defence - as much as the rest of the world put together - and nowhere near enough on health, education and social security .

not smart enough, and partly because they want to control.

The socialists in Germany and Scandinavia are spending liberally on all thr ee; their economies are fine, and their public health indices are a long wa s ahead of the US numbers (for the population as a whole). The governments there are picky about minimum wages and not endangering employees and custo mers, but they don't seem to be into any kind of "social control", give or take the German anti-Nazi law

They may not have the venture capitalists that the US has, but Germany expo rts as much as the US, despite having only a quarter of the population, and about two-thirds as much as China, despite having only one sixteenth of th e population and paying them a whole lot better.

You probably need to read

ost_Always_Do_Better

to get a more balanced picture of what's going on. Innovators do a lot bett er when there are plenty of well-trained and well-educated potential employ ees around, and the local infra-structure is up to scratch.

--
Bill Sloman, Sydney

We did that and got Solyndra, et. al.