Government Stories 2013-2014

Stories that earlier appeared in Nelson's News
Note: Carl Nelson Consulting, Inc is not an investment adviser and may hold a financial interest or client relationship in companies discussed.

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More subsidy, please.   Over the last few years as the [New Mexico]'s startup scene has emerged, a common complaint has been that there isn't enough startup capital available.  [One legislator]proposing a funding fix: tap the state's Severance Tax Permanent Fund.    ... would allocate up to one-quarter of one percent of the fund to early stage, high-growth New Mexico firms, he said.  ...  would appoint an 11-member board that would oversee the funds and invest the money in companies  [Dan Mayfield, Albuquerque Business First, Dec 31, 14]    Politicians love to spout such ideas with the promise of big state economic payoffs.  The reality is that there is plenty of venture capital out there looking for economic prospects and most of the companies seeking such government-provided capital do not have economically promising ideas. Our market economy with its far-reaching info systems continuously searches for good risk-reward ratios.  Government therefore is dredging in the dregs, as evidenced, for one, by the economic junk funded by most of SBIR.  State programs have a much smaller yard in which to dredge but the same wishes for discovering a bonanza, while the political benefit of announcing and cutting a ribbon on such programs is irresistible. So laws give the job of parceling out the cash to a committee that has no economic incentive to pick the best economic prospects, just a political incentive to please the enabling politicians.

Subsidy game.  In 2012, the Hartford-based financial services firm Smith Whiley & Company got $350,000 in state economic-development aid under an agreement to maintain its payroll of 12 full-time jobs and increase it to 15 by this year.   But instead of adding three jobs to Connecticut's workforce, it decreased the number to eight, state officials say. It also closed its downtown Hartford office and had employees start working from their homes.   What penalty does a company pay for such a failure in a taxpayer-funded deal with the state Department of Economic and Community Development, which provided a $100,000 grant and a $250,000 loan?  Not much  [John Lender, Hartford Courant, Dec 27]

For the past few years, DARPA has been working on a system called ARGUS-IR, or Autonomous Real-Team Ground Ubiquitous Surveillance – Infrared, which can take video over an area that is so super high resolution — 1.8 gigapixels — it would take a fleet of 100 Predator drones to produce the same images.  A PBS documentary last year explored the program, which uses hundreds of cell phone cameras linked together into a sophisticated rig. Mounted underneath an RQ-4 Global Hawk for example, ARGUS could loiter over an area at 17,500 feet and capture images as small as six inches square on the ground, effectively being able to tell the color of the shirt you are wearing.  Read more:   [Paul Szoldra, We Are The Mighty, Dec 30, 14]

Don't tax you, don't tax me; tax that guy behind the tree. America’s corporate income tax rate, at 35%, is the highest in the world. A rising chorus would like to bring it more in line with foreign rates, which average around 23%. I have a better idea—abolish the tax. The long-term benefits would greatly outweigh the short-term costs. And revenue from other sources, especially the personal income tax, would quickly make up for it and then some.  [John Steele Gordon, Wall Street Journal, Dec. 29, 2014]  Every idea for a better tax system starts with "tax somebody else".   Even economic historians like Gordon are peddling the Chamber of Commerce elixir.

Big rescue, small profit, big curse.  The U.S. government closed a chapter in financial-crisis history Friday when it sold its remaining shares of Ally Financial Inc. and shuttered its auto-bailout program, ending the last major pieces of a $426 billion rescue package that saved a swath of U.S. companies but never won public support.  ...  That profit, unexpected at the time of the bailout’s inception, has been nonetheless overshadowed by criticism that the rescue program put Wall Street’s interests ahead of Main Street’s, a view that prompted Congress to outlaw future taxpayer bailouts as part of the 2010 Dodd-Frank law.  [Wall Street Journal, Dec 19]  Ideologues and vested interests are never happy when the government does something big.  They convinced themselves that the system would have self-corrected, despite the history of deep financial panics in the 19th century with no government intervention. They simply do not accept the idea of government as a counterweight to wide swings in finance.  They prefer roller-coasters to mountain trains.

The meteoric rise and popularity of web-based handheld and tablet devices has enabled game-playing anywhere and at any time, providing an expanded market for entrepreneurial developers interested in producing education-related titles.  In recent years, SBIR has become a go-to funding source for many developers entering the games for learning space in areas including education, military, and health. [SBA blog by the Associate Administrator of the US Small Business Administration’s Office of Investment and Innovation, Oct 8].   Not everything good should be done by government, and not everything bad should be illegal.  If SBIR is a market-failure program and there is huge popular demand for the product, why is government intruding into the thriving private market?  Because Congress mandated a contribution from the Education Department, and the R&D arm wants to do things with a high success percentage. So, it picks some low-hanging fruit.  Meanwhile, taxpayers are ponying up tax revenue subsidy for something that the private market would have done anyway. For a true market-failure program worthy of a free-market government, DOEducation should be looking for high risk technology that would have a high societal payoff if it worked, but would not yet attract private capital because the risk-reward ratio is too big for the private investor. Unfortunately, Education is not in the high tech development game; it is only an adapter of new tech after the stuff works.  And so has no place for market-failure technology programs.  But a mandate is still a mandate.  Alas, subsidy politics as usual force it divert funds to small biz anyway.

SBIR/STTR Phase III Policy troll. SBA seeks comments on how to clarify how agencies can make more practical Phase III awards to the small businesses that initially developed the subject technology. In light of recent concerns regarding SBIR/STTR data rights by small business concerns, the SBA seeks comments that provide greater clarity and detail on these issues and recommendations to strengthen the data rights of awardees.  Comments are due January 6, 2015. Read the announcement .  [SSTI, Dec 3] This policy stuff applies for mission agencies that want to use/buy the SBIR-developed technology in a situation where the government now owns the right to use the technology without further license and is commanded by general procurement rules to seek the best deal for the government.  Opposing that idea is the SBIR law's command that the government favor the SBIR company.  Congress created the problem and will ultimately have to decide between government efficiency and handouts to favored constituencies. Expect much blather, especially platitudes about small biz. 

Bureaucracies are designed to kill innovation in the name of predictability.   Nevertheless,  innovation units are becoming de rigueur in the public sector too: Boston has an Office of New Urban Mechanics; Denmark has a MindLab; and Singapore has the more prosaically named PS21 Office.  [The Economist, Dec 6, 14]  We must remember that government's main role is the nation's safety and stability, not creation of wealth from innovation that could make the inventor disgustingly rich. Whether the politicians that start these enterprises have the patience to keep supplying resources and patience does not have a good track record.

The Fed forgets nothing because its involved in ritual incantation—-that is to say, the execution of religious doctrine. That’s why its pompous devotion to the “incoming data” is such a farce. There is nothing empirical and factually rigorous about what it does; it just changes the doctrinal spin as the bubble expands and the economic data grind-out transient noise one month or quarter at a time. [David Stockman,, Dec 9]  Stockman cites Talleyrand’s famous epithet: “They learned nothing and forgot nothing.”   Observers interested in programs like SBIR that rely more on conventional wisdom (small biz creates more jobs) than actual economic evaluation), and thinks "data" is the plural of "anecdote," could find a parallel with Stockman's view of Fed pump-priming.  Oh, never mind, politicians almost everywhere support pumping public debt into imaginary economic machines in "spend, spend, elect, elect." And as long as economic growth muddles along, the debt will be manageable.  Greece, for one though, recently found out what happens when subsidies don't create growth and the growth machine breaks down.

The Connecticut Center for Advanced Technology is soliciting applications for grants of $5,000 to $50,000 that can pay for consultants, contract engineering, patenting costs, tooling, training, equipment that will automate work, and other projects.  Manufacturers with no more than 300 employees may receive the money if the company spends an equal amount on the vendor's services, or finds federal dollars to match the state's grant.  Companies have to be at least three years old and generating revenue  [Mara Lee, Hartford Courant, Dec 8]

Maryland Stem Cell Research Commission expects a record number of applications for the $10.4 million it gives out annually for stem cell research.  The commission received 240 letters of intent from researchers and businesses for four grant categories, Researchers, universities and businesses interested in applying for one of four grants must first submit a letter of intent. ...  The multi-year grants support projects involving human stem cells at varying levels of research and are worth between $110,000 and $750,000.  ...   Applications for fiscal 2015 funding are due January 15.   [Sarah Gantz, Baltimore Business Journal, Nov 24]

Betting on faith and hope. Republican leaders in Congress such as House Budget Committee Chairman Paul Ryan want to reduce the federal role [in R&D] and hope that commercial interests will pick up the slack. For decades, support for science funding was a bipartisan given. No longer.  ... Meanwhile, the private sector has been reluctant to spend heavily on R&D in the aftermath of the crisis. Demand remains weak. Wall Street rewards companies that use record profits to drive the stock price up. It is skeptical of R&D spenders, preferring a quick payoff.  [Jon Talton, Seattle Times, Dec 5]

Cyber criminals are increasingly targeting health care and biotech companies for the trove of valuable details they hold — stock information, research secrets and even patients’ personal data, industry experts said. At the same time, the health and life-science sectors are underprepared for the assault from such sophisticated thieves. Well-planned “phishing” attacks and confidence tricks fool executives, scientists and hospital workers, who are often pressured to put productivity ahead of good online security practices.  [Bradley Fikes,, Dec 3, 14]

Immigrant startup founders in the U.S. face a Catch 22 in fundraising that a new Silicon Valley angel fund and accelerator is tackling. ... Tech workers here on H1B visas are barred from raising funds unless they are working for a certified employer or their company meets certain minimum funding levels already. Raising money for a startup while working fulltime for a company can be tricky, if not completely forbidden by that employer. ...  Unshackled Fund, founded by Nitin Pachisia and Manan Mehta, plans to employ the founders itself and provide them with workspace in San Francisco or in Palo Alto.   [Cromwell Schubarth, Silicon Valley Business Journal, Nov 13]  

Despite a recent push by the Defense Department for companies to invest more in research projects, the Pentagon might continue having trouble getting firms to spend more of their own money for this, experts say. ... Defense leaders argue that companies that spend their own money on research projects will be better positioned to win contracts down the road when Pentagon spending rebounds from the current decline.   Companies with large commercial businesses oftentimes spend multiples more on research than pure defense companies. That’s because there is a far greater chance of recouping investments with a successful commercial technological breakthrough. That is not the case with defense technology.   [Marcus Weisgerber,, Nov 26]  DOD dreams that the defense companies would invest in inventing new stuff with no commitment by the government to purchase and adopt it. Why would anyone want to rely on a company that stupid?

Texas State Securities Board has approved rules to regulate the way startups and investors conduct equity crowdfunding.  ... designed to enable unaccredited investors to invest as much as $5,000 a year in startups without requiring proof of high-income levels — in exchange for equity. ....  scheduled to go into effect in late November and enable approved online portals to list startups seeking investors, a board spokesman said.  [Christopher Calnan, Austin Business Journal, Oct 23] In dealing with anything possibly political in Texas -  caveat emptor.  

The Watervliet [NY] Arsenal [a 200-year-old manufacturer of cannons] is losing out on key tenants because it doesn't have the money to maintain and restore vacant buildings on the campus, says Peter Gannon, president of the Arsenal Business and Technology Partnership.  The reason? Nearly 80 percent of the $2 million of the rent and revenue generated by commercial tenants who pay to operate at the arsenal goes to the Department of Defense.  [Krystle S. Morey, Albany Business Review, Nov 19]   DOD / Congress needs the revenue and is not much concerned with capital investment to maintain a competitive enterprise. But then, government in the main does not do capital investment, it spends tax dollars and sees all outlays as mere spending.  Which is just as well because the political pressure is to reward constituents while mouthing party platitudes to attract the least-common-denominator voters. When the smoke clears occasionally, we see that we get the government we deserve.   All of which is one reason to be wary of SBIR's free money which has no interest in investing in your enterprise, just getting your work output on a one-time job because no one in the government has any economic incentive for your success. 

Mr SBIR died.  Roland Tibbetts, then at NSF, saw that NSF was ignoring the innovation potential of small business and convinced the powers to try SBIR. Roland had a good idea for NSF and NIH, agencies that were not going to use the technology developed and would thus not be entangled in self-interest.   Not long after, the small biz political machine saw the potential for a windfall of money and geared up for "if a little bit is good, a whole lot is better".  Even Ronald Reagan submitted in 1982.  Then the federal agency machine took over, with its unilateral authority, to re-capture the money into its regular R&D, which already had an active small business community.  Unlike NSF, which had been a purely academic funder. Thirty years later, only NIH has any track record of seeding small innovators on a trail to big success.  But the small biz political machine keeps promoting the myth. The rest do what they want and then make whatever story they can concoct about "commercialization"  for a willingly gullible Congress.

The Air Force has awarded a $7.4 million contract to Stellar Science (Albuquerque, NM; $2.5M SBIR) to support a research project involving directed energy at Kirtland Air Force Base.  [Gary Gerew,  Albuquerque Business First, Oct 29, 14]  The SBIR advocates think such Phase III contracts prove that SBIR is worth the money.  But most of the military contracts have no great economic impact because the military was going to award such support contracts to someone anyway.  In most cases, when the contract is over, the work goes nowhere until the military buys more of it. But the politicians applaud anything going to small biz. Unfortunately for any hope of the public understanding what's happening, the DOD obscures as much as possible any clear examination of its SBIR program which could be a rich source of innovation if managed to be so. 

Few businesses owned by venture capital firms have been awarded SBIR awards since this program was opened to them two years ago.  ...  Only two of these agencies — NIH and the ARPA-E — have allowed VC-owned businesses to compete for SBIR awards, according to a new GAO study. ..  received 20 applications from VC-owned firms and made 12 SBIR awards to them for a total of nearly $8 million.   [Kent Hoover, Baltimore Business Journal, Nov 20]  Why so little if small biz is the engine of innovation?  Politics.  The SBIR advocates like the sheltered world of big agency conservative self-interest  and the politicians don't care about program efficiency if it makes small biz unhappy. Besides, the money is too small and in the wrong hands to interest politicians.  Since the average member of Congress spends four hours a day dialing for dollars, ....

Though federal support for R&D increased in FY14, federal spending on research and R&D facilities is currently at its lowest point in a decade, according to new data from NSF. [SSTI, Nov 20]

Defense Secretary Chuck Hagel said much of the best technology coveted by the Pentagon lies outside the department and its main suppliers.  .... Any major shift in Pentagon procurement faces barriers. The Defense Department must persuade more companies to work with the Pentagon and coax lawmakers to switch funding from the type of big programs that can anchor jobs in their districts for years.  ... In recent months top Pentagon officials have said that a new wave of innovation is needed to counter China’s heavy military spending—notably in stealthy fighter jets and long-range missiles that could threaten the U.S. Navy.   [Doug Cameron and Julian E. Barnes, Wall Street Journal, Nov 21]  If the military is not getting innovation, they have only themselves and the politicians to blame as each seeks to protect vested interests.  

An incisive recent analysis by Butler University economist Peter Z. Grossman has documented that since the 1970s, Washington has spent over $200 billion in research and development alone in trying to deliver on its repeated promises to transform U.S. energy technology. The plain truth is that it has nothing to show for all these programs, promises, and dollars spent.  [Lee Lane, Toward a Conservative Policy on Climate Change, The New Atlantis, Spring 14] Liberals advocate government programs but focus on input, and ignore outcomes.  Conservatives oppose government programs but do not prove their vague claims that the programs are or were worthless, or worse. Almost no one invests energy in credible and factual analysis of the programs results.  It's almost as if the rule were: if it's past its good only for what tidbits we can pick for our side of the arguments for and against more of the same.

Two Yale professors will receive $500,000 grants from the [Connecticut Bioscience Innovation Fund] in the hopes that the money will help the researchers hasten the day their discoveries become salable products ... The state borrowed the money for both  ... how much of that money will be a loan vs. a venture capital style investment is yet to be negotiated. Businesses are not eligible for grants under the terms of CBIF. ... Loon Medical (Tolland, CT; no SBIR) is developing a remote monitor for ill people who do not have caretakers on site at all times, such as people with dementia. Tangen Biosciences (Branford, CT; no SBIR) is developing an affordable, mobile diagnostic test for tuberculosis for use in the developing world.    [Mara Lee, Hartford Courant, Nov 17, 14]

The N.C. Biotechnology Center awarded nearly $900,000 in loans and grants during [its] first quarter ... In addition, the center estimates that companies which previously received Biotech Center money raised more than $13 million in outside funding during the quarter.  ...  files as a private nonprofit, but receives appreciably all of its $13.6 million budget from the state taxpayers ... touts that every dollar that it loans to young life science companies is met with $117 in additional funding from outside groups, be that other government grants, funding from disease philanthropy groups or from private angel or venture capital.  [Jason deBruyn, Triangle Business Journal, Oct 22, 13]

SECDEF wants innovation.  Defense Secretary Chuck Hagel said Saturday the Pentagon will make a new push for fresh thinking about how the United States can keep and extend its military superiority despite tighter budgets and the wear and tear of 13 years of war.  Hagel announced a “defense innovation initiative” that he likened to historic and successful campaigns during the Cold War to offset the military advantages of U.S. adversaries.  ....  “We must change the way we innovate," he said.   [Robert Burns, WashPo, Nov 17]  SECDEFs often make such grand pronouncements, only to have the trench warriors continue their march and budget fights on conventional measures.  He could re-juvenate the technology innovation by pushing more money to DARPA and pushing the services to  pursue more tech innovation in their SBIRs.

We Americans are increasingly given to political escapism. Regardless of our place on the political spectrum — Republican or Democrat, liberal or conservative — we prefer self-serving fictions to messy realities. We avoid unpopular choices by hiding behind ideological platitudes. This defines Washington’s political paralysis and polarization. The question posed by the midterm elections is whether the parties want to break it.  [Robert Samuelson, WashPo, Nov 17] Since the mid-term election campaign was about almost nothing except anti-Obama, why will the winners claim any mandate to upset people with innovation?

Beware giving an expert opinion?   If an Italian asks a scientific opinion on something that could harm the town, an Italian scientist has no choice but to predict the worst possible outcome. an earthquake shook L’Aquila, Italy, killing several hundred residents. The week prior, a team of government seismologists reassured the community that a series of small shakes were nothing to worry about, and a court later held them responsible for the lack of alarm and the subsequent fatalities. Now, an appeals court has overturned all but one (manslaughter) conviction - the former head of Italy’s Civil Protection Department, who will serve two years in prison. [Kerry Grens, The Scientist, Nov 11] | November 11 In that kind of world, should an expert who predicts a disaster be criminally responsible for the expense of protection or evacuation for an aevet that does not happen?  Would you offer an opinion of any kind in such a world, or would you let them rely on their favorite superstition as their protection?

US and China agreed a big trade deal, Information Technology Agreement announced in Beijing, subject of course to a US Senate ratification if they can take time out from running against Obama and dialing for dollars, that would eliminate roughly $1 trillion in tariffs on a range of products including medical equipment, software, GPS technology and other high-tech goods. ...  “One local example is Illumina competing with (Beijing Genomics Institute) in China,” [Eric Topol, director of the Scripps Translational Science Institute] said. “Taking down the tariffs could help Illumina compete in what is a ginormous market.”  [Paul Sisson, utsandiego, Nov 11]

Is DOD in an acquisition death spiral? Government Executive's Katherine McIntire Peters: "The Pentagon has walked away from at least a dozen such programs since 2001 after sinking nearly $50 billion into weapons that will never see a battlefield."  [Foreign Policy, Nov 12] ... Twenty-five years ago, Defense Department officials were deeply worried about the health of dozens of companies they depended on to supply military troops with critical weapons and equipment. As the Cold War melted down, the department’s senior leaders knew they wouldn’t have enough work to sustain some 50 defense contractors, so they explicitly encouraged companies to restructure and consolidate. Corporate executives aggressively embraced the advice—today, there are just six major defense companies. Pentagon officials have spent much of the last several years trying to undo the damage.   [Katherine McIntire Peters, Government Executive, November 11]  Older hands will remember the frenetic Congressional efforts in 1992 to elevate SBIR into a national small biz savior in the race for Defense Conversion as Russia collapsed. Even free market lovingBush 41 signed on by approving an SBIR expansion in a hot election year where his opponent's mantra was "It's the economy, stupid." 

We found no evidence of the effectiveness of public subsidies, concluded an Italian economic study of R&D subsidies to large and small firms in one northern region. ... Notwithstanding the popularity of R&D investment subsidies, the question of whether they actually work—i.e., increase firms’ R&D activity—remains unsettled.    [Bronzini and Iachini, American Economic Journal: Economic Policy, 2014, 6(4): 100–134]  Passing out money is always popular for politicians and recipients, but proving it was worth the money almost never happens. The study found the large firms took the money and did not increase their R&D, but that small firms did sometimes invest that much again - a small measure that does not answer any ROI challenges.  Maybe the newly controlling Republicans will find a way to subsidize only when some decent ROI - other than temporary jobs for the money - is demonstrated.  Don't hold your breath.

A fourth revolution should go even further, getting government out of the business of picking winners in the private sector through market-distorting subsidies and regulations. ...  it’s not yet clear whether the West will be able to summon the sort of intellectual and political energy that, for the past four centuries, has kept it ahead in the global race to reinvent the state.  [John Micklethwait and Adrian Wooldridge, The State of the State, Foreign Affairs, J/A14]  The latest election provided no confidence that the real dilemmas of the Western liberal government - people wanting more government than they are willing to pay for - will be addressed by the new winners with no mandate because they mostly ran as being not-Obama.

SBIR beware Republicans.  The purest free-market Republicans detest corporate welfare and government intrusion in markets. That should mean that SBIR be downgraded to government technology awards only with no role of dual-use or Return on Investment considerations.  And since the only economic rationale for SBIR is quicker market entry for new technology in small innovative firms, there is no need for a set-aside program that shelters uncompetitive small firms from the cold winds of commerce.  There is also no evidence that the SBIR firms are any better than firms that would win government technology development in open competition.  ... But don't worry, SBIR advocates, the Republicans do not have that courage of conviction in their espoused principles. They will yield to the myth that small biz deserves  extra help because they are a political holy constituency.  The elected Republicans are more politician than free-market purist.

Day 1 of the roosters' taking credit for the sunrise.  American two-party politics regularly swings from one party to the other in the unending search for the perfect balance of wealth creation and wealth distribution to public purposes.  This time, in a relatively benign recovery from the financial crash of 2008 and global growth of economic competition, the voters want to try switching horses.  Things may or may not improve, but the newly elected politicians are kidding themselves if they think their ride in the saddle will be the reason for either faster or slower economic pace.  The public wants a new team but it has shown no appetite for any new approaches as half the country will object to anything.

Why Congresscritters have a field day with the Executive Branch.  An IG report said: The biggest problem with DHS' pandemic preparedness program was that it didn't analyze what it actually needed before spending $9.5 million on protective equipment and $6.7 million on antiviral drugs, the inspector general concluded. It also didn't keep accurate records of what it purchased or monitored its stockpiles. What the IG did not say was that if DHS had tried to make the perfect operation, it would have taken years to do anything, which given the rate of technological change would have soon become at least partly obsolete.  The IG could have observed that you cannot beat something (like a spreading disease) with nothing, and that what DHS did was reasonable under the circumstances for government system operation. Now the opposing party politicians will convene publicized hearings to yell at the DHS managers who at least did something.

The Republican dog has caught the Congressional car and will therefore have its chance to prove that there is no neat agreeable cure for the national malaise.  Good things still have to be paid for and subtractions make people unhappy. The people still want more government than they are willing to pay for.  Tom Friedman opines: Americans are feeling anxious that no one has a quick fix to ease their anxiety. And they’re right. The only fix involves big, hard things that can only be built together over time: resilient infrastructure, affordable health care, more start-ups and lifelong learning opportunities for new jobs, immigration policies that attract talent, sustainable environments, manageable debt and governing institutions adapted to the new speed. [New York Times, Nov 4] None of which had any stage time in the 2014 election drama.

Electing anybody else. Republicans might well control Congress next year.  Six years ago, the voters were hopeful. Four years ago, they were angry. Two years ago, they were cautious. But now the voters are just tired, fed up with the seeming inability of any institution — public or private — to make a positive difference in their lives.    Six years after the financial crisis devastated us, the economy is still the issue that resonates most with voters. Although in many ways the economy is doing much better than it was six years ago or even a year ago, for too many Americans it hasn’t improved at all in the most fundamental sense: Their incomes aren’t rising. Their standard of living is declining.   Understandably, very few people would say the economy is working for them. Shockingly, a plurality of voters trust the Republicans more than the Democrats on the economy, according to a Pew Research Center poll.   Anyone who trusts the Republicans hasn’t been paying attention to what their economic policies have been. Instead of focusing on full employment and higher wages, the Republicans have doubled down on the trickle-down policies that have failed so miserably over the past 30-plus years.  [Rex Nutting, MarketWatch, Nov 3]  Sadly for intelligent voting, the public grasp of economics is severely limited by its severely limited grasp of basic math.  Political campaigns exploit that gap with adverts that insult the intelligence.

Vote wisely, and raise your children to think like engineers.

Officials at many U.S. companies say they fear the sweeping language of the provisions [new proposed law] will be used to prevent them from competing for technology contracts in Germany[Europe’s largest market for information technology and telecommunications]  where attitudes toward American companies have deteriorated since disclosures that the U.S. [NSA] spied on German politicians. [Chase Gummer, Wall Street Journal, Nov 3]

Economy not what you want? Throw the governor out, or the Congresscritter. Never mind that the political system has little influence on the day-to-day market economy. Unemployment is down and consumer confidence is up, but wages have fallen or flatlined for many Americans. A record number of people work temporary jobs. In Florida, nearly a quarter of homeowners owe more on their mortgages than their houses are worth.   [Wall Street Journal, Oct 30]  The people will rush to WalMart to buy cheap goods made in Asia and then complain that the governor is not protecting the state's workers. Too bad, guv, you promsed four years ago to solve the problem with lower taxes and government austerity.  In the last few decades, we have tried all kinds of politicians with all kinds of economic promises and the hugely diverse economy chugs on mindless of the promises. The politicians mimic the rooster that takes credit for any sunrise. 

For government critics, a Senator's tabloidSen. Tom Coburn (R-OK) released his final edition of the Wastebook, which highlights examples of what he considers wasteful government spending. The final edition includes 5 National Institutes of Health grants, 10 National Science Foundation (NSF) grants, and 6 NASA grants. [AAAS, Oct 28] Lighten your day with Wastebook

Stepping up competition.  Wracked with corruption and the misuse of funds, the Chinese government’s competitive research grant system will be drastically reformed in the coming months and years, according to officials. ....  “China will reform state research fund management, delegating power to independent institutes in a bid to curb academic corruption and sharpen innovation,” according to Xinhua, the state-run newswire, quoted by ScienceInsider. “The government will no longer be in direct charge of research projects.”   [Bob Grant, The Scientist, October 27, 2014]   Meanwhile, some of our politicians want to get into judging individual research grants (at least until the election is over).

Election year antics.  [SBA] awarded Emerging Technology Ventures a $547,205 grant to establish a Regional Innovation Cluster in Alamogordo [NM]  ...  will establish an 85,000 square-foot site that includes 3D tools to develop prototypes and help with manufacturing, as well as co-working space to provide support for startups.   .... According to a statement issued by Sen. Tom Udall (D-NM) and Sen. Martin Heinrich (D-NM), the hub will capitalize on existing federal resources, including White Sands Missile Range and Holloman Air Force Base. ... Said the politician, “On the Appropriations Committee, I’ve been a strong advocate for the SBA, and these dollars will help make Southern New Mexico a high-tech research and manufacturing hub" [Gary Gerew, Albuquerque Business First, Oct 2]  The key phrase in this announcement is On the Appropriations Committee, where the local Senator can ignore the rantings of the Senator from Oklahoma :Sen. Tom Coburn (R-Okla.) has published his fifth installment of Wastebook, an annual tragicomic testimony to the power of diffused costs and concentrated benefits. [Lucian McMahon, Hit and Run blog of,  Oct 22]  Home cooking in NM is waste, fraud, and abuse in OK.  The likelihood of anything great coming from the Cluster that would not have happened anyway is in the eye of the beholder and the taxpayers in any other state who will be quiet as long as they get their share. Will subsequent accountability on ROI cause the Alamogordo handout to close? Of course not, as long as the Senator from Alamogordo stays on the Appropriations Committee. Ah, well, it's your tax money feeding this machine, and only you have the power to reform it. 

Outlaw data.  on June 12, 2012, the North Carolina Senate passed a law that effectively prohibited the use of any data about sea-level changes in determining coastal policy in the state. The law was drafted in response to a report from the state-appointed North Carolina Coastal Resources Commission’s expert scientists, who advised that sea-level rises of about thirty-nine inches could be expected in the next hundred years, putting coastal communities in the Outer Banks region at grave risk. [Priyamvada Natarajan, What Scientists Really Do, New York Review of Books, Oct 23]  Washington, DC, and other cities have an equivalent rule on noise:  only sound measurements by the world's most certified acousticians can be used in actions against noise-makers.

Fear deflation and national bankruptcy?  Elect Republicans for the austerity and free-market supply-side cure as the Republican dog is getting close to catching the car. The GOP is gaining ground with fundraising, ad buys, undecided voters and independents. [Wall Street Journal editorial page, Oct 16] Any politician who claims a cure for globalization economic effects should  [your cure here].    The stark reality is that we are in an intense world-wide competition while we long for the days after WWII when we had no conmpetition. The standard "cut my taxes, cut their wages" won't quite satisfy the voters' quest for a better life.

The Pennsylvania Biotechnology Center of Bucks County is getting some federal government money to expand yet again.  ... serves as an incubator for early-stage life sciences companies. The grant will support the addition of 15 laboratories at the site, which is expected to result in the creation of 90 new jobs.  ...  Nearly 300 people currently work at biotech center.  ...   Five for-profit life sciences companies — Flow Metric,  Novira Therapeutics, Fox Chase Chemical Diversity Center  ($600K SBIR), Synergy Pharmaceuticals ($900K SBIR) , and Cross Currenthave committed to leasing the new space being created at the center.   [John George, Philadelphia Business Journal, Oct 10, 14] 

[DOE] has made a $70 million grant to Red Rock Biofuels (Fort Collins, CO; no SBIR, founded 2011) which will enable the company to produce 12 million gallons of fuel from wood biomass a year.  ....  to help finance a refinery in Oregon to produce jet fuel, diesel and naphtha from the wood scraps left behind by timber operations.   [Denver Business Journal, Sep 23, 14]   The organic matter will not be left to enrich the soil for future tree production.  It will instead be converted to carbon dioxide and water in the atmosphere to grow trees in poorer soil.  If the cycle continues, eventually the soil's ability to retain water will degrade tree production. But that's a problem for future generations beyond the scope of present business  and political economics.   

Interstate bribery competition.  Colorado Economic Development Commission members offered four companies $11.6 million to bring more than 650 jobs to the state, including two worldwide firms ... Commissioners agreed to offer $6.03 million to an unnamed information technology company with employees across the United States that wants to expand its operations and create 262 jobs at an average salary of $108,504 — a pay grade 56 percent higher than the average salary of any Front Range county.  ...  the commission offered $5.02 million in incentives to a company that offers audit, tax and advisory services in 156 countries worldwide to open a facility to design, implement and engineer technology solutions for its clients.  ... also voted unanimously to offer $361,741 in incentives to Myco Technology (Aurora, CO; no SBIR), a year-old food and agriculture technology company that is looking to create 43 new jobs either in Aurora or the Albuquerque area. The company is negotiating with top-tier venture capital firms and hopes to secure a major funding round by November.     [Ed Sealover,  Denver Business Journal, Oct 9, 14]  [Myco Technology] focused on unlocking new opportunities in the food and beverage industry. We use a proprietary 100% natural non-GMO bio-process to transform agricultural products to enhance their value.  We are pioneers in the field of myceliated agriculture. By fermenting agricultural products with strains of our unique gourmet mushrooms, our patent-pending process greatly enhances the taste, aromas, nutritional value and other characteristics of foods and beverages. [company website]

Fighting distant wars and creating local jobs. The state of Colorado has been awarded $6.6 million from [DOD] to continue to create jobs and grow small and medium-sized businesses in the advanced manufacturing sector, Gov. John Hickenlooper and the Colorado Office of Economic Development and International Trade announced   .... the creation of centers of innovation, focused on the corridor from Fort Collins through the Front Range to Pueblo.   The centers (up to four as part of phase one) will provide mentoring, technical assistance and equipment necessary to help grow early-stage and proof-of-concept businesses across the advanced manufacturing sector.   [Heather Draper and Greg Avery, Denver Business Journal, Sep 18]  Must be election time when any handy federal agency becomes a conduit for local handouts. Later, politicians will criticize DOD for taking its eye off the ball in the Middle East. Looks like part of DOD Innovation Centers program alleged to be public-private partnership.

Machines who think.  iRobot introduced a new operating system that it says enhances the ability of robots aimed at the military to think for themselves when navigating terrain tougher than the living-room rug.  ...   replaces a joystick with an Android app that allows users to steer its robots on a tablet by pointing a finger. It includes technology that dovetails with the Pentagon’s push for robots that can steer and perform tasks themselves through tricky environments such as urban conflict zones or the sites of natural disasters.... [DARPA] has focused on developing wheeled or tracked robots that can pick their way through the debris of disaster sites and perform simple tasks such as moving rubble or closing a valve. The agency is sponsoring a robot challenge to test prototypes developed by private companies and universities in a simulated disaster area, replicating a contest it held for self-driving cars. But by the time it holds the final next June in California, Darpa said it only expects the robots to have the competence of a two-year old child.  Google which has been investing heavily in robotics, pulled Schaft Inc. from the Darpa contest in June after acquiring the Japan-based company.    [Doug Cameron, Wall Street Journal, Oct 8, 14]

Scavenging for political fodder.  NSF Merit Review Under Scrutiny. On September 30, House Science, Space, and Technology Ranking Member Eddie Bernice Johnson (D-TX) issued a letter to Chairman Lamar Smith (R-TX) expressing concern regarding a number of requests for access to material pertaining to the review of almost 50 specific grants awarded by the National Science Foundation (NSF) (see ScienceInsider). The requests ranged from access to peer reviewer comments (with names of reviewers redacted) to emails, text messages, and correspondence associated with the specific grants. Although the grants have been awarded from a range of NSF Directorates, the majority were funded by the Social, Behavioral, and Economic Sciences Directorate.   [AAAs, Oct 8]  The principle of peer review has to stand periodic hassling by politicians looking for something to be against with dedicated voters and contributors. Republicans seem anxious to resurrect Sen Proxmire and his Golden Fleece awards - a periodic fling as the corporate memory fades after a couple of decades. Politicians by their nature focus on the present, and get any history from conveniently partisan sources.

Sometimes a good idea is seeded through government funding: a 1994 NSF grant led Stanford grad students Larry Page and Sergey Brin to found Google. [Jon Gertner, reviweing Thiel's Zero to One,, October 8, 2014]  

Too close for comfort. The Army has awarded $80 million in helicopter contracts to Wall Street executive Lynn Tilton even as the Justice Department is investigating whether she played by the rules to win earlier military work.  ....  The Associated Press reported in March that Tilton and Bert Vergez, a retired colonel who ran an Army acquisition office in Huntsville, Alabama, were in unusually close contact for more than a year before Vergez retired from military service in late 2012. Three months later, he was working for Tilton. ...  Separately, two former employees of MD Helicopters have filed a civil suit against Vergez, Tilton and her companies under the Federal False Claims Act.  [RICHARD LARDNER, AP, Oct 8, 2014]

BIO CEO Jim Greenwood,  a former Republican congressman from Pennsylvania, on a biotech bubble:  Is there a bubble? I don't think so at all. When you look at price-to-earnings rations and other indicators, the investments are really being made on a sound basis.   [Ron Leuty, San Francisco Business Times, Oct 3, 14] Has any industry association CEO ever seen a bubble?

New York is asking clean technology business and entrepreneurs to submit plans for community-microgrids for its $40 million clean technology competition this fall. .... Microgrids are local energy networks that can operate independently from the larger electrical grid. Microgrids are becoming more common as states look to be more resilient to severe weather events.   [Megan Rogers,  Albany Business Review, Aug 26, 14]  How To Play.

Sweet tax deals sour results.  In truth, most tax subsidies don’t make much sense — not for countries and certainly not for states. “There is a lot of work that shows that tax subsidies vastly overpay for the jobs they create,” said Edward Kleinbard, a law professor at the University of Southern California and the author of the recent book “We Are Better Than This: How Government Should Spend Our Money.”  [Joe Nocera, New York Times, Oct 3] No matter, the politicians know that the public pays no attention to long term results, especially the twittering and texting public.

Small biz wants its chance to muddy the political waters at the state level, as SBA's Office of Advocacy urged the EPA to withdraw its proposed “ Waters of the United States” rule, a regulation that businesses contend would give federal regulators jurisdiction over everything from ditches to pastures. ...  Congress has held several hearings about the regulation, which the EPA contends will end confusion about what streams and wetlands are covered by the Clean Water Act. The EPA is taking comments about the proposed rule until Oct. 20.   [Kent Hoover, Washington Bureau Chief, San Francisco Business Times, Oct 1, 14] Office of Advocacy sees a big fed under every bed.

Edifice Complex. A development project totaling 1.7 million square feet and covering 15 acres of downtown [Durham, NC] real estate got a symbolic launching in a former tobacco warehouse. ...  the first component of a "Durham Innovation District." Plans for the project call for it to eventually extend from Duke Street to Durham Central Park, serving enterprises in science, technology and combinations of the two. [Jim Wise, Raleigh News & Observer, Oct 1]  Developers can always find some compelling rationale for building an edifice and selling it to an optimistic operator.  But can small innovators afford such space without a public subsidy?

Public investment always sounds good for the politicians passing out the money. Connecticut Innovations received $14 million in state funds in the fiscal year that ran through June 30, 2012, and approved $26.4 million in new loans and investments, according to a state audit,  It had $51.4 million in investments outstanding.  The audit said the quasi-public agency recorded $6.26 million in losses on investments made years ago.  .....   a more recent audit by Marcum Accountants, the accounting firm hired by CI. That audit, which goes through June 30, 2013, said CI approved $27 million in investments and loans that year, and had $4.1 million in losses. It received $51 million from the state that year, the audit said.    [Mara Lee, Hartford Courant, Oct 1, 2014]  CI has been at this investing for long enough to be judged on whether it is a net profit-maker for the state. But because it has public goals beyond mere economic profit, any overall judgment on its merit will be political, a field where auditors have merely one viewpoint.

DARPA's [mobile Intense and Compact Neutron Sources program] has asked industry to submit proposals to develop portable devices that can generate both X-rays and neutrons, the latter of which is very good at visualizing lighter elements and liquids. Solicitation taking proposals until Nov 20.   [Jill R. Aitoro, Washington Business Journal, Sep 25, 14]  If you have a hot idea with real new tech potential, DARPA is the place to look.  It has the wherewithal and attitude to simply open a whole new program in a microsecond, where the regular military hates to disrupt its doctrine unless it's taking serious casualties.

Virginia TechTober by decree.  Gov.declared October to be “TechTober” in Virginia, what he calls a statewide celebration of the commonwealth's high-tech industry. ... has the highest concentration of high-tech jobs per capita in the nation ... to host a series of informational, hands-on events highlighting tech activities and to launch a new mentor program for students “Mentors for Momentum.”   [Jeff Clabaugh, Washington Business Journal, Sep 30]

Good ol' Texas politics.  The leaders of some companies that received the money have contributed more than $1 million to his campaign. [MANNY FERNANDEZ, NY Times, Oct 1] The money was Texas Enterprise Fund awards by naked Executive action that did not follow normal competition and review. "His" means the Attorney General at the time, now running for governor.

Seven [Wisconsin] companies each will receive a $75,000 grant under a new program aimed at helping them commercialize their products. The first-ever grants are being distributed by a program called SBIR Advance. ... with $1 million from the Wisconsin Economic Development Corp. and administered by the UW-Extension Center for Technology Commercialization.   All of the companies have already received [SBIR or STTR]. But they aren't able to use those funds for activities like patent work and customer development and validation. receiving the grants are: C-Motive Technologies (Madison, WI; one SBIR)  Isthmus Biosciences (Madison, WI; one SBIR); Nutrient Recovery and Upcycling LLC (Madison, WI; one SBIR);  Pan Genome Systems (Madison, WI; one SBIR);  V-Glass LLC  (Milwaukee, WI; one SBIR); Fiberstar Bio-Ingredient Technologies (Eau Claire,WI; one SBIR);  Medical Cyberworlds (Verona, WI; $600K SBIR).  [Kathleen Gallagher, Milwaukee Journal Sentinel. Sep 25, 14]

More for us, please, we're special.  A report [from the American Academy of Arts & Sciences]out this week urges the U.S. government to lift spending on basic research to historically high levels as a way to ensure prosperity and preserve American preeminence in science and technology.  The recommendations include boosting real spending on basic research by more than 4% annually, making multiyear funding commitments, streamlining regulations on academic research, and creating an optimal biomedical research workforce.  [Science, Sep 19]  Federal science programs produce more PhDs than can be supported by federal funds, and thereby create another growing interest group.  And, of course, the science challenges cry out for attention to solve the mysteries of life.  “Sometimes I feel that we're plowing the ocean,” says [James Duderstadt, an engineer and president emeritus of the University of Michigan], who also served on a 2012 National Academies' committee that suggested ways to improve the health of U.S. research universities. 

his despair about the current state of American politics. Mr Fukuyama argues that the political institutions that allowed the United States to become a successful modern democracy are beginning to decay. The division of powers has always created a potential for gridlock. But two big changes have turned potential into reality: political parties are polarised along ideological lines and powerful interest groups exercise a veto over policies they dislike. America has degenerated into a “vetocracy”. It is almost incapable of addressing many of its serious problems, from illegal immigration to stagnating living standards; it may even be degenerating into what Mr Fukuyama calls a “neopatrimonial” society in which dynasties control blocks of votes and political insiders trade power for favours.     [The Economist, Sep 27]

Elections have consequences. The [US Supreme Court] ruling, which reflected a partisan breakdown in many court decisions nationwide on voting issues, saw the five Republican-appointed justices uphold the voting restrictions enacted by the state’s Republican-controlled Legislature in February. The new limits removed the first week of Ohio’s 35-day early voting period, in the process eliminating the only week that permitted same-day registration, a feature most often used by minorities. [New York Times, Sep 29]  The issue is preventing imaginary voter fraud versus easier voting access for minorities and poor, another entanglement in the situation-dependent states-rights as old as the Constitution. 

Brighten your corner. No one had heard of Mike Krieger when he responded to a call to organize San Francisco’s crime data. He was in his early 20s, working on his coding, and he created an app to help visitors and city-dwellers alike know when they had entered a high-crime area. A few years later, Krieger and a partner sold their startup, Instagram, to Facebook for a billion dollars. ...  Aneesh Chopra, America’s first CTO, argues that fixing government should involve more people like Krieger: those willing to devote time and techie know-how to improving their city, state, or country.   [Kara Miller,, Sep 26, 14]

SBA trumpets its course in competitive advantage. Learn how to get a competitive advantage with this course. Learn how to brand, study your competition, identify customers and their preferences, create pricing strategies and much more.  Get the story and decide for yourself whether a government agency can teach competitive enterprise.

An independent audit of the Texas Enterprise Fund has found that roughly $222 million doled out from the fund went to companies that submitted no applications or made no promises to create jobs  [11 projects that received awards totaling $222 million, roughly 44 percent of the $505 million awarded in total by the fund]. The fund has been highly touted over the years by Gov. Rick Perry, who has said it was an invaluable tool to bring jobs to Texas and to stem the flow of jobs that might otherwise have left the state.  ....  the first time the Texas Enterprise Fund's activities were reviewed by an outside agency.  ... a $40 million award in 2004 to then-Austin based Sematech Inc., a research consortium, had no requirements to create jobs, nor did the company submit an application for its funds. At the time of the award, Perry said the funding would allow Sematech to add 350 workers here, and economic research groups touting the award said it could eventually create up to 4,600 new jobs in the area. By 2007, the company had moved its headquarters to Albany, New York. The full report, 99 pages long.  In competition for political power Texas lawmakers are weighing how to improve oversight of the state's economic development incentive programs, including the Texas Enterprise Fund and the Emerging Technology Fund. ... proposed moving oversight function of the programs into the state auditor's office.   [Michael Theis, Austin Business Journal, Sep 24] The basic challenge for all such public subsidy programs is economic accountability when the incentive is for immediate gratification from public announcements of promises.

Connecticut Innovations, the state-funded venture capital fund with a mandate to spur high-tech job growth, has been hobbled after being frozen out of state borrowing for the past six months.   The agency, which is not part of the state government, says it will be unable to commit to new investments for the rest of the year. ....  From January through September, Connecticut Innovations committed $14 million in venture capital, an amount similar to the full-year total in the years before Gov. Dannel P. Malloy decided to give the agency more money so it could be more active. Connecticut Innovations also loaned about $15 million to tech companies and manufacturers.  The [governor's] administration downplayed the funding crunch, noting that Connecticut Innovations has more than $20 million of cash on hand. [Mara Lee, Hartford Courant, Sep 23] Not suprising, the story says nothing about CI's ROI for all its inventment over many years as government typically speaks only of input and state legislatures often tire of spending with no obvious payoff.

Government bribing corporations. Political scientist Kenneth Thomas, a leading expert on incentives, points out that “companies have learned that the site location decision is a great opportunity to extract rents from immobile governments, and invest considerable resources into doing just that.”   .... Instead of calling Tesla's bluff, Nevada shelled out $1.25 billion [more than $55,000 per job created]  in so-called economic development incentives, and a grateful Tesla agreed to make its batteries in the factory that it was already building.  ...   California recently doled out more than $400 million apiece in tax credits to Lockheed Martin and Northrop Grumman, while increasing its incentives to the film and media industries from $100 million to $400 million. Ini 2012, the state ranked second only to Texas, handing out an estimated $3.8 billion in incentives.   [Richard Florida, LA Times, Sep 15]

Now nobody wants to be an Organization Man. We like start-ups, disrupters and rebels. Creativity is honored more than the administrative execution. Post-Internet, many people assume that big problems can be solved by swarms of small, loosely networked nonprofits and social entrepreneurs. Big hierarchical organizations are dinosaurs. ...   Unfortunately, for the smaller-is-better bit, At root, this [exponential explosion of Ebola] is a governance failure. The disease spreads fastest in places where the health care infrastructure is lacking or nonexistent.  [David Brooks, New York Times, Sep 15] What's good for innovation is not necessarily therefore good for everything else. And the same dilemma faces the many tribal groups [like Sudan and Scotland] that scream for self-determination and lose the benefits of a large heterogeneous society.

Want more for less from your state?  Sign up for remedial economics. The allure of low taxes has been used by states to spur job creation, by attracting factories, businesses and corporate headquarters, massive online retailing, buying untaxed services, demanding tax cuts (that heavily favor the rich),  median household income remains below its level before the 2007 recession, etc.  Meanwhile no one wants less from the state than before (except for the undeserving "them"). 

the failings of economics were greatly aggravated by the sins of economists, who far too often let partisanship or personal self-aggrandizement trump their professionalism. Last but not least, economic policy makers systematically chose to hear only what they wanted to hear. [Paul Krugman, New York Times, Sep 15] Policy makers act that way because their constituents insist that the politicians tell them what they want to hear. And economics is a game where everyone has an opinion mainly founded on myth.

Americans now view [Obama] more negatively than former President George W. Bush.  [Kent Hoover, San Francisco Business Times, Sep 10] Bush got us into war and Obama got us out.  Could both be wrong, or is popular opinion not a good guide to anything? From the euphoria of getting elected to the realities of presidential inability to deliver the unrealistic dreams of the electorate.

SBA recently named the 50 winners of the first Growth Accelerator Fund competition, which recognizes accelerators building stronger entrepreneurial ecosystems in underserved parts of the country. Each organization will receive $50,000, in exchange for providing SBA with quarterly reports on their activities, impact and partnerships. [SSTI, Sep 11] A way for Congress to spread a little money around to neglected (underserved, whatever that means or merits) states. Congress is under the illusion that such money will actually create more jobs and progress than leaving the funds in the hands of private citizens with a very slightly smaller tax bill.  

SBA Administrator Maria Contreras-Sweet got a taste of what awaits her from the House Small Business Committee, which doesn’t want the Small Business Administration to do anything that it hasn’t authorized. ....  “resources instead have been devoted to potentially duplicative, unauthorized entrepreneurial development programs dreamed up by the agency with little public input,” [Committee chair Graves] said.  [Kent Hoover, Pittsburgh Business Times, Sep 10]
 Ah, well, it's election time again and the politicians want to be seen as befriending small biz and dissing the opposing party.  More Washington theater.

Gov. Brian Sandoval announced that Nevada won a high-stakes battle with four other states for Tesla Motors' coveted battery factory, but the win comes with a hefty price tag — up to $1.3 billion in tax breaks and other incentives over 20 years that state lawmakers still must approve. ...  governor called it a ‘‘monumental announcement that will change Nevada forever’’ and asserted that it would create more than 22,000 jobs and pump $100 billion into the state’s economy over the next 20 years — claims that critics said were exaggerated.   [SCOTT SONNER and JUSTIN PRITCHARD, Associated Press, Sep 5]

Skolkovo was once touted by government officials as a budding version of Silicon Valley that would help Russia transition from its oil-and-gas economy and into a diversified, technologically driven future. Around 2010, foreign venture investors and tech companies began stepping up their investment in Russia as the government seemed ready to align with the West.  .... the West's passion for Russian technology sector has also cooled.   [Yuliya Chernova, Wall Street Journal, Sep 8] Report card: Doesn't play well with others.

Mr. Clinton said the test of any democracy is finding ways to have a vigorous debate and still resolve the nation's problems. "If you read the Constitution, it ought to be subtitled: 'Let's make a deal,'" he said.  [Wall Street Journal, Sep 8]

Government as commercial competitor.   The University of Texas at Austin has inked a deal as a supplier of laboratory and scientific materials to Kerafast Inc (Boston, MA), developers of an online platform designed to provide bioresearch materials from laboratories, disclosed Wednesday that UT joined a list of 100 academic institutions whose laboratory-derived research reagents are offered in Kerafast’s online catalog. [Christopher Calnan, Austin Business Journal, Sep 3, 14]

Proudly self-sufficient Texas making nets to catch federal money.  The University of Texas Board of Regents will decide whether to allocate more than $40 million for two institutes — one that promises to push the boundaries of science and another that will bolster the energy industry. ..  would set aside $20 million over the next two years so UT could purchase equipment and provide seed funding for neuroscience research as part of a proposed UT System Neuroscience and Neurotechnology Institute.  If approved, the measure would open up aggressive research opportunities at all UT campuses throughout the state, including Austin. It's a move designed to take advantage of growing pools of federal funding available for research into the neurological sciences.  [Chad Swiatecki, Austin Business Journal, Aug 19, 14]

Patent or perish?  A suggestion by Australia Minister for Industry Ian Macfarlane that the government may consider tying science funding for universities to the number of patents they generate has drawn sharp criticism. “We need to ensure that commercialisation of [intellectual property] … is part of the process of giving taxpayers' money to researchers,” Macfarlane said. Political opponents and researchers decried the idea, saying it could shift funding from basic research, particularly in areas with no obvious potential for commercialization. A focus on patents could create “perverse incentives,” Aidan Byrne, chief of the Australian Research Council, told The Australian. But several commentators note that Macfarlane's ministry may have little impact on university research funding policy, which is primarily the responsibility of the education ministry.  [Science Aug 15]  Be careful what you wish for.

Five years ago, North Carolina was spending more than $111 million, or about $76 per student. Today we’re spending $23.3 million or $15 per student.  .... officials aren’t worried about the state of our educational system. They’re upset that the General Assembly failed to pass legislation extending a variety of economic development programs. ... our unwillingness to properly fund our schools will, in due course, send jobs and economic opportunity elsewhere.   [Andrew Silton, Raleigh News & Observer, Sep 5] Taking money from teaching and giving it to subsidies for companies; must be a Republican state.

SIRI: The Siri voice-recognition system embedded in the latest iPhone was born out of DARPA research. Apple acquired Siri, the company and the technology it had developed, in 2010. Siri was founded in 2007, but the original research upon which the technology was built – Cognitive Assistant that Learns and Organizes (CALO) – was funded by DARPA (not with SBIR) in order to develop better tools for soldiers in the field.   [,  Sep 2, 14]

A measure that would have allowed startups in North Carolina to crowdfund was shut down by legislators [over unrelated issues tacked on]   ... prior to legislators' decision, crowd-lending startup GroundFloor announced it was exiting Raleigh for Atlanta. While CEO Brian Dally said North Carolina’s crowdfunding regulations (or lack thereof) weren’t the sole reason for the move, he did cite Georgia’s “progressive” crowdfunding stance as a reason to relocate there.   [Lauren K. Ohnesorge, Triangle Business Journal, Aug 19]

DOD self-invests. DOD allows add-on SBIR money in Phase 2 projects if other people's money supplements the SBIR "enhancement." The bad news is that almost the entire list for several years of non-SBIR money comes from just DOD institutions (including large military contractors). Private economy growth from DOD SBIR is nil despite all the SBTC blather for Congressional special pleading.   The list of enhancements that make government smarter. And that list is a tiny fraction of DOD SBIR awards.  

The [$500M] price tag for a state landing Tesla’s $5 billion “gigafactory” and its 6,500 jobs first arose publicly in a July 31 earnings call with Tesla Motors founder Elon Musk. [Austin American Statesman, Aug 31] How much are low-tax, small government, Texans willing to pay for their governor's bragging rights in his quest for top national office?  How will he explain it even in the state of tall tales?   Five states are on the short list for a $5 billion factory that Tesla Motors plans - Nevada, California, Texas, Arizona or New Mexico. [AP,Aug 31] Subsidy, subsidy in an allegedly  free-market country with many Republican governors willing to hand out tax money to private firms.

Competititon.   North Carolina business recruiters offered Toyota more than $100 million in incentives for the world's largest carmaker to move its North American headquarters to Charlotte rather than a Dallas suburb, but still lost out to a Texas offer half that size. .... because the Lone Star State has no corporate or income tax, [EMERY P. DALESIO , AP, Sep 1]  If Texas doesn't tax corporations or or income, what do they tax? Oil wells?

The Republican schism over immigration reform was on display at the Heritage Foundation, where National Review Editor Rich Lowry said the GOP needs to pay more attention to American workers and less attention to big business. [Kent Hoover, Houston Business Journal, Aug 21]  Wait a minute; what's a Republican for if not to coddle business and pay cheaper wages?

You got the money, honey, we got the room. Due to a surge in Chinese participation, the U.S. for the first time is on course this fiscal year to run out of immigrant-investor visas that offer a fast track to permanent residency.  ...  Investors from China have accounted for about 85% of the [EB-5 program] visas this year ... American businesses have raised billions of dollars through the program [Miriam Jordan, Wall Street Journal, Aug 26]

Extra, extra, read all about it.   DOE to make papers free.  The U.S. Department of Energy (DOE) this week unveiled its answer to a 2013 White House mandate to make the research papers the agency funds free for anyone to read: a Web portal called PAGES that will link to full-text papers within 12 months after they're published in a peer-reviewed journal. That will eventually mean free access to 20,000 to 30,000 papers a year on energy research, physics, and other scientific topics. The papers will not reside in a central DOE database, but on institutional repositories and journal publishers' websites. Open-access advocates complain that linking to papers on journal sites will limit what people can do with the material. Researchers must submit links for their papers for DOE funding awarded after 1 October. [Science, Aug 8]

Antibiotics to be focus of prize  The public has spoken: The 2014 Longitude Prize, a new £10 million British award aimed at stimulating innovation, will go to whomever can “create a cost-effective, accurate, rapid, and easy-to-use test for bacterial infections that will allow health professionals worldwide to administer the right antibiotics at the right time,” the prize's website states. The challenge was selected by the British public in a vote from six candidate themes (including dementia, paralysis, water, food, and flight) and was announced 25 June. The prize is a modern version of the £20,000 Longitude Prize, offered by the British government in 1714 for a method to determine a ship's longitude at sea. Money for the 2014 version comes from the innovation charity Nesta and the government-funded Technology Strategy Board. Nesta and the Longitude Committee will now finalize the criteria for awarding the money; entries are welcome starting this fall.   [Science, July 4]

Subsidy Retreat.  North Carolina is eliminating one of the nation's most extensive programs for awarding tax breaks to film companies, in a retreat from a race among states to lure Hollywood productions.  ...  has been offering producers a 25% refundable tax credit, which meant, state legislators note, that taxpayers offset about 25 cents of each dollar spent. Refundable credits reimburse a company for its investments, even if it doesn't owe state taxes. The state awarded $61 million in incentives last year to production companies for films   [Valerie Bauerlein, Wall Street Journal, Aug 20, 2014]  Unlike federal subsidy programs, states are much more sensitive to the economics of return on investment. Federal subsidies are much more purely political inventions for favored constituencies.

The Small Business Technology Council sent a letter to House Speaker John Boehner and other House leadership members voicing our support for the proposed “Targeting Rogue and Opaque Letters Act of 2014″ aka the “TROL Act”  This bill is designed to combat patent trolls: companies that assert patent rights and and litigate or attempt to collect licencing fees for intellectual property used by other companies, but do not have any intention of producing the products or services that the patent protects.    [SBTC, Jul 22]  The SBIR folks respect the rights of patents as private property when they own the  patents.   A right the Constitution empowers Congress to grant.  If they sell the patent to another private party, they want the full price of the value as a patent right, and then they want to restrict its use. A strange idea of fairness and private property and liberty.

Just 5 percent, or $26 billion, of federal grant funds went directly to for-profit businesses, mostly for activities related to research and development through programs like the STTR and SBIR.  [New York Times, Aug 13]

Texans against risk.  State lawmakers studying taxpayer-funded incentives for Texas businesses on Tuesday criticized the Emerging Technology Fund as a failure, particularly for its investments in tech start-ups.   Four lawmakers, both Democrats and Republicans, questioned whether taxpayers should be making risky investments and one, Rep. Jason Villalba, R-Dallas, argued that the private sector would be better at choosing investments — even with taxpayer money if Texas partnered with venture capital firms.  [Austin American Statesman, Aug 11]  Politicians like sure bets with quick payoff (in votes). Federal agency managers (except DARPA) think the same way - high success statistics. State high-tech ventures usually cannot stomach the VC game with a few big winners and a pile of nothing-gained investments. In Texas in particular, the governor's politicizing of the Emerging Tech Fund did not help. 

The U.S. is still the world leader in medical innovation, despite the Food and Drug Administration, so companies want to invest here. Inversions will decline when there are fewer compelling opportunities in the U.S. and companies are content to invest in foreign workers, plant and equipment.   [Wall Street Journal, Aug 12] WSJ of course supports lower taxes on profits and on corporate owners and on everyone else.  It's their religion.

In "Innovation Breakdown: How the FDA and Wall Street Cripple Medical Advances," Joseph Gulfo (founder) tells the tumultuous history of MELA Sciences, the company that invented MelaFind.  [Alex Tabarrok, Wall Street Journal, Aug 11, 14]  Since medical diagnosis always has some uncertainty, regulators like FDA can sometimes obsess on that uncertainty. 

Judge has his own opinion. A San Diego federal judge ordered a new trial on the $283 million damage award won this spring by ViaSat against Space Systems Loral.  The trial, tentatively set for November, will be argued before a new jury. U.S. District Judge Marilyn Huff agreed with Space Systems Loral that there were problems with the original jury’s large damage penalty based on the evidence.   [Mike Freeman,, Aug 11, 14]

More science, please. The Senate's Commerce, Science, and Transportation Committee released proposed legislation on 18 July that calls on Congress to increase the National Science Foundation's (NSF's) budget by nearly 40%, to $9.9 billion, by 2019. It also endorses NSF's current policies for reviewing grant proposals and—in sharp contrast to a U.S. House of Representatives bill—emphasizes the importance of the social sciences as part of a balanced research portfolio. The bill, titled the America COMPETES Reauthorization Act of 2014, would replace the 2010 America COMPETES Act, which expired last year. But neither the Senate nor the House is likely to complete action on its reauthorization bill before the November election.  [Science, Jul 25]  Meanwhile, the House Repubs want to force NSF into justifying every award on economic grounds, for fear that some new social idea might emerge from social science research.

Massachusetts policymakers intend to invest more than $80 million to spur economic growth with a significant emphasis on strengthening Massachusetts’ innovation industries. Tech-based economic development efforts will focus on emerging industries, investments in workforce development and education, and promoting targeted regional growth.  [SSTI, Aug 7]

The Connecticut Inovations Bioscience Fund fund will be issuing grants, equity investments and loans over the next 10 years, and Connecticut-based nonprofits, colleges and universities, and for-profit startup or early-stage businesses in bioscience, biomedical engineering, health information management, medical care, medical devices, medical diagnostics, pharmaceuticals, or personalized medicine may apply. [Mara Lee, Hartford Courant, Aug 6, 14]

[Wisconsin] Technology entrepreneurs will receive funding from a new $1 million program to commercialize innovation. SBIR Advance will be available across the state through the University of Wisconsin-Extension's Center for Technology Commercialization. The funding comes from the Wisconsin Economic Development Corp. and is available to recipients of SBIR and STTR grants. ....  The new program is part of Start-Seed-Scale, or S3, a new initiative that the WEDC has taken on with the University of Wisconsin to help high-tech start-ups commercialize. Online applications for SBIR Advance opened Aug. 1 . [Kylie Gumpert, Milwaukee Journal Sentinel, Aug 6, 2014]

Got innovation ideas? The White House National Economic Council, along with the Office of Science and Technology Policy, released a request for information seeking input on an updated Strategy for American Innovation. The strategy serves to guide the administration as it designs and implements innovation policy that yields economic growth. Responses must be submitted by September 23.

it is a poor idea for government to seek to pick and promote individual firms. After all, even the most-experienced venture capital firms have substantial success in only one of every ten investments they pick, so we shouldn’t expect inexperienced and possibly not-very-objective politicians to do better. ....  Virtually every state has a biotech initiative, but few will be successful. Lerner (2009) emphasizes the dismal performance of policies attempting to seed specific ventures or industries [Kerr, Nanda, and Rhodes-Kropf, Entrepreneurship as Experimentation, Journal of Economic Perspectives, August 2014]

Old boy networks affect politics. We demonstrate that personal connections amongst US politicians have a significant impact on Senate voting behavior. Networks based on alumni connections between politicians are consistent predictors of voting behavior. We estimate sharp measures that control for common characteristics of the network, as well as heterogeneous impacts of a common network characteristic across votes. We find that the effect of alumni networks is close to 60 percent as large as the effect of state-level considerations. We show that politicians use school ties as a mechanism to engage in vote trading ("logrolling"), and that alumni networks help facilitate the procurement of discretionary earmarks. [Cohen and Malloy, American Economic Journal: EA Economic Policy, August 2014]

Tax rates matter little.  This paper uses the interwar United States as a laboratory for investigating the incentive effects of marginal income tax rates. We examine the impact of the large changes in rates in this period on taxable income using time-series/cross-section analysis of data by small slices of the income distribution. We find that the effect operated in the expected direction but was economically small, and that it is precisely estimated and highly robust. We also find suggestive time-series evidence of a positive impact of marginal rate cuts on business formation, but no evidence of an important effect on other indicators of investment.  [Romer and Romer, American Economic Journal: Economic Policy, August 2014]  But the hype for cutting taxes will continue regardless of the real economics, because the mythical economics sounds better in the wealthy ear.

Too many businesses focus on getting subsidies and mandates from government rather than creating value for customers. According to George Mason University's Mercatus Center, such favors cost us more than $11,000 per person in lost GDP every year, a $3.6 trillion economic hit. [Charles Koch, Republican sugar-daddy, Aug 5]  His favorite recipes for prosperity: cut his taxes, stop handouts to unemployed, cut business regulations (let's have 19th century capitalism), eliminate the artificial cost of hiring (Obamacare), and treat labor as a commodity.

Last week, SBA Administrator Maria Contreras-Sweet announced that for the first time in 8 years, the federal government has met its annual 23% goal for small business contracting. This has resulted in more than $83 billion dollars of revenue for small businesses. [SBA] A nice political act of faith but hardly proved as more efficient government procurement.

Durham has a new tool to attract startups from across the country: A housing stipend.Groundwork Labs announced that a new housing stipend will “enable companies anywhere to take advantage of the Groundwork Labs program.”  ...  Since launching in February of 2012, the program has housed more than 60 companies. [Lauren K. Ohnesorge, Triangle Business Journal, Jul 29, 14]

Targazyme (formerly America Stem Cell, Carlsbad, CA; no SBIR) is one example of a problematic startup [funded by Texas Emerging Technology Fund] that is chronicled. On paper, the San Antonio-based startup is developing stem-cell breakthroughs with 14 employees and the help of $1.25 million in state funds. But the rural address listed for its Texas headquarters [Floresville, TX] is actually a weedy horse pasture. During a recent visit by a reporter, the ex-husband of the CEO was warning his guest to watch for rattlesnakes, according to the AP. Targazyme founder Lynnet Koh said her company is moving forward but that she left Texas because Perry’s office withheld additional funding, a complaint echoed by other recipients. She now lives in California and said many of the jobs created by the company were short-term hires outside Texas, none of which is mentioned in the fund’s 2013 annual report.  [Christopher Calnan, Austin Business Journal, Jul 25, 14]

 At least 17 of the 143 startups awarded commercialization grants worth nearly $23.5 million have gone bust. Earlier this year, the Austin Business Journal analyzed the fund's bleak future in a cover story "Who can save the Emerging Technology Fund."  .... Now, some legislators believe there is bipartisan support to kill the fund during the next session, which begins in January.   [Christopher Calnan, Austin Business Journal, Jul 25, 14]  In politics, your opponents focus on your failure rate, which is why federal mission agencies prefer safe and predicatble SBIR projects. It is not the way VCs think and calculate.  They look at the total return from all investments, knowing that a large percentage are likely to fail but not necessarily to carry a large portion of the investment fund down with them. VCs therefore prefer early failure. Any emerging technology that has a 95% success rate is too conservative and has missed some big payoffs. Which is one reason that government should not be in the high tech investment business because they expect 100% success and hate to rationalize failure to constituents in competitive election campaigns. The AP report by Paul Weber, Jul. 24, 2014 unfortunately emphasized the failure rate as though it were a political report. 

A government newspaper says Chinese regulators have concluded Qualcomm, one of the biggest makers of chips used in mobile devices, has a monopoly.  ... China's government has complained about the high cost of licenses for foreign technology   [AP, Jul 25, 14]  Well, the purpose of patents is to give the inventor a temporary monopoly.

A legislative committee charged with developing a strategy to create a massive amount of new, money-importing jobs in New Mexico has approved a $73.4 million wish list to get the process started.  ... In 2013, the Jobs Council, which has more than 25 legislative, private-sector and cabinet secretary members, agreed that New Mexico has to create 160,000 economic-base jobs by 2014 just to get back to prerecession job levels. An economic-base job is one in which more than 60 percent of the good or service it produces is exported and which brings new money into a community to grow its economy.   [Dennis Domrzalski, Albuquerque Business First, Jul 24]  Is someone making realistic calculation of rate of return for public spending to create private jobs?   Or is it political wishing while pretending that the taxes collected for the investment do no harm?   The reporter showed no interest in the question. And BTW, wasn't NM's economy built on sixty years of federal defense money, and if so, where's the attractive base for private investment?

People to drive the engine. Some institutes within the U.S. National Institutes of Health (NIH) are considering a move away from grants for a specific research plan to no-strings support based on an investigator's promise. The idea of funding "people, not projects" is popular among some nonprofit, private biomedical research funders, but until now has not caught on widely at the $30 billion NIH. The most far-reaching proposal comes from NIH's basic research institute, the National Institute of General Medical Sciences. It is seeking feedback from the research community on the idea of giving all its roughly 3300 investigators the option of applying to swap their project grants for a single, long-term award based largely on their track record. But NIH officials and others acknowledge that such an approach should be phased in with care to avoid shutting out some scientists. [Science, Jul 24]  Hard to believe Congress will issue blank checks to curious scientists. To do so removes the annual political opportunities to satisfy constituent interests. 

Purely political economics. Three years ago, Republican lawmakers balked at a deal put forward by Democratic Gov. Bev Perdue to offer a company cash incentives to lure 1,300 jobs to North Carolina.  Now, with a Republican governor at the helm, some GOP lawmakers want to expand state incentives and create a so-called “closing fund” that will allow cash grants to seal a deal with large corporations that promise to add jobs.  [John Frank, Raleigh News & Observer, Jul 24]  Expect the usual announcement promises and then changing the subject. No talk of course on where the new money would come from.

Politicians love subsidy announcements. Last week the City Council voted unanimously to give Illumina a $1.5 million kickback on sales taxes over 10 years.  In exchange, the biotech’s executives promised to expand a building at its San Diego campus, reckoning that it will create 300 jobs inside the building.  ... For those keeping score at home, this was the third deal this year in which city leaders proposed diverting taxpayer dollars to a fast-growing company that almost certainly would have grown without the public subsidy.  .. the downside is borne by thousands of job-creating companies that don’t get tax giveaways.  [about which Brookings notes] “Business deaths now exceed business births for the first time in the 30-plus-year history of our data,” the study said.    [Dan McSwain,, Jul 23]  And economic development  folks need something to do.

Taxes first and always.  To avoid fiscal and economic calamity, Washington must do the following: First, get the economy moving. .... To get the economy moving, we will have to enact comprehensive tax reform to simplify the tax code, encourage more domestic energy exploration, replace ObamaCare with patient-centered health care, expand exports through new free trade agreements, and limit Washington red tape.  Second, the government must avoid large tax increases [Rob Portman, Wall Street Journal, Jul 22]  The supply siders and other Republicans see lower taxes as the ultimate solution to every economic challenge. They are, of course, encouraged gto do so by their rich supporters who want to pay less tax. Every tax reform idea starts with "cut my taxes."

The CBO's Cassandra-like message probably will fall on deaf ears in Washington, and for the usual reasons. The crisis isn't imminent, and politicians don't normally address disasters due to occur long after they leave office.  [Gene Epstein, Barron's, Jul 20] Our politicians do our bidding as we curse them and re-elect them.

CEO excited.  Omnitracs  (San Diego, CA; no SBIR, 300 employees), a software firm that manages applications for the trucking industry, will relocate its headquarters from San Diego to Dallas thanks in part to a $3.9 million check from the Texas government.  [Jonathan Horn and Lori Weisberg,, Jul 18, 14] Texas voters should ask how much each costs Texas and how long the jobs will remain in Texas. Any firm that will move states for money will move again for more money. Unfortunately for the US economy as a whole, all the benefit goes to the firm's owners [Omnitracs CEO John Graham said he was excited about the move] as each job and tax payment in Texas comes at the expense of California where no one votes for Texas governors.

Review each other. A recent pilot project by the NSF aimed at easing the strain on its vaunted merit review system featured an unusual twist: Grant applicants were required to review seven proposals from peers competing for the same pot of money. The approach created a captive—and highly motivated—pool of reviewers for program managers within NSF's Civil, Mechanical and Manufacturing Innovation Division, saving them time. And using mail reviews rather than panels also saved NSF money. The quality of the reviews also seemed to be comparable to what is generated with NSF's traditional approach to peer review. NSF officials are weighing whether to expand the pilot to other programs. [Jeffrey Mervis, Science, Jul 18]  Of course, no ethical scientist applicant would make any deals with fellow proposers.

Hope and public subsidy.  New York state is embarking on a $500 million public-private partnership [New York Power Electronics Manufacturing Consortium] that is expected to create some 500 jobs in Rochester ... follows news that General Electric will invest more than $100 million into the New York Power Electronics Manufacturing Consortium, a new public-private partnership including companies such as GlobalFoundries, Lockheed Martin and IBM. ...  State officials expect the high-tech nanotechnology initiative to create thousands of jobs across the state as it involves over 100 private companies.  [Albany Business Review, Jul 16]

astonishingly, five years into an official recovery, more than half of those in a Gallup poll believe economic conditions are “getting worse”—in complete contradiction to what the Labor Department numbers tell us. That means economic growth must be the number one priority for Washington: for this Congress’ last months, for the remainder of the President’s term, and for the next Congress.   [Jason Wiens and Dane Stangler,, Jul 16]  Which means stand by for blather on how a politician's ideas would resurrect the economy.  Except for pumping borrowed money into government spending, the government plays little role in economics. But every politician with a pet idea will claim to have the solution to vibrant growth. And there are more pets than pet food on the hill. One of more persistent ideas is Policymakers must overcome partisanship to encourage investment through supply-side measures that will enable the economy to grow more vigorously.[John Makin, American Enterprise Institute, Jul 11], the fantasy that lowering taxes on the productive and investment class will produce amazing economic growth and even raise government revenue.  AEI is actually doing something useful for economic growth by investing a pile in a glitzy new headquarters in a historic Dupont Circle building that can no longer be afforded by the National Trust for Historic Preservation.

States' rights ... to beg for federal aid.  States are allotting a growing share of the funds they raise from gas taxes to debt service and spending unrelated to roads and bridges, making them more reliant on federal assistance to pay for new infrastructure. ... Texas spends 25% of its fuel-tax revenue on education programs.  ...  New Jersey is projected to collect $541 million in state gas-tax revenue this year, of which $516 million has been set aside to pay for about $1 billion in debt interest.  [Damian Paletta, Wall Street Journal, Jul 17]  So, states voters should elect their favorite tax-cutter at state level and best spender at federal level.  Or they could just admit there is no free lunch - low taxes mean poor government.  The states that moan the loudest about taxes are the ones that get back more federal handouts than they pay in federal taxes. Hypocracy there is considered a moral right.

The fossil fuel state will even risk drinking it. The council governing a North Texas city that sits atop a large natural gas reserve rejected a bid early Wednesday morning to ban further permitting of hydraulic fracturing in the community after eight hours of public testimony. ...  a former chief justice of the Texas Supreme Court, representing the powerful Texas Oil and Gas Association, testified that some of its thousands of members would "undoubtedly sue" if the ban eventually passes. ...  organizers of the citizen-led petition garnered about 1,900 voter signatures  [EMILY SCHMALL, AP, Jul 16]

Volts for peace. the Navy on Tuesday unveiled a pair of experimental [electromagnetic railgun] guns that make it cheaper, easier and safer for a warship to knock down missiles and aircraft and protect amphibious forces as they move ashore. ...  It can knock out anything on the surface of the water. [says one admiring admiral] ... Warships currently stock such weapons as Tomahawk and Standard missiles, which cost $600,000 and $409,000, respectively. The missiles take up a lot of room, limiting the number that can be carried aboard ship. A railgun projectile costs about $25,000, and it’s comparatively small, raising the prospect that a ship could stock hundreds. [Gary Robbins,, Jul 8]  It's small but takes a huge load of electric energy that has to be generated at sea, which takes fuel.  Sorry, no free lunch.

Empire State Development Corp.’s board of directors has approved up to about $200 million in previously announced funding for three Buffalo Billion projects. ... up to $107 million for the South Buffalo manufacturing hub commonly known as RiverBend that will house green energy businesses Silevo and Soraa. .... also approved $55 million to support the Buffalo Information Technologies Innovation and Commercialization Hub, a software development center that will be anchored by IBM and is expected to create 500 jobs. ... also approved for funding was the EWI/Advanced Manufacturing Institute in Buffalo, which will help area manufacturers commercialize technologies and improve their production efficiency. [The Buffalo News, Jul 3]

More than 100 applicants are vying for $12 million worth of Maryland [Biotechnology Investment Incentive Tax Credit] available to biotechnology investors in fiscal 2015, state economic development officials said. ... part of O'Malley's 10-year, $1.3 billion plan to expand the state's life sciences industry, boost investment in fast-growth businesses and encourage creation of intellectual property. Funding has doubled from $6 million to $12 million since 2007.  [Lorraine Mirabella, The Baltimore Sun, Jul 1]

If not our friends, who?  New Jersey grants $1.25bn in public funds to firms that back Republicans. the 30 biggest corporate subsidies awarded by the state of New Jersey since Christie appointed one of his closest allies as head of the state’s “bank for business” found that 21 went to ventures involving firms that made significant donations to Republicans, or had senior executives who did.  ... The Guardian examined the 30 biggest subsidies, awarded by Christie’s EDA in the form of 10-year tax breaks, since Brown took over as chief executive on 1 October 2012. Many of the awards were given to corporate partnerships with names that did not make their ownership arrangements immediately clear. [The Guardian, Jul 12]

Who needs roads anyway?  Governors from both parties voiced incredulity over an impasse in Washington that has jeopardized spending on roads and bridges [Wall Street Journal, Jul 14] The govs say the states need road work, but the states' representatives in Congress dither in service to some grand philosophy that something will come from nothing. Who speaks and acts for the state?  The same barrier exists for medical help for the states' indigents through Medicaid. At least for Medicaid the govs have some leverage to get the federal help despite the Congressional bickering.

Magic wand, please - enforce world peace with US hegemony, but don't call us to action. The president's critics in Washington, as well as some diplomats abroad, believe Mr. Obama's [foreign relations] policies have fueled today's conflicts.  ... including a historic intra-Islamic feud between its Sunni and Shiite sects that no outside power could significantly affect and that is undermining the very structure of the region's nation states. [Jay Solomon and Carol E. Lee, WSJ] A Congress where almost no one has military experience, or desire to so serve, wants to rattle the sabers while kibitzing safely from their seats and quibbling over political power. Obama who got elected twice as not George Bush is doing about what any not-Bush would do.

Anti-gov TX seeks pork city of Austin said  it will invest $3 million and release 107 city-owned acres near the airport to private manufacturers in an effort to jump-start the industry in the area. .....  The deal will rely on a $1 million federal grant from the Federal Economic Development Administration ...  In total, the city would spend about $10 million on readying the site, which is expected to pay for itself over 20 to 25 years through lease revenue from site tenants.  [Robert Grattan, Austin Business Journal, Jul 1]

The myth of tax-break funded incentives. Overall, government tax breaks to attract businesses are almost always a bad idea. Unfortunately, the politicians in control of the tax breaks care more about re-election than economic welfare on a large scale. ...  Because of this economic leverage which large employers can hold over local politicians, once a tax break is given it is very hard to ever put an end to the largess. This means that local communities are essentially held hostage to their largest local businesses with current and future politicians unable to undo deals foolishly made by their predecessors.   [Jeffrey Dorfman,, Jul 14] On balance, the losers are the taxpayers who pay for the tax breaks. The winners are the larger businesses and the politicians with a megaphone.

Politicians will inevitably come under pressure to halt this revolution (of technology's undercutting brick mad mortar universities). They should remember that state spending should benefit society as a whole, not protect tenured professors from competition. [The Economist, Jun 28]  Don't worry much about the politicians choosing the future over the present where people vote and contribute.

Palestinian militants fired 40 rockets in one hour, setting off air raid sirens in communities as far as 50 miles from the Gaza Strip, Israeli military officials said. A dozen rockets were intercepted by the Iron Dome air defense system and about 30 struck open areas, officials said."  [Foreign Policy blog, Jul 8]  Remember that the laws of gravity and conservation of mass dictate that all the pieces fall to earth, just not explosively. You'll have to decide for yourself between the competing claims of the two sides how effective the defense was and how effective the rockets were.  In war, truth is the first victim.

More small biz kissing. Must be an election year!  TRANSFER Act Introduced in Senate. On June 26, Sens. Kirsten Gillibrand (D-NY) and Daniel Coats (R-IN) introduced the TRANSFER Act (S. 2551). The legislation is a companion to a House bill originally introduced last year by Reps. Chris Collins (R-NY) and Derek Kilmer (D-WA), and would create a grant funding program within the Small Business Technology Transfer program "to accelerate the commercialization of federally-funded research." The grants would fund efforts such as proof of concept of translational research, prototype construction, and market research.  [AAAS, Jul 3]  The government is highly capable to deciding what technology it needs and whether a company can actually do the proposed work, but the agency technical people or managers have little competence to decide "commercialization potential," and especially "market research."  Nor do the agency people have any economic incentive for success of such "transfer".  Further, it was my experience as an SBIR judge that little of really good commercial potential stuff ever crossed my desk. All the hoopla by SBIR advocates is just fuzzy theory to justify a handout program from gullible legislatures wanting to look friendly toward "small business."  Anything that had real potential could attract the private capital that sloshes around the  world seeking opportunity. One way to put such a program to the test is to require private co-investment and regular appropriation.

Ohio State neurosurgeon Dr. Ali Rezai says the Neurobridge system pioneered by Battelle and the OSU Wexner Medical Center is one example of the type of projects that could potentially receive help in regulatory and commercial development from Columbus’ new Neurotechnology Innovation Translator. The Ohio State-led center got off the ground with a $21 million Ohio Third Frontier grant last week and, with numerous public and private investments, it has a $161 million budget over four years to help spin off and attract neuroscience companies.  [Carrie Ghose, Columbus Business First, Jun 24]

Important work in the 1960s and '70s by Gordon Tullock and Anne Krueger showed that when governments dispense privileges, firms expend resources chasing those privileges. They lobby, donate to political campaigns, and employ expensive government-relations operatives. This activity expends real resources even though it fails to create net value for the economy. [Matthew Mitchell,, Jul 7] Note that SBIR qualifies as such a privilege to be chased by companies willing to feed at the subsidy trough for short term income. Many feed very well.

Voters assume government handouts go to people who need help. But they usually don't. Most government handouts go to the middle class and the rich. Government has no business handing out loan guarantees to companies. Corporations can pay their own way. [John Stossel,, Jul 2]

With immigration legislation dead for the year, Congress has a very short must-do list as relations between the two parties, already miserable, seem to be getting worse in the buildup to the midterm elections. [Carl Hulse, Boston Globe, Jul 2] When electoral competition is the only goal. Unless the electorate decisively chooses one party or the other , the deadlock will continue.

Can you say bubble, anyone? we now have an alarming disconnect between the performance of global equity markets, which are booming, and an underlying world economy that is merely limping along.   ... government officials have sought to pump up the numbers through monetary and fiscal stimulus    [Judy Shelton, Atlas Economic Research Foundation and co-director of the Sound Money Project,, Jul 1].  The punditocracy is alerting us that the sun will rise in the East, sometime. But they have to keep it vague and acceptable to their contributors. 

[Tea Party] candidates need to understand that America simply doesn’t work at RGDP growth rates under 3.0%.  Budget plans based upon the CBO’s growth assumptions are pointless.  They are like meal plans based upon 500 calories a day.  No matter what recipes you come up with, you are still doomed.  .... If people conclude that economic growth is not on the political menu, they will cast their ballots for candidates offering income redistribution.   [Louis Woodhill, Forbes, Jul 1] Hoover ran on the Tea Party platform in 1932, and lost big to FDR, who in accord with the conventional wisdom of the time, espoused with the same idea.  Only in office did FDR switch to activism.

As President Barack Obama talks maker startups – those entrepreneurs taking advantage of new prototyping technologies and changing the world of manufacturing – similar discussions are happening in downtown Raleigh.   [Jun 18 was] the first-ever White House Maker Faire, and it’s there that the White House is making a series of announcements, such as targeted support for makers via the Small Business Administration’s $2.5 million accelerator competition. The U.S. Patent and Trademark Office, too, will be providing support for the startups, with other ongoing initiatives at agencies such as the Department of Defense, the National Science Foundation, NASA and the U.S. Department of Agriculture. [Lauren K. Ohnesorge, Triangle Business Journal, Jun 18, 14]

Congress’ failure to renew tax breaks that expired Jan. 1 has led corporate executives to dial back their plans for capital spending this year. ...  Only 44 percent plan to increase capital spending in the next six months, down from 48 percent in the previous quarter’s survey.   [Kent Hoover, Triangle Business Journal, Jun 17, 14]  While complaining about government regulation, business also complains about lack of government subsidy. Where you stand still depends on where you sit.

The Ohio Third Frontier Commission has given $21 million to a consortium of groups, including several in Dayton, looking to create high-tech jobs in the state.  Ohio State University is leading the collaboration, termed the Neurotechnology Innovations Translator  .....   will be based in Columbus, will support the formation of new companies and the commercialization of technology with both expertise and funding.   Other public and private partners include Cardinal Health and Medtronic Inc., the world’s largest medical device maker (which just moved its HQ abroad to avoid US tax rates)  [Dayton Business Journal, Jun 13]

Draining America. The Obama administration cleared the way for the first exports of unrefined American oil in nearly four decades, allowing companies to start chipping away at the longtime ban on selling U.S. oil abroad. [Wall Street Journal, Jun 24] Capitalism takes immediate profit where it can find it in world markets. Only government can restrain that urge in any national long term interest.

A newly created state board awarded nearly $29 million in income tax credits on for companies that have agreed to expand and retain jobs in California.  .... [including] $6 million for Samsung Semiconductor, which promises to create 400 jobs in San Jose.  [AP, Jun 19]  What do existing companies think of the increased competition from state-bribed firms?

Sacramento’s Five Star Bank made a $10 million government guaranteed loan for Marrone Bio Innovations, which was only possible because the project was in rural Michigan  (in Bangor, MI, population under 2,000). The USDA Business and Industry Guaranteed Loan program, popularly know as B&I loans, only can be made in communities of fewer than 50,000. ....  will help the company finance the expansion and conversion of a former biodiesel plant into a production facility for Marrone’s biological pesticides.  [Mark Anderson, Sacramento Business Journal, Jun 18, 14]    The politics of small places overrides the efficiency of natural capital investment.

The Navy is joining DARPA on a project that could ultimately result in military drones taking flight from smaller Navy ships.   ...  The first two phases of the program focus on preliminary design and risk reduction for the TERN system. Five companies were awarded contracts last fall for the first phase of the program, which focuses on development of a preliminary design:     Northrop Grumman Aurora Flight Sciences (Manassas, VA; $24M SBIR);  AeroVironment (Monrovia, CA; $15M SBIR);  Maritime Applied Physics (Baltimore, MD; $7M SBIR);   Carter Aviation Technologies (Wichita Falls, TX; one SBIR)   [Jill R. Aitoro, Washington Business Journal, Jun 13, 14]   

A hit, a palpable hit. The U.S. missile defense system managed by Boeing Co on Sunday hit a simulated enemy missile over the Pacific in the first successful intercept test of the program since 2008  [Reuters, Jun 22]

Even Texas wonders. Texas House Speaker Joe Straus created a committee to study whether state incentives to businesses are working.  “Texas has been very successful in attracting job creators and fostering economic opportunity,” Straus said. “We owe it to taxpayers to take a detailed look at what has worked and what can be improved.”   [Austin American Statesman, Jun 20]  Just as he did in 2012.

Scalise (hyper conservative #3 in House leadership) described himself as a pro-growth Republican who is in favor of tax reform that would lower marginal rates and simplify the code. "I believe this would help generate an economic boom," he told me. [Larry Kudlow, NRO, Jun 20] Like all politicians for tax reform, he wants first and foremost to cut the taxes of him and his friends. All the chatter about the economic benefits of such tax reform is just platitudes because the American system is far too complex for such a simple judgment.

The economist pundits say that young people employment is an all-time low; the rightist pundit says: fewer and fewer young people are holding jobs. This exit from the workforce by the young is counter to the conventional wisdom or the Obama administration's official line. [Stephen Moore,, Jun 16] And that the government should not push up minimum wages because that suppresses young employment. What's a government to do? 1) keep a minimum wage so workers get enough to live on, 2) let employers hire at whatever wage they like and have government provide a subsidy to the  worker, 3)  butt out altogether in a market economy and let efficiency rule the employment market.    Register your choice in the next election by voting either for total market freedom or for government balance policy in employment.  You, of course, have your own firm convictions about which course is right.

Fix the roads, but don't tax anybody. The federal Highway Trust Fund provides more than half of the money spent on road, bridges and transit projects in the U.S. Without any action by Congress, it’s projected to run out of money sometime this summer, which could force a halt in projects already under way. The gasoline tax hasn’t been raised since 1993 [Kent Hoover, Pittsburgh Business Times, Jun 19]  Another free lunch request by the crowd that wants government shrunk, somewhere else.

Tax credit wars. U.S. states are digging deeper into their pockets, offering businesses lucrative tax credits for everything from brewing beer to renovating buildings, in an effort to spur economic growth and create jobs.  .... an increasing number of the state credits are refundable or transferable, meaning they can guarantee a company cash regardless of the size of its state tax bill.  Some 46 states now offer such tax credits through more than 200 different programs, compared with only a handful of states a decade ago, and exchanges are popping up to help businesses trade them. ...  New Jersey has been using transferable credits for years to foster the technology and biotech industries. About half of the state's $60 million program goes to biotech firms, which bring an additional $510 million in venture capital and grant funding into New Jersey, according to industry group BioNJ.  [Emily Chasan, Wall Street Journal, Jun 16]  Where will the states get the money to buy business loyalty? By taxing other people, or imagining an luscious investment return from the cuts in supply-side fervor. 

The Watervliet NY Arsenal has been awarded $30 million in production funding. The funding is part of a $150 million Industrial Mobilization Capacity account that offsets financial losses of arsenals in times of peace, giving them the opportunity to compete for new business.  ....  has spent the past 200 years manufacturing cannons and firearms for American and foreign military forces. It is the only manufacturer of large-caliber defense cannons in the country.  [Krystle S. Morey, Albany Business Review, Jun 11, 14]  Need a long hole bored through the hardest steel?

Building on the success of the Arch Grants program, Missouri Technology Corporation will administer a pool of funds ($4.5 million total) to support similar initiatives across the state. ...  A bill introduced earlier in the session would have earmarked up to $9 million per year over the next four years to MTC for investment in up to six Early Stage Business Development Corporations.  [SSTI, Jun 11] What was the success?  It went pretty well — we awarded $750,000 cash to 15 startups, in addition to two $100,000 follow on grants, as well as plus pro bono support bringing the total around $1,000,000 awarded to startups in St. Louis! It went so well that we awarded 20 grants in 2013 for a grand total of $1,000,000 in grant funding.  [] Government success as measured in how much money it passed out.

No interest like a vested interest. The solid Indiana Republicans accepted a $33M federal handout for "future development" from the US Treasury's New Markets Tax Credits. [AP, Jun 11]

The city of Raleigh NC plans to begin a support program for entrepreneurial start-ups ...   focus on developing a partnership between the city and mutliple private organizaiton, according to a news release. The intent of the program is to support businesses centered on technology, social innovation, fashion, designers and makers.  ...  still in the planning stage, may assist entrepreneurs through public and private matching grants; beta testing and prototyping programs; start-up challenge programs; crowdfunding; and entrepreneurial exchanges with other cities.  [Raleigh News & Observer, Jun 11]

with Eric Cantor's shocking [primary election] defeat, things for the U.S. Chamber of Commerce and the Business Roundtable just got a whole lot worse.  For one, they lost a major defender of their favored policies--from the beneficial tax treatment of private equity income to immigration reforms favored by the country's biggest tech companies. But even worse for their prospects, Cantor lost to a challenger who specifically attacked him for his close ties to business -- going so far as to single out the BRT and the Chamber. [Jia Lynn Yang, Washington Post, Jun 10]  If the Tea Party is anti-CofC, will it also be anti-subsidy like SBIR?  The Tea Party wants to revive the golden days of the 19th century free-markets of robber barons and snake oil, in the name of liberty.

Grand plan canceled.  Citing economic concerns, National Instruments Corp. has scrapped a 1,000-job expansion project in Austin and has canceled incentive agreements with the city, county and state.  The project, which was announced last year, called for the Austin-based company to invest $80 million and add 1,000 technical and engineering jobs in Central Texas over the next 10 years.  [Brian Gaar, Austin American-Statesman, Jun 9]  the company would have received $4.4 million in incentives from the Texas Enterprise Fund, $1.3 million from Travis County and an additional $1.7 million from the City of Austin. National Instruments spokeswoman Stacy Schmitt released this statement Monday to the Austin American-Statesman via email:  "Because of difficult conditions in the test and measurement industry and global economy, we will not move forward with the project as originally contemplated in the agreements. We will continue to hire the best and brightest to meet our growth needs, but do not have any exact hiring projections at this time." Currently employs 2,600 in Austin  [, Jun 9]

Mr. Schuck argues that the endemic failure is a consequence of the nature of modern government.    [Yuval Levin reviewing "Why Government Fails So Often," , Wall Street Journal, Jun 10]  No surprise, another book on what's wrong with government as if there were some obvious efficient and fair alternative.  As long as voters elect politicians to do something for them, with power limited only by the Constitution, we will have a muddle of conflict and benefits. Critics unlimited have no good solution either to the dilemma of self-government. David Brooks counters with the proposition that conservatives should not be naïve about sin. We are moving from a world dominated by big cross-class organizations, like public bureaucracies, corporations and unions, toward a world dominated by clusters of networked power. These clusters — Wall Street, Washington, big agriculture, big energy, big universities — are dominated by interlocking elites who create self-serving arrangements for themselves. Society is split between those bred into these networks and those who are not. Moreover, the U.S. economy is increasingly competing against autocratic economies, which play by their own self-serving rules.  Sometimes government is going to have to be active to disrupt local oligarchies and global autocracies by fomenting creative destruction — by insisting on dynamic immigration policies, by pumping money into research, by creating urban environments that nurture innovation, by spending money to give those outside the clusters new paths to rise.  [New York Times, Jun 10]

But what's truly astounding is how many Republicans raced to turn Obama's commitment to bringing home a POW into an outrage. [EJ Dionne, WaPo, Jun 9]  No mystery: even with the mission accomplished, any hook for a sound bite in an election season where anti-Obama is the theme

The subsidy urge.  Neeltran, a maker of custom transformers and power systems in New Milford, will receive a $750,000 loan from the state Department of Economic and Community Development for a renovation and 6,000-square-foot addition that's expected to lead to 10 new jobs. The company, which has 119 jobs, will borrow the money at 2 percent interest, and $150,000 of the loan will be converted to a gift if it meets its hiring and retention goals.  The expansion project is going to cost $1.75 million — the other million dollars will be partly from company cash and partly from private borrowing. ....   "This is a great example of the public-private partnership at work." said one subsidy champion. [Mara Lee, Hartford Courant, Jun 6] Politicians seen doing something without mentioning the added tax collection needed to pay for each something. Return on investment? Stay tuned, although don't expect an honest accounting.

Need more immigrant techies, says the tech world. The pro-overhaul group, Partnership for New American Economy, released a new report Wednesday that contends U.S. workers are hurt because visa caps slow job creation and wage growth in computer-related fields. The partnership, led by former New York Mayor Michael Bloomberg, reports that H-1B visa denials in 2007 and 2008 led to 2,500 fewer tech jobs for American-born workers in the Raleigh/Durham area.  The findings are part of a national study that reported job growth U.S. workers in computer related industries would have been 55 percent faster between 2005-2006 and 2009-2010 if not for the visa denials at the beginning of the recession.  [Franco Ordoñez, Raleigh News & Observer, Jun 5]

Welcome, rich inmmigrants. The city of Austin’s Economic Development Department has recommended the creation of an immigrant investor program through a partnership with several existing private foreign visa centers in the area.   .....  If successful, the city could use the immigrant investor program, also known as the EB-5 Program for the types of visas used, to direct foreign capital to city-backed projects throughout Austin.  The EB-5 program allows foreign citizens to trade a job-creating investment of $1 million or $500,000 in the U.S. for a visa.  [Robert Grattan, Austin Business Journal, May 27]

Sacramento will support the development of the $49 million first phase of construction at the Powerhouse Science Center just north of downtown. ...  "This project is a home run," said [a cheerleading local politician].  ....  Much of the funding will come from private and corporate sources, in addition to grants and tax credits.  .....  to convert the former power plant into a showplace for science education and learning.  [[Mark Anderson, Sacramento Business Journal, May 28, 14]

One model for the Obama [manufacturing] plan is the Fraunhofer Society, a network of government-backed research institutes that has helped make Germany one of the leading exporters of high-tech manufactured goods, despite the country's relatively high wages and high levels of regulation. ..... The Fraunhofer institutes research everything from algorithms and other aspects of computing to cell biology and wood technology. They focus mostly on short-term research projects with immediate business applications.   [Chase Gummer, Wall Street Journal, Jun 1]

Can't get there from here. Any nation’s foreign policy is bound to fail more often than it succeeds. The attempt to influence the behavior of people even in the domestic setting is difficult enough. To influence other peoples and other nations without simply annihilating them is the most difficult of all human tasks. It is also in the very nature of foreign policy, as in human affairs generally, that all solutions to problems only breed more problems. This is certainly true of all wars. There is no perfect ending to any war, even those fought with the clearest and most straightforward of objectives.  ....  In fact, the world “as it is” is a dangerous and often brutal place. There has been no transformation in human behavior or in international relations. In the twenty-first century, no less than in the nineteenth and twentieth centuries, force remains the ultima ratio. The question, today as in the past, is not whether nations are willing to resort to force but whether they believe they can get away with it ..... As Michael Ignatieff once observed, it may be that “liberal civilization” itself “runs deeply against the human grain and is achieved and sustained only by the most unremitting struggle against human nature.”     [Robert Kaplan, The New Republic, May 2014]

The antediluvian House barred the military from giving illegal immigrants brought in as children from getting citizenship for serving in the military, and from doing any climate science research.  They just like the old-fashioned views of life that got them elected in their conservative Districts. Maybe they will send their sons and daughters to the military with a mission to defend against any more warming of the sky.

There's also evidence that cutting corporate taxes is of little use in stimulating business. First, many entrepreneurs aren't that mobile; second, they tend to want to be in cities with large talent pools. Taxes don't often figure among the reasons entrepreneurs cite for where to start a business. And once a company is up and running, marginal tax rates are rarely something that leads a company to move.  [James Greiff, Bloomberg View, May 20] But politicians know the magic of tax cut talk, regardless of the actual economics.

the future of solar, he says, depends on the more-with-less dynamic—e.g., finding better ways of storing and amplifying the energy drawn from sunlight—and such change will come about only by private capital meeting consumer demand for affordable energy—not by diktat or subsidy.  If one looks at the history of government-sponsored green-energy initiatives, both in the U.S. and Europe, it is hard to disagree. Governments can play a role in supporting basic research, but the assumption by regulators and politicians that they can pick technology winners better than the market has been proved wrong time and again. [Arthur Herman reviewing 'Smaller Faster Lighter Denser Cheaper' by Robert Bryce, Wall Street Journal, May 21] "Government bad, markets good" advocates like Herman have no trouble finding government initiatives that did not work out well, while ignoring the market driven things that didn't work out well either. They also ignore public policy aspects of assuring a decent supply of basic needs for the population. But it's also true that politics tends to override economics when there is to be free money on the table as the private market sharks feed on the politicians' need to be seen doing something.

Alafair Biosciences (Austin, TX; no SBIR) biosciences firm is the recipient of $2 million from the Texas Emerging Technology Fund, the governor’s office said.... to assist with the commercialization of a technology it has developed — biological film used to protect wounded tissues and assist with healing. ... patent-pending technology was developed in a laboratory at the University of Texas. It helps prevent post-surgery scarring, which is responsible for $3.45 billion in health care costs each year in the United States, according to the company. .... A total of $205 million has been given to 145 companies so far, Perry’s office said. [Gary Dinges, American-Statesman, May 16, 14]

Government VC, an oxymoron.  Venture capital in Europe has delivered returns of just 2.1% a year since 1990, according to Thomson Reuters, making it perhaps the worst investment class outside Japan (American VC managed around 13%).   .....  Several studies of public VC schemes have found that for every dollar the public sector puts in, the private sector pulls one out.   ....  The EIF alone has sunk more than €3.8 billion into 260 venture funds, but provides no data on how its investments have fared. Ho-hum entrepreneurs whose firms only launch because of government backing (and dud firms that would have folded long ago without it) drive down average returns .....  Josh Lerner of Harvard Business School compares doling out public-sector cash, EIF-style, to serving a main dish before the table is set.    [The Economist, May 17]  If economic return is the objective, government does not have the tools and attitudes.   

The owner of a California-based aerospace company pleaded guilty in federal court to charges he used inside information from an employee of The Boeing Co. to win contracts to build military aircraft parts, the St. Louis Post-Dispatch reports. 
William Boozer, owner of Globe Dynamics Engineering International (Santa Ana, CA; no SBIR), paid Deon Anderson, a Boeing procurement officer, for information on historic prices and competitors’ bids. Boozer pleaded guilty to one count of felony wire fraud and is scheduled to be sentenced in August.  [Washington Business Journal, May 13]

Where you stand depends on where you sit. “I don’t think government should have anything to do with education.”  [said the] founder of the conservative think tank,[that] new national science standards for schools were a form of “coercion,” .... [MOTOKO RICH, New York Times, May 18] especially since the government education standards include recognition of global warming in a state with a fossil-fuel extraction economy.

Two technology companies are promising millions in investment and hundreds of new jobs in Central Texas, in exchange for state tax breaks.  The Austin City Council is set to vote on designating Flextronics America (no SBIR) and Spansion (no SBIR) as Enterprise Zone Projects under the Texas Enterprise Zone Act. That designation would allow the companies to get refunds on their state sales and use taxes.  [Austin American Statesman, May 15, 14]

At NIST, the Committee granted an increase for the agency's lab programs, but cut back funding for public-private advanced manufacturing initiatives. [AAAS, May 14] Repubs hate subsidy programs for private firms except the big ones that lobby and contribute heavily.

The first batch of DOEnergy 2014 Ph II SBIR awards went one each to three rookies and the other seven awards to companies with previous awards through about 2012 of  $2M, $20M, $50M, and $70M. It pays to know how the umpires think. Is $70M of kerosene enough to light a fire in any company with intentions of exploitation beyond more government money? DOE in effect is using SBIR for long term contracting for support services to make the government smarter. But Congress will do nothing to stop it because the delegation from Colorado thinks it's a great idea to send federal money to Colorado, and innovation is whatever the people with the money say it is. The only objectors would be principled Libertarians (oh sure, all politicians are principled) like the ones campaigning against six-term Senator Cochran because he steered money into Mississippi. But then, if Libertarians ran the government, SBIR would not exist at all.

Washington's outgunned deficits hawks huddled for their annual pep rally, even as lawmakers and the White House have given up any pretense of tackling the country's budget woes. [AP, May 14]  Cutting spending only sounds good in the third person, cut their spending.

In his classic 1978 book, The Way the World Works, Jude Wanniski outlined his “Political Model,” which explains the current Piketty/Pope Francis redistributionist boomlet.  Wanniski observed that the electorate prefers economic growth to redistribution, but they will vote for redistribution if there are no politicians around that seem capable of delivering economic growth.   [Louis Woodhill, Forbes]  The basic problem is that neither the presidents nor the Congress know how to create the growth desired at any reasonable price.  But they signed up for the blame when they claimed they could.  And we have no one to blame but ourselves for believing their fantasies and electing them. If we want realists as our governors, we must get involved in finding and encouraging realists to get elected, and make realistic demands of them.

Why handouts need auditing: A New York City minister who was the subject of an Associated Press investigation about misspent 9/11 and Hurricane Katrina charity funds has agreed to repay $1.2 million that he took from his congregation to buy an 18th century farmhouse on seven acres in rural New Jersey. [ DAVID B. CARUSO , AP, May 14]  SBIR gets audited for the same reason, although the technical oversight (meddling) by the mission agencies helps keep the honest men honest.

Not as easy as they thought, even in innovation hothouseMassachusetts is giving up on trying to fix the state’s flawed health insurance website and will instead buy “an off-the-shelf product used by several other states to enroll residents in health plans,” the Boston Globe reported.  [Matt Rocheleau,, May 6]

New Mexico’s photonics industry may become a manufacturing community through the federal government’s Investing in Manufacturing Communities Partnership.  .... the Obama administration last year pitched a program that would offer up to 12 selected communities preferential consideration for up to $1.3 billion in federal dollars and assistance from at least nine federal agencies.   .... The state has 54 photonics manufacturers here with combined revenue of $610 million, according to Dekker.  [Dan Mayfield, Albuquerque Business First, Apr 30] When politics talks "preferential," economic inefficiency takes a back seat to constituent service. Federal dollars also bring federal oversight that the arid Libertarian West claims it wants to escape from. Just a touch of hyprocisy in "send us money and cut our taxes".

(GAO) testified last week before the Senate Small Business and Entrepreneurship Committee regarding agency compliance with spending requirements on (SBIR) and (STTR). According to the GAO, agencies used differing methods to calculate their SBIR/STTR budgets when appropriation funds were received late in the year, and for the same reason found it difficult to spend the entire allocated amount in a timely fashion.   [AAAS, Apr 30] The beneficiaries of any handout program worry that they are not getting their "fair share."   And SBIR is a "fair share" program regardless of all the political blather about a jobs or economic engine. SBIR merely shifts contract money from open competition to a shelter, taking jobs from open programs to the shelter. No one has even proved any benefit from the shift.

 [Congress] passed the "Digital Accountability and Transparency Act", sending the bill to President Obama for signature. .. seeks to improve the "availability, accuracy, and usefulness" of federal spending information by setting standards for reporting government spending on contracts, grants, etc. The legislation would also require that OMB develop a two-year pilot program to evaluate reporting by recipients of federal grants and contracts and to reduce duplicative reporting requirements. [AAAS, Apr 30]  Look for more reporting requiremnts in your federal contracts.

“Washington, instead of being a place that builds opportunity for young people, has turned into a place that helped concentrate money and power with those who’ve already made it,” ......   Ms. Warren said. [Gretchen Morgenson, New York Times, Apr 26]Although the Senator was not talking about SBIR, the principle in the mission agencies is the same  -- awards flow freely to companies who have learned how to serve the government R&D machine. And as long as the small biz gets a visible share of the business, Congress will accept the inefficiency and the loss of innovation.  Congresses aren't about innovation anyway, they are about re-election and keeping the country stable and functioning. 

Dreaming unlimited tech. If all the state dreams and investments created the tech world they plan, America would be attracting the entire world's capital available for tech investment.  Lawmakers in Georgia and Kansas recently passed budgets that include funding to support high-tech research facilities and similar measures are pending in several other states. The University of Georgia (UGA) is slated to receive nearly $45 million for a Science Learning Center and, in Kansas, the legislature approved $2 million for creation of a new Innovation Campus aimed at attracting technology jobs.[SSTI, Apr 23]   And almost all the other states dream the same dream, at least at the political promises stage.  No, it's just interstate competition for a limited pool of talent and capital. The only winners will be the companies that build facilities with money the state borrows in the capital markets. Like the gold rush days, the winners were the merchants who sold picks and shovels.

Sticklers relent. On April 17, the National Institutes of Health (NIH) made a major change to its application submission policy. Previously, NIH had a 'two strikes' policy that gave investigators only one additional chance to resubmit a proposal to the NIH before being required to substantially change the scientific focus of any subsequent applications. Under the new relaxed policy an investigator will still be given a second chance to resubmit a research proposal after incorporating reviewer's comments. However, if the proposal still fails to be accepted after a second review, investigators now will be able to resubmit the same research idea as a new application multiple times. As noted in a Science Insider article, this is a significant change that should help new investigators in what can be a very competitive process.  [AAAS, Apr 23] NIH SBIR used to have a rigid standard for administrative presentation of a proposal, that made it easy for the mailroom to ditch proposals and thus ease the job of the reviewers.  The theory in all bureaus with such standards is that if you are not organized enough to satisfy the rules, you won't make a good contractor. A decent standard for buying commodities, but counter-productive if your objective is disruptive innovation. 

Where's our free lunch?  the public shares the elite consensus that in a post–Cold War world, the United States ought to be able to pay less into the system and get more out. When that doesn’t happen, people blame their leaders. In any case, there is little public appetite for large new initiatives at home or abroad, and a cynical public is turning away from a polarized Washington with a mix of boredom and disdain.  ....  In a world where the great questions have been solved and geopolitics has been subordinated to economics, humanity will look a lot like the nihilistic “last man” described by the philosopher Friedrich Nietzsche: a narcissistic consumer with no greater aspirations beyond the next trip to the mall. [Walter Russell Mead, Foreign Affairs, M/J14]  In safe hands.  In the age of liberal order, revisionist struggles are a fool’s errand. Indeed, China and Russia know this. They do not have grand visions of an alternative order. For them, international relations are mainly about the search for commerce and resources, the protection of their sovereignty, and, where possible, regional domination. They have shown no interest in building their own orders or even taking full responsibility for the current one and have offered no alternative visions of global economic or political progress. [G. John Ikenberry, Foreign Affairs, M/J14]

If you really have the stuff.  DOD awarded contracts for about $308 billion for products and services during fiscal 2013 — of which 43 percent was awarded without competition, according to a [ GAO] report. DOD accounted for over 80 percent of government-wide obligations that used noncompetitive contracts, in fact.  The reason? The vast majority of the time —more than 90 percent of the 65 cases examined by the GAO — the Pentagon explained the lack of competition by saying there was only “one responsible source.” .... involved proprietary technical data owned by the contractor.  ... because of a previous decision not to purchase proprietary technical data,”    [Jill R. Aitoro, Washington Business Journal, Apr 17]

[The sponsor] scrapped his proposal to make the Holy Bible the official state book before it could go to a full vote of the state [Louisiana] House of Representatives. The bill had become a distraction, he said. [Julia O'Donoghue, Times-Picayune, Apr 22]  Show-boating for the gullible constituents.

DARPA plans to release any day now one of its broad agency announcements calling for executive summaries, white papers and proposals for advanced research, development and demonstration of innovative systems, according to the Washington Business Journal. ... Of particular interest are people or groups with experience in systems engineering, integrating manned and unmanned systems, and autonomous systems. Proposals should address what TTO described as “rapid experimentation, iteration and demonstration” of prototypes in real-world situations.  [Dayton Business Journal, Apr  16] It's not really news for government R&R watchers that DARPA wants new ideas. All the DOD agencies doing early (pre-development proof of concept) R&D issue such calls, called Broad Agency Announcements, for proposals, and anyone can propose almost anything. More than the other agencies, DARPA is more open to innovations that go beyond the agency's immediate R&D plans for developing hadware for the operating forces. But to get to the top of the heap at DARPA, you need something out of the ordinary.

Holy fossil! A bill in the South Carolina House would designate the woolly mammoth as the official state fossil. After the bill passed the House [a legislator] proposed an amendment to add text that reads "as created on the Sixth Day with the other beasts of the field." He suggests that the amendment would be constitutional, as it is not specific to one particular religion.   [AAAS, Apr 16]

Massachusetts Gov. Patrick has unveiled an economic development package intended to bolster the state’s role in the global tech economy through multi-year investments totaling an estimated $100 million.  ....  the package includes a new Global Entrepreneur in Residence Program that will help entrepreneurial foreign students remain in the country even without H-1B visas, an expansion of the Massachusetts Technology Collaborative’s internship and mentoring program, recapitalization of the MassVentures public venture fund, an expanded R&D tax credit program, and a new Middle Skills Job Training Grant Fund. The governor also is proposing to eliminate non-compete clauses for tech businesses, a move modeled on policies in California. [SSTI, Apr 9]  Not satisfied with a roaring capital investment flood, a politician has to invent a need that only his program can fill. Never mind, we get the government we deserve by seeking something for nothing.

Competition for government contracts is becoming more cutthroat as federal spending shrinks by billions of dollars, with big companies swooping in on smaller ones and bid protests on the rise.   ..... The [post-Iraq] shakeout has been drastic and sudden, forcing even big companies to battle for relatively small contracts.  [Washington Post, Apr 5]

 Intel announced that its venture capital arm will establish a $100 million fund to help accelerate the creation of new smart devices that use its chips.  .....  also are creating an innovation center in Shenzhen, China      [Albany Business Review, Apr 2]

Public to private. The Watervliet [NY] Arsenal will invest more than $26 million in new machines and enhanced capabilities this year. ....  to encourage partnerships with the private sector, adding to its existing 600 machines. The arsenal already has started work with a private manufacturer. usually making cannons and firearms for American and foreign military operations. With new partnerships and investment in machinery, the 200-year-old establishment will open its doors to private manufacturers.  ....  The same machine used to structure a cannon barrel can be used to make anything cylindrical from something that can fit in your pocket to a 30-foot tube .... The $1.6 billion arsenal is spread out over 143 acres of factory space. It's the only manufacturer of large-caliber defense cannons in the country.   [Krystle S. Morey, Albany Business Review, Feb 28, 14]    

Batteries failed their mission. The massive surge of Michigan tax credits and federal stimulus dollars that charged up the state’s nascent battery industry five years ago failed to generate the thousands of jobs that were promised. ...   Following the collapse of battery-maker A123 Systems and the dissolution of partnerships involving Dow Chemical and Johnson Controls, Michigan’s goal of becoming the world leader in battery supply production appears unrealistic.  “We got the cart before the horse,” said Dave Cole, chairman emeritus of the Ann Arbor-based Center for Automotive Research.  .....  Today, Michigan has only a few hundred battery workers in four plants — despite $861 million in Obama administration stimulus grants and $543 million in Michigan tax credits  .....  After taking office in 2011, Gov. Rick Snyder eliminated most of Michigan’s business tax credits, saying the government can’t pick winners and losers in the economy. But companies that had secured tax incentives already were allowed to keep them.   [Nathan Bomey, Detroit Free Press, Mar 16, 14]  No doubt the politicians made many headlines in generating and accepting the free money and the promise of jobs, jobs, jobs.

Backward, march!   Louisiana Evolution Bill Voted Down. A bill (SB 70) to repeal Louisiana legislation from 1981 that mandates equal treatment of creationism and evolution in science classrooms -- an outdated rule deemed unconstitutional by the U.S. Supreme Court that nonetheless remains on the books -- failed in the State Senate with a vote of 5-32.  [AAAS, Apr 4]  Meanwhile, Louisiana will promote economic development by recruiting sci-tech people with strong religious beliefs.

Smart public investment?  The beneficiaries think so.  "A Supply Chain Study of the Economic Impact of the North Carolina Motion Picture and Television Industry.” was commissioned by the Motion Picture Association of America and several regional film commissions in North Carolina. The same groups are leading the charge for extending the film incentives program. ... The study found that for every dollar of film incentives paid out by the state, the industry spends $9.11 in North Carolina.  ... director of regulatory studies at the conservative John Locke Foundation, said - “It’s like robbing Peter to pay Paul, focusing on Paul, but not accounting for what Peter could have done.”  ..  .said the return-on-investment findings, which he deemed “not credible,” are consistent with similar studies used to bolster particular industries.  ...  [The professor] declined to say how much he was paid for the study, adding that he was "grossly underpaid for the amount of work that went into it." The Motion Picture Association also wouldn’t say how much the study cost. [Patrick Gannon, Raleigh News & Observer, Apr 1]  SBIR plays the same fantasy benefit game of ignoring the opportunity cost of shifting the business from open competition to protected competition.

Meanwhile, subsdies in Minnesota. The state of Minnesota approved its first five grants worth $2.27 million to manufacturers as part of the new, $24 million Job Creation Fund. The fund hopes to attract scores of companies to Minnesota and to encourage firms here to stay and expand in the state. ...  So far, the state has approved grants to Axis Clinicals (Dilworth, MN; no SBIR) ($779,988) an India-based clinical-trials laboratory that decided to open a new $12 million facility in Dilworth with 100 employees. , Heraeus Medical Components (White Bear Township, MN; no SBIR) ($498,100) Heraeus Medical is expected to add 55 workers. It plans to spend $7.8 million to renovate its existing plant,  Bluegrass Proteins (Dawson, MN; no SBIR) ($650,000) Kentucky-based Bluegrass Proteins will bring 56 jobs, plans to invest $18.2 million to buy and retrofit the Associated Milk Producers’ raw milk plant,  Harmony Enterprises(Harmony, MN; no SBIR) ($215,000),  and Valmont Industries(Farmington, MN; no SBIR) ($129,000).  an aluminum pole maker with operations in Minnesota, Indiana and Canada... makes waste compactors and recycling balers. Its plans include 14 new hires and a $1.1 million plant expansion.  will add 15 workers.  Combined, the five companies plan to add 240 jobs in Minnesota. [Dee DePass, Minneapolis Star Tribune, Apr 1, 14]

A Japanese government-funded laboratory said Tuesday it found that data in a widely heralded stem-cell research paper was falsified, holding the lead researcher responsible for the fabrication.  [ ELAINE KURTENBACH,  AP Mar31]

[In Washington (state)] the failure to renew a high technology tax incentive for research and development, which has been in place for 20 years and was a priority for the technology industry.  ..... The Life Sciences Discovery Fund (LSDF), established in 2005 to distribute up to $350 million of state tobacco settlement money over 10 years to life sciences research, has come under attack before.  [Benjamin Romano,, Mar 27] As usual, the beneficiaries say the stte will suffer dramatically from loss of such funding, but can produce no compelling evidence that it has made any difference in the state's fortunes.

Showtime, again.  the House Small Business Committee chopped the SBA's budget request into tiny little pieces, and told the agency to stop spending money on what it wants to do and instead spend money on what Congress wants it to do.  .... new entrepreneurial development programs that the SBA instituted on its own, such as its growth accelerators and regional innovation clusters. [Kent Hoover, Baltimore Business Journal, Mar 25]

Stuff that dreams are made on. [Pol candidate] unveiled his jobs plan for Maryland, a blueprint that includes increasing exports and commercializing more discoveries from Maryland universities. With the shuttered RG Steel plant at Sparrows Point as a backdrop, Gansler said he also wants to improve the state’s economy by advancing manufacturing and cutting tuition for Marylanders studying for high-demand fields like cyber security and health care.   [Gary Haber, Baltimore Business Journal, Feb 27] And a few cloud capped towers.

Money talks.  The U.S. House of Representatives on Tuesday passed a bill that would allow coal mining companies to return to an old practice of dumping mining waste into streams.  House Speaker John Boehner, a Republican from Ohio, called it part of an effort to stop what Republicans call the “war on coal” and a “pro-growth jobs bill.”   [Renee Schoof, Raleigh News & Observer, Mar 25]  With enough money, you can get the Speaker of the House to mouth your fantasy message.

Lower taxes, no new jobs.  the Hall Family Foundation, a charity, estimates that over the past five years the two state governments [Kansas and Missouri] have forgone $217m in taxes. Some 3,289 jobs have been tempted across the metropolitan border to Kansas; Missouri has won 2,824 jobs back. Kansas can therefore claim to be “winning”. None of this border-ruffianry creates new jobs.  ... It is difficult to understand why either state would want to continue throwing money at a scheme that benefits only the companies that move.  [The Economist, Mar 21]

Those falling numbers. The percentage of successful NIH submissions relies on two numbers—the numerator, the dollars available, and the denominator, the total number of grants submitted for funding consideration. For the past decade the fall in the success percentage can to a large extent be explained by an increase in the number of submissions. The rise in submissions is a result of an ever-increasing pool of junior scientists and to an increase in the number of "research" faculty at academic medical centers. Research faculty are required to fully support themselves by securing external grants. [Susan M. Fitzpatrick, Wall Street Journal, Mar 11]

Dan Kaufman, the head of DARPA’s software-innovation group, ...  a former Silicon Valley lawyer and past operating chief at DreamWorks Interactive, is also optimistic. He believes that if anyone is going to build a post-Snowden world that can better balance privacy concerns with the increasing power of software, it may as well be DARPA.  ....  with fully homomorphic encryption [Evelyn Rusli,  Wall Street Journal, Mar 9, 14]

Get whatever's on offer. Texas ranked sixth among the states in the amount of economic development subsidies awarded to companies relocating or expanding operations, according to a new report by Good Jobs First.   ...  Since the mid-1980s, Texas and various local governments have approved more than $6 billion in subsidies to companies expanding in Texas.  [James Aldridge, San Antonio Business Journal, Feb 27] Check your free-market jabber at the door.

The Tax Code: Make It Flat, says Steve Forbes, over and over and over.  The first objective of any proposer of tax reform is to lower his own taxes. Then he searches for supporting data and argument that politicians can sell to the multitudes, not just rich Republicans who don't need selling. Forbes, in particular, also wants to attract Republican buyers for his publications.

Sangamo Bio up 17%  [Mar 6, 14]

Guess who's in court.   PMT (Chanhassen, MN; no SBIR) medical device and equipment manufacturer, violated federal civil rights laws by refusing to hire women and workers over 40, according to a lawsuit filed Wednesday in federal court by the U.S. Equal Employment Opportunity Commission. Despite hiring at least 70 people between Jan. 1, 2007, and late 2010, an EEOC investigation showed that PMT hired no female salespeople.  .... started in 1979 and “is dedicated to the research and development of specialty products, devices and instruments used in the medical field  [James Walsh, Minneapolis Star Tribune, Mar 5, 14]

The who-lost-Ukraine debate eerily echoes the sorts of recriminations common during the Cold War, starting with the who-lost-China [Peter Baker New York Times. Mar 5]   Political wannabes torturing history for competitive point-scoring with an audience ignoring most of history. As if "someone", usually a political opponent, had the power to "win-China."

[NIH] reports that between 1980 and 2012, the share of all research funding going to scientists under age 35 declined to 1.3%, from 5.6%. During the same period, the number of NIH awards going to scientists age 35 and under declined more than 40%, even as the total number of awards more than doubled. [ Ronald J. Daniels and Paul Rothman, Wall Street Journal, Mar 5]  What's the problem? More PhDs being produced than scientists retiring.

Synegava BioPharma (Lexington, MA; $800K SBIR in 2010, market cap $3.5B) down 12% [Mar 3, 14] 

Seventeen [Texas Emerging Technology Fund]’s startups spawned by public money have gone bust....  were awarded commercialization grants worth nearly $23.5 million.  .....  the ETF has been dogged by allegations of impropriety and political influence in its application process, and many question whether the state should be funding startups.  ....  the largest grant amount awarded was 21-Century Silicon (Richardson, TX; no SBIR) that was awarded a $3.5 million grant in 2009 [Christopher Calnan, Austin Business Journal, Feb 3]  With politics poisoning the well, it is hard to say whether the failure rate is from expected tech risk or pure political handouts to supporters.  It's also hard to find a reason to believe that the guv acted cleanly in picking winners.

Who is the best friend of the US DOD? The Russian MOD. 

The overall picture is that most conservatives are inflation obsessives, and nearly all inflation obsessives are conservative.  Why is this the case? In part it reflects the belief that the government should never seek to mitigate economic pain, because the private sector always knows best. [Paul Krugman, New York Times, Mar 3]

the White House announced a series of Executive Actions "to encourage innovation and further strengthen the quality and accessibility of the patent system." The first initiative involves a U.S. Patent and Trademark Office (USPTO) crowdsourcing effort to facilitate ways for the general public to contribute to "prior art" and allow patent examiners the ability to determine whether an invention is novel. A second executive action includes creating a new training program that will allow experts from industry and academia to provide patent examiners with a better understanding of S&T innovations. Finally, the USPTO will expand pro bono services.  [AAAS, Feb 26]

Economists are doubtful about tax incentives offered by states to entice businesses to their region. A study by the Pew Centre on the States found that every American state has at least one incentive programme but concluded that “no state regularly and rigorously tests whether those investments are working.” Both the costs and the benefits of the incentives are far from clear.  .... Life in Kentucky is far from perfect. The state has long been one of the poorest in the country, ranking 44th in terms of GDP per person in both 1939 and 1970 and still only 43rd in 2012.   [The Economist, Feb 20]

Governments’ role in pushing forward technological progress has been widely underestimated, as Mariana Mazzucato shows in her book, “The Entrepreneurial State”. The first computers were developed by governments, as were jet engines, nuclear power and lasers. The internet grew out of ARPANET, a project nurtured by America’s Defence Department. It took government-launched satellites to enable global positioning systems to work. Touchscreen technology was invented by academics with the help of government funding. Even the algorithm that made Google so successful was created with the aid of a grant from America’s National Science Foundation.  [The Economist, Feb 20]

Shrink the Army, again. SECDEF Hagel plans to shrink the United States Army to its smallest force since before the World War II buildup and eliminate an entire class of Air Force attack jets in a new spending proposal that officials describe as the first Pentagon budget to aggressively push the military off the war footing adopted after the terror attacks of 2001. [THOM SHANKER and HELENE COOPER, New York Times, Feb 24]  The Army would shrink to a smaller number than even 2001 when it was too small for two simultaneous anti-terror wars, and a tenth the number of 1945. How much is enough Army? Depends on the nation's idea of security. And Navy and AF?  Better protected by politics to keep jobs producing hardware in the constituencies.

Got money and dream. The first applications for an enormous pot of state money for bioscience companies and tech transfer efforts have begun rolling into Connecticut Innovations, the state's venture capital fund.  The administration aims to distribute $200 million over 10 years in grants for university or non-profit researchers and investments in start-up companies in biomedical engineering, medical devices, pharmaceutical and biotech drug companies, medical diagnostics and personalized medicine.  ... hopes to find recipients for $10 million this year, with each research group or company receiving no more than $500,000.  .... For more information, visit   [Mara Lee, Hartford Courant, Feb 20]

Supporters of California’s multibillion-dollar stem cell program plan to ask for $5 billion more to bring the fruits of research to patients.  Robert Klein, a leader of the 2004 initiative campaign that established the program, said he’s going to be talking with California voters about the proposal. If the public seems receptive, backers will work to get an initiative on the 2016 ballot to extend funding for the California Institute for Regenerative Medicine.  [Bradley Fikes,, Feb 20]

Tom Perkins, the Silicon Valley venture capitalist who compared the plight of the wealthiest Americans to Jews in Nazi Germany, offered up a provocative new idea on what the rich deserve: more votes in public elections for every dollar they pay in taxes. [Sarah McBride, Reuters, Feb 14] He thinks the US needs the best government money can buy.  He no doubt envies his intellectual predecessors who bought state legislators who appointed US Senators, a system brought down by the  Seventeenth Amendment.  At least until the Supremes resurrected it with the Citizens United ruling that money is speech.

ARPA-E is funding several projects that use liquid battery electrodes to cut costs and increase energy density.  ...  could theoretically allow an electric car to travel 500 miles on a charge, five times farther than most electric vehicles can now, say the researchers developing the technology, who are based at Argonne National Laboratory and the Illinois Institute of Technology.   [Kevin Bullis,, Feb 17] 

one cliché seems to be missing from the boilerplate arguments being deployed on behalf of [the Comcast-Time Warner monopolisitc combination]: I haven’t seen anyone arguing that the deal would promote innovation.  .... Moreover, there’s good reason to believe that monopoly is itself a barrier to innovation. [Susan Crawford of Benjamin N. Cardozo School of Law, whose recent book “Captive Audience”] argues persuasively that the unchecked power of telecom giants has removed incentives for progress: why upgrade your network or provide better services when your customers have nowhere to go? [Paul Krugman, New York Times, Feb 17, 14]

The [Secretary of State] devoted much of his speech to venting spleen at those in the "Flat Earth Society" who dispute the 97% of climate scientists who believe in man-made global warming. "We should not allow a tiny minority of shoddy scientists and science and extreme ideologues to compete with scientific fact," he said. [Brett Stephens, Wall Street Journal, Feb 18]  Strong blanket criticism of the few scientists who hold different conclusions and doubts about climate forecasts that still rely on a lot of simplifying assumptions. Forecasters of any future should restrain their enthusiasm and criticize differing opinions on scientific bases, not on majority opinion.

Interstate competition.   Ottobock, a German prosthetics manufacturer, is closing its Minnesota operations and shifting hundreds of headquarters jobs to Utah and Texas. ... in Salt Lake City, adding about 80 jobs there with the help of a $390,000 tax credit provided by that state  [Sam Black, Minneapolis / St Paul Business Journal, Jan 14, 14]    president and CEO of the Economic Development Corp. of Utah, added that Ottobock’s decision to expand here reflects well on the state’s promotion of its array of life-science firms."It is important to companies like Ottobock that Utah has a well-established cluster where deep and mature talent pools increase their efficiency," he added.   [Mike Gorrell, Salt Lake Tribune, Jan 14, 14]  Meanwhile, Tillges Certified Orthotic Prosthetic (Maplewood, MN; no SBIR, 43 employees) will expand into the west metro and boost its trauma business after buying Metropolitan Orthotic Laboratory (Minneapolis, MN; no SBIR) near Hennepin County Medical Center.  ....  Tillges didn’t disclose terms of its deal. .... Tillges recently spun off a startup, Tillges Technologies, that developed a mobile app and electronic sensor designed to help diabetic ulcers heal.  [Katherine Grayson, Minneapolis / St Paul Business Journal, Jan 13, 14].  What is the net effect on the US of such tax-inspired shifts except profits for the moving industry?  Local tax revenue will go down in both places as corporate costs decline and profits increase (maybe).

The big question we have to consider is this: Is the U.S. maximally, or even significantly, capitalizing on its research investments? Are we seeing the high-quality jobs, the growth in GDP and the societal benefits that should flow from our national investments in innovation?  The resulting GAO study, which is being released today, notes that the U.S. is still widely seen as the world’s premier basic research nation—including for nanotechnology. Yet many people have concerns about our national ability to capture value from our collective investments, whether through developing intellectual property, licensing and commercialization, manufacturing goods at scale or delivering new services.   [Timothy M. Persons is the chief scientist of the United States Government Accountability Office, Feb 7]  Interesting questions for politicians designing government's role in American innovation.  Unfortunately, since they are politicians, a lot of what they do results from political calculation, especially when there is money being passed out with no hope of realistic evaluation of return on the "investment."

Connecticut's manufacturing sector — growing in sales but falling in employees — needs more state support to modernize and grow, the Malloy administration says, so it will ask the legislature to authorize an Advanced Manufacturing Fund. .... already has more than $100 million in the Manufacturing Assistance Act pool  ... Currently, the state Department of Labor subsidizes training at factories through STEP-UP, which pays about 80 percent of the wages for the first six months for those hired at the average wage of $14.23 an hour. ...  a lack of willingness on the part of the companies to hire someone who isn't immediately able to work on the advanced machines in the shop. [Mara Lee, Hartford Courant, Jan 29]   Low-wage public subsidy for private companies.

The Indiana House voted yesterday 93-0 to pass H.B. 1020, which would require Indiana’s standing bicameral Commission on State Tax and Financing Policy to review all state and local tax incentives over a five-year period.  .... states routinely issue reports on the efficacy of credits in their code, and often times they fail to meet even the most basic of cost-benefit requirements.  ....  Of the studies that find that tax expenditures have positive effects—these sometimes are conducted by industries that benefit from a particular preference—there are often problems with the assumptions built into the model.  [Scott Drenkard,, Jan 24]  Allow me enough assumptions, and I will prove anything you want to hear. Tax and subsidy breaks for companies are a long-established political game with little profit to show that any decent accountant would accept. When the smoke, if any, clears in Indiana, the legislature will continue to handout money to companies.

Eventually, contracts get an audit. The Justice Department accused the government's largest private security background check contractor of defrauding the country of millions of dollars by methodically filing more than 660,000 flawed background investigations—40% of the cases it sent to the government over a four-year period. [Dion Nissenbaum, Wall Street Journal, Jan 23]

Just a little less. Overall R&D at the Department of Defense will likely end up below FY 2012 levels, but that is due mostly to reductions in downstream weapons and technology development, a trend that has been ongoing in recent years. Basic and applied research and early-stage technology development would all fully recover above FY 2012 funding. Also notable is the major increase for DOD's medical research program, which includes funding for peer-reviewed research on cancer and other areas, and has long been defended by Congress from Administration cuts.   [AAAS, Jan 16]

Bacon-bits. $10 million for the Regional Innovation program in the U.S. Department of Commerce’s budget. This is the first time the grant portion of the program was directly funded. The program was authorized in the America COMPETES Act of 2010 and establishes the program “to encourage and support the development of regional innovation strategies, including regional innovation clusters and science and research parks.”  Funding for the Regional Innovation program was one of SSTI’s highest legislative priorities and many SSTI members reached out to their representatives and senators to express support for the program. Language indicates that the Economic Development Administration is to centrally administer the grants rather than through its regional offices and with criteria provided in the America COMPETES Act. [SSTI, Jan 15]  The pork money's negligible and the local announcements delicious.

Entrepreneur who worked on DARPA Internet project gets $8.5M for startup .... [Charles Brown] straight out of high school, working on computers the Air Force used for national defense. He went from there to working on the DARPA-funded experiment to build the internet and worked hand-in-hand with Vint Cerf, the man credited with inventing TCP-IP protocol. ....Brown has launched Festival Transactions, a specialized startup that provides a payment processing platform for big festivals. The company has raised $8.5 million  [Emily Parkhurst, Puget Sound Business Journal, Jan 7, 14]

An ancient tradition:  defrauding government. A San Diego-based government contractor admitted to virtually double-billing the U.S. Defense Department over a five-year period, resulting in more than $3.6 million in losses, federal authorities said.   ..... When the Defense Department conducted an audit in 2011, Vector went back and falsified its electronic accounting entries and backdated false invoices to match what had been submitted.  [Kristina Davis,, Jan 14, 13]  And yes, SBIR companies have been caught in fraud also. Which is why SBIR contracts have a zillion clauses.

A former Texas Emerging Technology Fund official is now on the board of the biotechnology company that received the second-largest non-research grant in the fund’s history and caused controversy three years ago by allegedly circumventing the fund’s normal approval process.  Bob Pearson, a former member of the ETF’s 17-member advisory committee, has joined the board of Genprex (Austin, TX; no SBIR) biopharmaceutical company founded in 2009 as Convergen LifeSciences Inc. by Gov. Rick Perry campaign donor David Nance. [Christopher Calnan, Austin Business Journal, Jan 2, 14]  

Congress has once again allowed a popular tax break that encourages U.S. companies to invest in research to expire. The lapse of the research and experimentation tax credit, estimated to be worth $7 billion last year to U.S. firms, has reignited debate about whether the measure is a costly corporate windfall or a vital incentive for research.  [AAAS, Jan 2, 14]  Everybody loves his subsidy. Note that the only named benefit from the program is that the companies get $7B, good for company profit margin, but of unknown value to the nation of taking money from taxpayers to supply the $7B.



Minnesota has begun accepting applications from startups that want to participate in the popular angel investor tax credit program.  .... awards tax credits to individuals who invest in young Minnesota companies certified by the state.  .... Last year, the state had $12.7 million in credits to give out and ran out of funds May 9. Nelson expects 2014’s $12 million in credits to go even faster ... The state has so far certified 14 companies to participate in next year's program   ....  Last year, 128 Minnesota companies raised nearly $51 million through the program. [Katharine Grayson, Minneapolis / St. Paul Business Journal, Dec 5, 13]

Following the Supreme Court’s rejection of gene patents, the U.S. proposes steep cuts to reimbursements for breast cancer-gene tests..... Hours after that decision was announced, other molecular-diagnostics companies announced that they would offer similar tests at a lower cost than Myriad Genetics’s test.  And now, the federal government’s Centers for Medicare and Medicaid Services, or CMS, is proposing to lower the amount of money it pays for the tests. The new rate is approximately half of what the agency has previously reimbursed, according to GenomeWeb.  [Susan Young,, Dec 31]

 A crime too frequent and easy.  AT&T, Verizon and the other carriers are under growing pressure to install the switch, a technical fix making cellphones useless to robbers.  .... CTIA-The Wireless Industry was not available for comment but most industries typically oppose technical mandates.   [Michelle Quinn, San Jose Mercury News, Dec 31]

Promises, promises. As the battle for financing heats up, some startups are making big promises to their early investors: a guaranteed return on their money when the company goes public.  .....  pledging to investors that their shares will go public at a certain price, often much higher than their current value. If the price doesn't meet the target, the companies will agree to give the investors more shares to make up the difference.  [Telos Dimos and Douglas Macmillan, Wall Street Journal, Dec 25]  For SBIR proposers to the mission agancies, don't worry, they don't care abut or rely on such promises; they just want your technology.

SBIR skipping Phase 1 and straight to Phase 2 proposal is now allowed for three agencies:  DOD, NIH, and DoED. DARPA and NIH have said they will start doing it.  Read - carefully - the specific instructions in the solicitation.

Eternal hope in incubation. Hamilton County Business Center has been awarded $500,000 from the Ohio Third Frontier on Thursday as part of more than $12.8 million in loans and grants to fund biomedical companies and tech startups. The grant amounts to half of the incubator’s funding.  .... The Dayton/Miami Valley Entrepreneurs Center was also awarded $450,000 to provide incubation services and leased space for tech-oriented businesses in the Dayton region.  [Andy Brownfield, Cincinnati Business Courier, Dec 12]   from 12 in 1980 to more than 1,400 today reflect the nation’s unyielding interest in entrepreneurship (Knopp, 2007) Incubators thrive because of the underlying belief that they select and nurture good business ideas that generate new companies, jobs, and local economic development ... A surprising finding is the low level of incubated firms that exit the incubator, signaling that incubators find it difficult to wean their tenants out of the protective environment of the incubator  [Just like SBIR!]  ....  incubated businesses have slightly lower survival rates than their unincubated counterparts while also having slightly higher employment grow th and sales growth rates than their unincubated counterparts. These effects while statistically relevant do not offer compelling evidence on whether incubation programs as a whole should continue being expand  [Alejandro Amezcu, Boon or Boondoggle? Business Incubation as Entrepreneurship Policy, financial support from the Kauffman Foundation, circa 2007] Don't worry incubators, the politicians love the publicity of kissing babies. But remember that we encourage them to act that way.

Love the subsidies, hold the economics. Three Greater Cincinnati companies were awarded tax credits to create jobs in Southwest Ohio, including Tom + Chee Worldwide LLC, which is a franchise restaurant known for its grilled cheese sandwiches, is expanding rapidly thanks to exposure on ABC’s “Shark Tank.” The company received a 45 percent, seven-year job creation tax credit for its expansion project in Cincinnati. The company expects to create 65 full-time positions that will generate $3.5 million in additional annual payroll and retain $215,385 in existing payroll. [Tom Demeropolis, Cincinnati Business Courier, Dec 2]  Where will Tom's new customers come from? A sudden surge in demand for cheese sandwiches (as a low budget meal)? A big population increase?  Or from existing eateries whose biz loss will offset any gains by Tom?  Especially since Tom avoids taxes while the existing joints keep paying taxes. Econo-politico-flummery, again and again; politicians turning nothing into something. Quick, someone mention "market-failure" without defining it.

Proposals for two new research deals — worth a combined $83 million — came out of Wright-Patterson Air Force Base this week.  The Air Force Research Laboratory published the two request for proposals, which includes a $46 million effort to advance CERFER (contested environment radio frequency exploitation and research) technology and $37 million to accelerate the transition of energy efficiency and alternative energy technologies.  The contracts are good news because they mean more business opportunities for Dayton-area defense companies .....   Proposals are due Jan. 4. Air Force officials expect to award that contract to one company, which would then bid for individual tasks. more information.  [Joe Cogliano, Dayton Business Journal, Nov 26]

NC IDEA has awarded more than $200,000 in grants to five North Carolina startups.  Three of them are: FokusLabs (Wake Forest, NC; no SBIR) has developed an intervention tool designed to remind individuals with autism and ADHD to get back on task when their attention wanders.  NIRvana Sciences (Durham, NC; no SBIR) is focused on novel fluorescent dyes developed at N.C. State University for use with medical diagnostic and imaging tests.   Panacea Solutions (Research Triangle Park, NC; no SBIR)  is using robotic technology to create low-cost, 30-day supply nutritional packets that are personalized for an individual’s needs.   [David Ranii, Raleigh News & Observer, Dec 10, 13]

Caveat emptor investor.  Officials in nearly a dozen states, including Georgia, Alabama, Kansas and Wisconsin, have enacted or proposed new laws—or tweaked existing policies—to make it possible for resident entrepreneurs to secure financing from everyday local investors, also known as "equity crowdfunding," according to the North American Securities Administrators Association.  [Ruth Simon and Angus Loten, Wall Stret Journal, Dec 10]

Only a government could love. The National Renewable Energy Laboratory’s 26th Industry Growth Forum, a showcase for startup cleantech companies pitching what could be the next big thing, routinely draws a lot of attention.  .... among the nearly 400 attendees at the annual two-day forum were investors and business executives from the United States, the United Kingdom, and Canada.  ....  forum got started because NREL, which works with startup companies working in the cleantech sector, was getting calls from investors asking if the federal laboratory knew of any companies with good ideas, Farris said.  [Cathy Proctor, Denver Business Journal, Dec 6]   The government talks up tech transfer and wonders why so few of its "investments" draw private investment..  Because the government looks at technology with public (and political) benefit government eyes while private investors look at ROI.  As a result, few projects getting government subsidy (political handout) appeal to investors.  If government really wants tech transfer, it has to involve investors at the project early development stage. If no private money is willing to make any commitment or contribution, government is probably looking at the wrong incentives.  Subsidies like SBIR are a prime example of funding stuff only a government could love and having forum after forum to moan about the lack of tech transfer.   They should look in the mirror for the answers.

More Colorado handouts ("investments"). Colorado's economic development arm awarded $3.135 million in grants to four university and trade groups that help scientists form companies and turn university research into biotechnology products.....  under the Bioscience Discovery Evaluation Grant Program meant to help commercialize new biotechnologies discovered in the state.  The Colorado Institute for Drug, Device and Diagnostic Development, based at the Fitzsimons Life Science District in Aurora, won a grant of $1.35 million. CID4, as it’s known, incubates a small number of companies each year, helping them find investment and other resources to form companies around technologies patented from research in Colorado.  The Colorado Center for Drug Discovery, affiliated with Colorado State University, was awarded $750,000. C2D2, as it's called, helps researchers identify refine potential new drug compounds and conduct proof-of-concept studies, providing research databases and chemical libraries that small companies and labs usually cannot afford.  The Skaggs School of Pharmacy and Pharmaceutical Sciences at the University of Colorado received $410,248 from OEDIT. The Aurora-based pharmacy college conducts research on new medicines and pharmaceutical chemistry.  The BioFrontiers Institute, at the University of Colorado Boulder, was awarded $624,752. The institute is a multidisciplinary biological research center combining molecular biology, chemistry, physiology, computer sciences, engineering and other disciplines with the intention of yielding new technologies with applications to improve human health.   [Greg Avery, Denver Business Journal, Nov 13]

Thievery charged.    Envia Systems  (Newark, CA; no SBIR), a battery startup, made a big splash in early 2012 when it claimed it had achieved a milestone: a rechargeable lithium-ion battery with the highest "energy density" ever recorded. The company had been awarded a $4 million grant from ARPA-E, the innovation arm of the Department of Energy, and General Motors invested in the company with the hopes of licensing the technology.  Now, in an explosive and highly detailed lawsuit, three of Envia's top former executives allege that Sujeet Kumar, the company's co-founder and chief technology officer, created the company using intellectual property that he stole outright from NanoeXa  (Santa Clara, CA; no SBIR), his previous employer. [Dana Hall, San Jose Mercury News, Dec 4, 13]

Evidence-free SBIR dogma.  Enhancing Technology Commercialization through SBIR/STTR Reform, a talkfest housed by the Information Technology and Innovation Foundation in Washington think-tank land, brought the usual speeches about more organizing for innovation, a handful of success stories, talk about commercialization, blather about beautiful small biz, etc.  Charles Wessner who has run several SBIR studies at the National Academy noted that "we are the best in the world at innovatiom but we aren't very good at it." , "public research stimulates private research, "  and  "The program works pretty well, so why are we trying to fix it?" It works: relative to what?  lots of theoretics on investment and VC disdain for risk [but SBIR in the main avoids most of the same risk]  talked up how SBIR takes no equity as if that mattered in incentivising real innovation. Talk about jobs and the myth of small biz without asking whether SBIR created more jobs than the agency money would have done if left unmolested. "Big business does not do innovation any more, " said the biggest political lobbyist for SBIR.   Oh, really?  Great commercialization, he said.  Oh really, by what standard and from what data source?   Not a word about whether SBIR made any notable difference in innovation, however measured. No words about market failure, other than some small companies like free money from government. Some lo-o-ove it. No words about a controlled experiement with a control group for comparison. One audience member actually asked the question, What would the federal agency have done with the money if SBIR never existed? , followed by Did SBIR do any better?. Wessner answered No, but, some good things came from it, and that the program has been one of the most studied programs (at least by the Academy).  One SBIR beneficiary [with over $50M SBIR] told a nice anecdote of a project that worked for the military with the implied idea that anecdote is the singular of data. She did not answer for her other $49M. Thanks to Cass Sunstein for the "evidence-free dogma" phrase. The advocates for government intervention in the US innovation system made the usual pleas that ignore the history of the US's rise to the top of the technology and economic world. Some of them make their living on the recommended government programs. The show can be seen from ITIF at

Imagine you are going to a picnic. Government is properly in charge of maintaining the essential background order: making sure there is a park, that it is reasonably clean and safe, arranging public transportation so as many people as possible can get to it. But if you remember the picnic afterward, these things won’t be what you remember. You’ll remember the creative food, the interesting conversations and the fun activities.   Government is the hard work of creating a background order, but it is not the main substance of life.  [David Brooks, New York Times, Dec 3]  Which is why we should not expect miracles from programs like SBIR where government gets into details of choosing winners and losers in competition for capital. 

SBIR Hoedown on Capitol Hill. Enhancing Technology Commercialization through SBIR/STTR Reform, Tuesday, December 3, 2013 - 9:00am - 10:30am  Cannon House Office Building with the usual suspects benefitting from SBIR.   Real reform unlikely to appear.

Indiana Biosciences Research Institute founders [raised] $25 million in private funding, including $7.5 million from Eli Lilly  .... match a $25 million grant from the state of Indiana announced last May  .....   The nonprofit institute was created as a place for Indiana life sciences companies and academic researchers to collaborate on research on the pressing human health issues of diabetes, cardiovascular disease, and obesity and nutrition. As many as nine research teams will be funded.    .....  Indiana is one of few states where a collaborative research institute with private companies could work, Johnson said, because Indiana’s life science firms are diverse and most are “not competing for the same piece of intellectual innovation.”   [Jeff Swiatek, Indianapolis Star, Nov 19]

Political rhetoric today – no matter what side – is principally about the repetition of ideological narrative and tropes. It's the marketing of worldviews in order to win elections and undermine rivals.   [Andy Fitzgerald, The Guardian, Nov 23]  Or as put earlier, Winning isn't everything; it's the only thing. [Vince Lombardi, winning football coach]  The politicians' problem is that, having won, they will enact something so awful that they will soon lose again.  Basically bescause the polity looks for unrealistic solutions to complex problems.

the New Democrat Coalition -- which represents Members of Congress interested in  innovation, technology, and economic growth -- issued a statement outlining their principles for the America COMPETES Act. In its press release the Coalition states that "public and private sector leaders called for federal funding to strengthen the United States' R&D enterprise and develop a world-class workforce for the innovation economy."  [AAAS, Nov 21]  Happy words with the devil in the details. Other than the idea that the government spent a lot of money over decades on research, it is hard to credit the government for most of the tech advances over seventy years other than staying out of the way of the investment capital markets. But since the politicians have to be seen doing something, they will concoct some grand scheme with a timeline that stretches long after the next election while the Democrats take credit for wonderful government schemes and the Republicans grouse about too much intrusive government. Neither will have credible data for their subsequent claims.

The next growth spurt for New York's budding computer-chip economy won't happen in the Capital Region, but 100 miles west, in the city of Utica.  There, six companies on the front- and back-end of the supply chain are creating 1,000 jobs in a combined $1.5 billion investment, Gov. Andrew Cuomo announced  .... IBM is among the companies now expanding to the SUNY Institute of Technology campus in Utica  ....  Cuomo is devoting $200 million over the next decade to buy equipment for the companies to perform research and development.  [Adam Sichko, Albany Business Review, Oct 10, 13] 

Universities try to cash in on discoveries — gene splicing, brain chemistry, computer-chip design — but the great majority of them fail to turn their research into a source of income, according to a new study from the Brookings Institution.  Research universities have “technology transfer” offices that make thousands of business deals annually for the use of their patents. But in any given year, at about seven of eight universities, the resulting revenue funneled into university budgets is not even enough to cover the cost of running that office, said the study’s author, Walter D. Valdivia. [Richard Perez-Pena, New York Times, Nov 20] University researchers, like researchers everywhere, prefer the comfort of the lab paid for by someone else, disdaining the "purple of commerce".  Which may be good or may be bad, but it "butters no parsnips".  If government and government-supported universities want economic return, they need a new model.  In principle, SBIR was invented to induce spin-off of research to private investors.  But since the federal agencies have no incentive to use SBIR that way, they probably have a worse economic result (never even measured) than the universities which lose only a little. get the report.

NASA SBIR solicitation opened on November 14 and will close on January 29.  New NASA SBIR website.  Note that last year's winners list reeks with old hands (career SBIR firms) doing low risk stuff because NASA prefers predictability in its R&D.  Which is understandable for an agency sending things to remote places where problems are not easily repaired. But that preference shuts the door to a whole lot of innovation.  Agencies also have to protect their backsides from grandstanding Congresscritters pontificating for the folks back home about wasted money. What can you do? Don't reward your Congressional candidates with applause and votes for empty talk.

Unmanned Aircraft Systems Airspace Operations Challenge,  a NASA Centennial Challenge Program wherein competitors try for $500,000 in prizes by demonstrating UAS technology.  Rules and registration

Accelerate Long Island (NY) will partner with the area's largest venture capital firm to fund local startups through access to a $213 million fund. A shared interest in advancing research-based startup companies through commercialization helped bring about the alliance. The goal is to move beyond seed funding to give the startups coming through the Accelerate LI pipeline an avenue to potentially access the type of cash to get them going, reports Xconomy. [SSTI, Nov 13]

Accelerant, the DDC’s initiative to develop entrepreneurs in the Dayton region, hopes to raise $15 million in the Accelerant Fund I, a new 10-year seed-stage venture fund. “We’re betting that the Dayton region will bet on itself,” said Joel Ivers, vice president for entrepreneurial development   ..... The fund will focus on companies in the aerospace, advanced materials manufacturing, IT and sensor systems industries.  [Tristan Navera, Dayton Business Journal, Nov 13, 13]  And the envisioned buyer in right in town - the US Air Force - which will find itself shrinking until the next war. Better  hope the Ohio CODEL can keep the AF spending in Dayton, as in A new $50 million materials development program for the U.S. Air Force will be run locally.  [Joe Cogliano, Dayton Business Journal, Nov 6, 13]  Not like The DoD announced late last week it closed the Defense Information Systems Agency data center operations in Dayton, as well as a DISA data center in Chambersburg, Pa. and transferred their functions to other Defense Enterprise Computing Centers. [Tristan Navera, Dayton Business Journal, Nov 4, 13]

A measure to increase the sales tax in Jackson County, MO, to fund medical research across Kansas City and St. Louis was rejected by greater than a 5-to-1 ratio, reports the Kansas City Star.  [SSTI, Nov 6] No medical research nor taxes, please, we're conservative. Taxes would support government and research might undercut our beliefs.

Are you ready for a public competition with other businesses in your industry on who has the safest workplaces?  OSHA wants to require employers to report their injury and illness records to the agency electronically. Naturally, former SECTREAS Paul O'Neill, the great CEO champion of safety at Alcoa, approves. [Kent Hoover, Portland Buusiness Journal, Nov 7, 13]

Sen. Elizabeth Warren (D-MA) called for leaders from both parties to make "a renewed commitment to innovation" and added "we need two things: to double our investment in scientific and biomedical research and to create more year-to-year certainty for that funding." She also touted federal research and development as a boon to innovation, saying "refusing to invest in the [NIH] is the budgetary equivalent of cutting off your feet to save money on shoes."  [AAAS, Nov 5]

Cytori Thera up 60% [Nov 5, 13] unveiled a pact to commercialize the company's cell therapies for the cardiovascular, renal and diabetes markets in Australia and several Asian nations.  [Wall Street Journal, Nov 5]

the Center for New American Security sees the next decade as “likely to be the most disruptive since the early 1980s” with the “exponential growth of unmanned and increasingly autonomous robotic systems, the power of data-mining technologies . . . and the possibility that directed-energy weapons [like lasers] could dramatically alter the offense-defense balance in key military competitions.”  The study notes that in contrast to the Cold War — when the Pentagon led by investing in missiles, satellites, precision munitions and stealth technology — it will be the commercial sector that “will drive many of the innovations that will most define the next 20 years” in robotics, unmanned systems and cyberwarfare. [Walter Pincus, Washington Post, Nov 4]  The military hates changing course after it has battled day-after-day to defend its dogma and investments, especially if commercial advances are making the dogma irrelevant. Its SBIR loves to buy an deeper understanding of its what it already has.   One classic  change came in  Desert Storm when soldiers were getting and using pagers from their parents at home and a whole era of battlefield communication went obsolete.

Innovate in PA will raise up to $100 million that will flow through Innovation Works, Ben Franklin Technology Development Partners, three Life Sciences Greenhouses and the Venture Capital investing program. The plan is to create at least 1,850 technology jobs and double the return on the state's investment..  [Paul Gough, Pittsburgh Business Times, Sep 28, 13]  As long as the politicians are in charge of calculating the ROI, it should look good or have some brain-testing excuses.  The difficulty will come form public entities' collecting meaningful business data from private firms.

in a recent opinion piece for Politico, House Science Committee Chairman Lamar Smith (R-TX) linked entitlement reform with the prospects for science and innovation funding. [AAAS, Oct 30] Politics is about first pleasing the voters of whatever persuasion and then national priorities for long term advance. Science and tech funding today won't produce a campaign nugget before the next election.

Although not a statewide measure, Jackson County, MO, voters will be asked to approve a sales tax of one-half of 1 percent for 20 years to fund medical research and discovery across Kansas City. [SSTI, Oct 30]

Endocyte down 10% [Oct 30, 13]

MILLIONS of Americans negotiating America’s health care system know all too well what the waiting room of a doctor’s office looks like. Now, thanks to, they know what a “virtual waiting room” looks like, too.  ...  For the first time in history, a president has had to stand in the Rose Garden to apologize for a broken Web site. ...  Indeed, according to the research firm the Standish Group, 94 percent of large federal information technology projects over the past 10 years were unsuccessful — more than half were delayed, over budget, or didn’t meet user expectations, and 41.4 percent failed completely.    [Clay Johnson and Harper Reed, NY Times, Oct 24]

Kicked the can, again. The government is open and the debt limit slightly boosted, all until the end of the year when the battle will be re-joined. Resolved are the ideas that the debt limit is too dangerous to play with, and Obamacare is stoutly defended by the Democrats and will eventually be popular enough with the public to be tamper-proof.  

So the farcical stand-off in Washington, the unruly “Occupation” movements, the recall votes and rallies in Madison, etc., are probably all symptomatic of marshalling efforts of the future in the battle between SMALL and BIG using the mobile information technology as a call to arms. For a more detailed discussion of this, see Nicco Mele’s book, The End of Big: How the Internet Makes David the New Goliath.  In it he coins the phrase “radical connectivity” which would seem to convey how the internet is undermining the power of large institutions.  [investment letter,, Oct 16]

Don't tax you, don't tax me.... Medical device makers in Washington state [which has 242 medical device/tech companies] are hoping the budget showdown in the other Washington will end a tax on their products that they say is hampering growth and innovation. [Valerie Bauman,  Puget Sound Business Journal , Oct 14] .... Tax that guy behind the tree. We all want something that someone else will pay for, and we elect Congresscritters to make such wishes come true.

How close is good enough?  California governor vetoed a biosimilar bill that allowed biosimilars to be substituted by pharmacists if the F.D.A. deemed the biosimilar “interchangeable” with the reference product, a higher standard than merely being similar. ...   would have required pharmacists to tell the patient’s doctor whether a biosimilar or the brand-name drug had been dispensed. The pharmacist also would have been required to notify the patient if a substitution had been made. [Andrew Pollack, Wall Street Journal, Oct 13] Human chemistry is still loaded with mysteries over the body's reaction to a single atom difference in any medical molecule.

The North Carolina Chamber, the state’s powerful business lobby, is setting up a private statewide insurance exchange to sell health policies to people whose employers drop health coverage for their workers. It’s a first for North Carolina and is scheduled to go public next week [John Murawski, Raleigh News & Observer, Oct 11] Eventually the conservative/ libertarian political assault on Affordable Care will subside and practical solutions will appear to enable people and business to buy competitive health insurance. Why? An opinion poll June 2012 showed that a majority of Americans, while opposing Obamacare, strongly support most of its provisions. [Slavoj Žižek, The Guardian, Oct 12]  The older of us remember the same political machinations around establishing Medicare.

Zero-sum game in prospect.  In 1955, household debt was 49 percent of Americans' disposable income; by 2007, it was 137 percent. Government moved from the military-industrial complex to the welfare state. In 1955, defense spending was 62 percent of federal outlays, and spending on "human resources" (the welfare state) was 22 percent. By 2012, the figures were reversed.   ..... Slow economic growth now imperils this postwar order.   [Robert Samuelson, Washington Post, Oct 14]  The battle is joined to grab a choice piece of a shrinking pie. And The simple fact is that Congress is getting worse at avoiding the traps it sets for itself. ... Standard & Poor’s downgraded the U.S. in 2011 on the grounds that “the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges.”   [Ezra Klein, WashPo, Oct 14] Congress's struggle is to balance the books without getting tossed from office by voters who don't understand economics. We want or economic miracles, or else.

Games they play. Passing what Washington calls a "clean CR" (continuing resolution) just kicks the proverbial can down the road—an activity at which Congress excels. It takes no imagination, no complex negotiations, no concessions to the other side, and CRs come in any size you like: a week, a month, a quarter. You just continue arguing over the budget and live to fight another day.  [Alan Blinder, Wall Street Journal, Oct 11]

NASA is facing an extraordinary backlash from US researchers after it emerged that the space agency has banned Chinese scientists, including those working at US institutions, from a conference on grounds of national security.   ..... The recent Congressional action refers to a broader law passed in July which prohibits NASA funds from being used to participate or collaborate with China in any way.  [Ian Sample, The Guardian (UK), Oct 4]  NASA was invented to escape from the military security into a purely civilian peaceful venture into space. But at least one influential politician could not resist the urge to pander to protectionism.

Pressure, unimaginably light. Under a proposed new [SBA] directive, advanced SBIR grants would be subject to a new "commercialization benchmark" to ensure that companies are following through on efforts to develop markets for the technologies those grants underwrite.  ..... As currently drafted, the new rules would apply to any company that has landed 16 or more Phase II awards over a 10-year period. Those companies would have to generate $100,000 in any combination of commercial sales or investments for each award, on average; or secure patents representing at least 15 percent of their Phase II awards. [Alexander Soule, Boston Business Journal, Oct 1] No matter that no smart investor would touch any business prospect that could generate so little revenue, and practically no profit, for zero or less ROI, the SBIR advocates are weeping over harsh pressure.  The real problem is that the agencies are funding stuff with no commercial potential in companies who revel in repeated Phase II contracts that require only "best efforts".  Of course the SBA requirements (derived from the SBIR law) are too stiff for such contracts and contractors. If you had invested  $16M (16 Phase IIs at $1M each) in a company, would you settle for $1.6M in revenue and probably no profits?  The next challenge for Congress is to invent some excuse to allow the handouts to continue with only some delusionary ROI. But Congress is busy battling over a real program with real incentives and potential - economic and political - Obamacare. In that world there's no energy to hassle the mythically beloved small businesses over peanuts. So, if you a business with real potential, realize that you have to compete with mediocre businesses that can do the kind of straightforward work that their government R&D machine wants. And with sequester and other budget pressures squeezing the big SBIR mission agencies, they will try even harder to put their SBIR money into short term predictable results with no concern whatever for economic success of the company.  Eventually, a long way hence, Congress may honestly face up to the question of what SBIR is for.

Fed up and sitting tight. Americans also are pessimistic about the course of the country, with 68 percent saying it’s headed in the wrong direction, the most in two years. [Mike Dorning, Bloomberg, Sep 26]  Not to worry, though, they are even more than 68% likely to re-elect their Congresscritters.  Complaining is labor-free, actually doing something is a lot of trouble.

Shutdown.  The political power struggle will shut down the non-essential part of the federal government at midnight for lack of authority to spend money. Already funded contracts will continue unaffected. Federal people will be barred from performing their duties and even being in their offices. Stay tuned for the eventual resolution which could take quite a while. And, no, SBIR is not essential. The big sticking point is the Republican effort to strangle Affordable Care in its crib.

Profit first. the U.S. Senate passed, by a vote of 97-2, the Responsible Helium Administration and Stewardship Act to authorize the Bureau of Land Management to continue to sell helium from the nation's stockpile.  [AAAS, Sep 26] They don't make helium; the earth's initial supply is the earth's final supply. Profit from birthday party baloons that have no economic value will eventually exhaust the world supply and foreclose on who-knows-what new and importantapplication. The Congress should know better than to spend an non-renewable supply for no serious purpose. But watching Congress's pandering to special interests give no confidence that they can see past the campaign contributions for the next election. 

John Cridland, director-general of the Confederation of British Industry, warns that the state should intervene no more than is necessary to solve market failures.  [The Economist, Sep 21]  Good philosophy but hard to convince a politician that "market-failure" does not include a  desire for more businesses in  the  constituency.

Leaders of bioscience and medical technology companies met with U.S. Rep. Chris Collins (R-Clarence) to discuss how they can position themselves for future growth.  ..... The biomed industry (including pharmaceutical, biotech and medical device sectors) directly employs 73,300 New Yorkers.  But company leaders contend that this impact can only be sustained by policies that support investment to create new technologies and jobs.  [David Bertola, Buffalo Business First, Aug 26, 13] Motherhood stuff that only means something in the details because every Congresscritter is for new technologies and jobs.  Just what did these leaders want that could survive the Tea Party assault on government? And what did the Republican tell them about prospects for recognizable help for their cause?

Liberty and small government for science. One-half of all papers are now freely available within a year or two of publication, concludes a new study sponsored by the European Commission. That means so-called open-access publishing has reached a "tipping point" and will now accelerate, suggests Éric Archambault, the lead author of the study and president of Science-Metrix Inc. in Montreal  [Jocelyn Kaiser, Science, Aug 23]

When politicians "invest". City leaders gambled in 2010 that Elona Biotechnologies (Greenwood, IN; no SBIR) would give this suburb a niche in the growing drug-manufacturing marketplace. That gamble never paid off and a new batch of city leaders hope Friday’s auction of Elona’s building, equipment and patents will salvage a large fraction of the $9.5 million the firm owes taxpayers. ....  Michael J. Hicks, director of the university’s Center for Business and Economic Research, said the deal on the empty laboratory building likely will bring in another company that could create jobs. [Vic Ryckaert, Indianapolis Star, Sep 24, 13] Let's guess the hoopla that surrounded the announcement of the "investment in the city's future."

In another state, more political investment. A German chemicals company will add 37 workers to its 97-person payroll in Wallingford, [CT] Gov. Dannel P. Malloy’s office announced, in exchange for $6 million in subsidized loans at 2 percent interest.  The state will allow BYK USA to keep $4 million without having to pay it back if the job creation total is met.  The state money, which will be paid for by bond borrowing.  [Mara Lee, Hartford Courant, Sep 24]

Don't wanna know no bad news.  North Carolina’s environment agency has taken the unusual step of returning a federal grant to study streams and wetlands that could be harmed by hydraulic fracturing for natural gas. ....  the former Division of Water Quality is [to be] absorbed by the Division of Water Resources, a move mandated by state legislators who complained that environmental regulations kill jobs. The environment department under the McCrory administration declares it will no longer be a “bureaucratic obstacle of resistance.”  [Bruce Henderson, Raleigh News & Observer, Sep 24]

[Moretti] also takes a welcome stand against those policies, still sadly popular in political circles, to fight the “tides of history” by subsidizing or protecting manufacturing. Manufacturing’s decline had some terrible consequences—just walk around Detroit—but policies to revive manufacturing employment seem both quixotic and distortionary.[and demanding of taxes to pay for the subsidy] Successful manufacturing firms in the United States have become so capital intensive that helping industrial firms does not guarantee any meaningful increase in manufacturing employment, especially of less skilled workers.  .....  is claim “that innovation has become America’s new engine of prosperity,” reflects a view, which I share, that America’s comparative advantage lies in producing new ideas, and that innovation will remain a labor-intensive activity.   [E Glaeser reviewing Moretti's The New Geography of Jobs, J Econ Literature, Oct 2013]

Autumn is upon us again, time for more government finance follies as the irresistible forces meet the unmovable objects.

Open season on optimists. federal legislation goes into effect to allow “emerging growth” companies — essentially, small start-ups — to ask for equity investments publicly, such as through social media sites or elsewhere on the Internet, without having to register the shares for public trading. [Jenna Worthan, New York Times, Sep 23]

As badly as one might think markets work, the government, with its intrusive alternative-energy policies, is worse. If the government were effective at promoting alternative energy sources, today you'd have driven your hydrogen car (having recently traded in your cellulosic ethanol-fueled model) from your all-electric home powered by a breeder reactor to your office lighted by Carter-era synfuels. The government is terrible at picking alternatives, and this short list should be a vivid reminder of how costly its missteps can be.  Just to be clear, we aren't against clean-energy startups. We oppose government support of these companies. [Douglas Holtz-Eakin, Wall Street Journal, Sep 23]

Needless subsidy. An affiliate of ABC for Health Inc., a public-interest law firm in Madison, has received a $1.2 million [NIH SBIR] grant from the to develop software to help hospitals and clinics determine whether patients are eligible for government health programs. The three-year grant is the second from the NIH SBIR for My Coverage Plan Inc, a for-profit affiliate of ABC for Health. [Guy Boulton, Milwaukee Journal Sentinel, Sep 20, 13] And where is the "market failure" of software with no technical uncertainty whatever? Such software can be developed by any of two zillion private software firms with only a business risk that the market will buy a competitor's product. In effect, the government has inserted itself with a needless subsidy to a market competitor. No worry, though, the SBIR advocates will cheer that money was passed out, and the local politicians will applaud the NIH wisdom in funding a local vendor. The loser is any number of small biotech firms with high tech new innovations that won't get funded as NIH cries about its science funding being cut by sequester. The case reeks of politics. BTW, this sort of thing by NIH goes back to the mid-1980s when it did an SBIR for a video on stopping smoking.

Less budget means less money. NIH Director Francis Collins expressed concerns for further dips in the already record low NIH success rates as a result of budget cuts caused by sequestration and a greater-than-expected number of grant applications. The success rate could dip as low as 14 or 15 percent, Collins told ScienceInsider. In the past decade, NIH has gone from funding roughly one in three grant applications to less than one in five. He also said that if Congress passes a continuing resolution freezing spending at FY 2013 levels, NIH will lose about $600 million and several hundred more grants. [AAAS, Sep 18]  Research grants produce PhDs who then apply for their own grants [what else have they learned to do?] , etc, etc, in a chain that requires ever more research money. The world gets more and more science which produces more and more medical capability that needs more and more money to apply all the great things to patients. Where and how does the game reach a steady-state?  

Eventually and eventually.  Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement that those entitlements will need to be dealt with to rein in government costs. “However you cut the numbers, we are on a path we simply cannot afford and will eventually need to come to terms with the growing costs of Social Security, Medicare and Medicaid,” she said.  [Robert Schroeder, Market Watch, Sep 17] Not to worry in the short term as the political system will find a way to give everybody what they want, while promising to lose weight next week. And the SBIR advocates will continue to beg for a bigger share of any shrinking pie.

All that tax poor-little-rich-guy talk.  Countries that made large cuts in top tax rates such as the United Kingdom or the United States have not grown significantly faster than countries that did not, such as Germany or Switzerland. ...  By and large, the bottom line is that rich countries have all grown at roughly the same rate over the past 40 years—in spite of huge variations in tax policies.  [Alvaredo et al, J Economic Perspectives, Summer13]

A survey done for the American Society for Biochemistry and Molecular Biology shows that federal budget cuts are having a major impact on research.  [Gary Gerew, Albuquerque Business First, Sep 5, 13]   The competition for federal government money has intensified since some in Congress want less of everything federal (except for "my District"). The ugly fact is that the people don't want to pay for all the good things everybody wants, including great science. So, we demonstrate our maturity coefficient by engaging  in competitive tantrums over the choices for getting and spending  the available money.

Loved your money; we're outta here. In the seven years since [Massachusetts] increased a tax break to Intel almost tenfold, to as much as $300 million, the computer chip giant has cut more than 600 jobs at its facilities in Hudson and now plans to eliminate another 700 when it closes a factory in town next year. Officials said they are reviewing whether to end Intel’s tax break early because of the pending plant closing. However, it does not appear the state can force Intel to repay any of the tax benefits it claimed during the period it was cutting jobs, as the state law that authorized the deal at the time did not provide for so-called claw back provisions, except in cases of fraud.  [Todd Wallack, Boston Globe, Sep 13]

The state of Ohio has given $250,000 to the Hamilton County Business Center startup incubator to help develop fledgling tech companies, the Cincinnati Business Courier reports.  ....  will provide support for mentors for 51 startups at the center, one of 11 Edison Technology Incubators across Ohio, including TechColumbus locally.  [Doug Buchanan, Columbus Business First, Aug 22, 13]

Startech, a San Antonio-based technology commercialization center, has quietly shut its doors permanently. .... founded in 2003 with funding from the City of San Antonio  .... was seen as a major factor in driving the local technology sector which has had an estimated $16.3 billion annual impact on the local economy. But the organization was never able to become fully self supporting and after the city funding ended it began to lose its status in the industry.   [Mike Thomas, San Antonio Business Journal, Sep 5, 13]  The classic subsidy value-added question: Why pay for support if the results would have happened anyway?  SBIR has dodged that question for three decades.

Didn't get our share, cry the handout recipients. SBIR Insider Rick Shindell reports a recent GAO report shows that 9 out of 11 federal agencies with SBIR programs are not in compliance with their SBIR funding allocations. And what's more in a snit, we are hearing from more and more companies that in spite of SBIR reauthorization, small businesses are questioning the value of continuing to participate in the program due to increased programmatic read tape, new burdensome regulations, and a perceived reduction in success rates.

Meanwhile, SBA has trotted out a policy that would shut out SBIR companies for a year who don't commercialize well enough. Congress is unlikely to let that stand because it would wipe out handouts for a huge pile of SBIR junkies. Stay tuned to SBIR Insider for developments.

Paying to play.  Microsoft  has given millions of dollars to a small business technology trade group over the past few years. The Center for Public Integrity reports Microsoft gave the Association for Competitive Technology nearly $2.5 million between July 1, 2011, to June 30, 2012, and also gave the group $1 million in the years 2009-2011.The trade group is "aggressively pressing Congress to ease key immigration law," according to the Center, and Microsoft's contributions are a huge percentage of the group's annual budget. [Portland Business Journal, Jul 17] You pay, Congress listens. Re-election is expensive.

the title of Chief Innovation Officer has picked up steam in localities and across states as leaders seek to brand their region as “the” place for innovation. [SSTI, Sep 4]

When money is no object and questions not allowed. The National Security Agency, working with the British government, has secretly been unraveling encryption technology that billions of Internet users rely upon to keep their electronic messages and confidential data safe from prying eyes, according to published reports Thursday based on internal U.S. government documents. [San Jose Mercury News, Sep 5]

Science writer Marshall Brain has concluded that America should phase in a government stipend for every adult to cope with a future of widespread, permanent underemployment  [triggered by the onslaught of robots].   .....  now artificial intelligence machines can translate languages, understand legal documents, write news stories and read X-rays. .....  Soon robots will be building and repairing other robots, learning from their mistakes and each other as they go.  Where does this leave humans?   [Dan McSwain, utsandiego, Sep 1, 13]  We innovation techies like to convince ourselves that, since the dawn of the Industrial Revolution, we created many more jobs than we killed. But the people losing jobs have the ultimate societal tool - unversal suffrage - that can force taxing the robot sellers to provide for the unemployed.They vote in the present, not the future.

Bless that government innovation. Apple’s success would have been impossible without the active role of the state, the unacknowledged enabler of today’s consumer-electronics revolution.  .... The armed forces pioneered the internet, GPS positioning and voice-activated “virtual assistants”. They also provided much of the early funding for Silicon Valley. Academic scientists in publicly funded universities and labs developed the touchscreen and the HTML language.  ..... the research that produced Google’s search algorithm, the fount of its wealth, was financed by [NSF]grant.  pharmaceutical companies are even bigger beneficiaries of state research than internet and electronics firms. America’s NIH, with an annual budget of more than $30 billion, finances studies that lead to many of the most revolutionary new drugs. .... Ms Mazzucato says that the most successful entrepreneurial state can be found in the most unlikely place: the United States.    [The Economist reviewing Mariana Mazzucato's book, “The Entrepreneurial State”, Aug 29].

DOD's latest SBIR solicitation  issued a pre-release July 26. Closes Sep 25.  Questions answered until Aug 25. Anyone contemplating a proposal for work on any specific topic should determine that (a) the technical approach has a reasonable chance of meeting the topic objective, (b) this approach is innovative, not routine, with potential for commercialization and (c) the proposing firm has the capability to implement the technical approach, i.e., has or can obtain people and equipment suitable to the task. The DOD agencies insist on (a) and (c), but have a slippery standard for (b).  If they want what you have, they will believe your story about innovative and commercializable. Of course, if it is routine, you will have a lot of competitors.

Conservatives who aren't reflexively antigovernment can accept that government-sponsored basic research contributes to innovation-driven growth. .... an English economist, Mariana Mazzucato, suggests a more expansive understanding. In a pamphlet developed into the 2013 book "The Entrepreneurial State," she shows that U.S. government efforts such as SBIR and ATP have provided 20% to 25% of total funding for early-stage technology companies, far more than the amount invested by private venture capital. .... According to Ms. Mazzucato, private capital tends to be averse to making commitments when the odds of success cannot be assessed, opening an innovation gap that only entrepreneurial government can fill. [William Galston, Wall Street Journal, Aug 28]  There is a legitimate government "market-failure" role for ideas with high technical uncertainty, but not for ideas that face merely business risk of whether they will sell.  SBIR's problem is that the mission agencies, that control much of the money, don't like uncertainty. And Congress abets that attitude by wanting success numbers and criticizing tech failures. Show me a govedrnment innovation program with a high success rate and I'll show you a hyper-conservative.

The most recent background check of former National Security Agency contractor Edward Snowden was so inadequate that too few people were interviewed and potential concerns weren't pursued, according to a federal review following his leak of some of the nation's most closely guarded secrets. [ Brent Kendall and Dion Nissenbaum, Wall Street Journal, Aug 28]  Which bothers you most - too little or too much government. Shrink government spending while demanding faster response and you get less service like security investigation, demand more government and you get the paranoia of the right. So, we have periodic elections where we display our schizophrenia and elect mix of attitudes that compete for power by press releases and handouts to favored groups.

the budget proposals now coming out of the House would gut programs for renewable energy and climate change. The Republicans propose cutting ARPA-E’s budget by 81 percent.  [John Judis, the New Republic, Aug 21]  The fossil fuel industry does not want renewable competition, and pays well for a seat at the table.On the otheer hand, we have no defensible quantitative estimate of the effect of research on the economy, just faith and myth.

Dodd-Frank has emabled an unprecedented government legal assault against U.S. financial institutions. [George Melloan, Wall Street Journal, Aug 26] Having created a monster communicable disease, the promoters complain of public health measures to prevent a repeat. Are the measures blunt? Of course, since there is little experience on which to base a perfect defense.

The John S. and James L. Knight Foundation has awarded Ben Franklin Technology Partners of Southeastern Pennsylvania a $345,000 grant to expand the Project Liberty Digital Incubator  ...  Since its inception, Project Liberty has incubated eight digital media companies, which collectively have raised $6 million.  .....   Ben Franklin is a state-funded economic-development agency  [Peter Key, Philadelphia Business Journal, Aug 7, 13]

Politics always has at least advocate for "anything goes".[EPA decided] to make it easier for oil refiners to meet biofuel quotas drew mixed reactions.  It got praise from one refinery owner and a labor leader, but U.S. Sen. Pat Toomey, R-Pa., reiterated his position that the quotas should be repealed entirely.  [Peter Key, Philadelphia Business Journal, Aug 7, 13] Especially staunch advocates for a return to the 19th century business "freedom".

Home cooking. the office of [NY state comptroller] plans to promote its investments in two technology companies, RebelMouse [social networking aggregator] and CoopKanics [focused on mobile], as part of its initiative to invest in New York businesses. ... part of the comptroller’s In-State Private Equity Program, which meant to support native New York businesses while also generating hopefully solid returns. Last year, the comptroller’s office boasted that the program over all had yielded an internal rate of return exceeding 30 percent.  ....  It currently has about $278 million invested in New York City start-ups, and since 2011 has set aside an additional $60 million for early-stage investments. [New York Times, Aug 20, 13]  Why should a government invest public money in enterprises that can compete for private investment?  Aren't these investments being made in companies that are failing at attracting private investment because their business prospects are only mediocre? Should government even be allowed to compete with private capital? How did the state raise the capital for such investments from the taxpayers? If there is a "market failure", what is it?

“Economics is a highly sophisticated field of thought that is superb at explaining to policymakers precisely why the choices they made in the past were wrong,” [Ben Bernanke said] “About the future, not so much.” [Morgan Korn | Daily Ticker, Aug 19]

Classic bureau does SBIR.  DOE issued their 2014 SBIR/STTR Phase I Announcement   showing several hoops to be jumped through before they will even read your proposal. Submit a letter of intent by September 3 (only they know why), obtain a Dun and Bradstreet Data Universal Numbering System (DUNS) number, register with the System for Award Management (SAM), and register with Those applicants not registered with SAM and/or must understand that it may take up to 44 days to complete these requirements. DOE has always been proud that their SBIR train runs on time, but they have lost the Congress's intent that the process be simple and direct for beginners.  DOE like the other mission agencies prefer experience to innovation.  An agency that wanted innovation and entrepreneurs would take a concise 5-8 page proposal, pick out the innovators, and turn them over to the contracting people to work out the details with the agency technical expert(s).  The technical experts are not the faceless dupes that the Republicans pretend to grind the government gears.   Don't forget though that the agency has a pile of money they must award to SBIR qualified companies.

Once and still dependent on government  After cutting its teeth manufacturing [RFID] tags to track military equipment, Savi Technology (Alexandria, VA; $2.5M SBIR, almsot all in a single 1991 Navy SBIR) is moving beyond hardware and embracing data analytics, particularly hoping to attract more commercial work.  The shift reflects the need for technology companies to continually reinvent themselves as their products mature. ...has been owned by three defense contractors: Texas Instruments from 1995 to 1997, Raytheon from 1997 to 1999, and Lockheed from 2006 to 2012 ... Lockheed sold it last year to affiliates of a private-equity firm as the military continued to draw down operations overseas.  ... government still makes up about 85 percent of its revenue. ...  Now Savi also is readying a much larger shift, moving into data analytics related to its tags. .... Savi may face challenges in moving into commercial work, said Raghu Das, chief executive of British market research firm IDTechEx, which has been tracking RFID technology for 14 years. The company had great success winning the military market, he said, but simply hasn’t put the same emphasis on commercial industries.   [Marjorie Censer, Washington Post, Aug 16, 13] Savi was the Navy's SBIR poster child of 1991, with its RFID technology that was already technically mature. But Navy loves predictable results. It was much more business risk than technical risk that Navy was reducing.  Savi is an all too common case of a government tech contractor having trouble graduating into commercial markets, despite government blather about SBIR commercialization. But 20 years of defense sales qualifies as a commercial success as defined by DOD, and 20 years of sales is no small accomplishment.

SBA Boo-bird.  Congress created the Small Business Administration in 1953 to fix a specific problem: Lenders allegedly were turning away large numbers of small businesses that, if given a loan, would generate untapped economic growth.   It is questionable whether this problem ever existed. However, there is plenty of evidence that today the SBA hurts more small businesses than it helps, wastes taxpayer money and distorts economic activity. ....  The SBA wrongly assumes that every high-risk borrower has the potential to succeed.   .... More than 150 years ago, French economist Frederic Bastiat noted that many economic fallacies persist because the beneficiaries of government actions are easily visible, while the victims are harder to identify. [Veronique de Rugy, senior research fellow at George Mason University, Wall Street Journal, Aug 19]  SBA Cheerleader. Small businesses created two of out three net new jobs in the U.S. from 1993 to 2009. About half of the people who work in this country are employed by a small business. [Barbara Kasoff, CEO of chief executive of Women Impacting Public Policy, a public-policy organization, Wall Street Journal, Aug 17, 13] The cheerleaders seldom answer the comparative economic questions, and merely tot up the totals of money distributed to winners. Since politicians love winners, and the costs are diffused, government subsidy programs proliferate.

A test too far.  NC Gov. McCrory vetoed legislation that would have required some recipients of cash welfare benefits to undergo drug screenings, calling it a financial boondoggle that had proven ineffective in other states. "This is not a smart way to combat drug abuse," McCrory, a Republican, said in a statement. "Similar efforts in other states have proved to be expensive for taxpayers and did little to actually help fight drug addiction. It makes no sense to repeat those mistakes in North Carolina.  [Reuters, Aug 15]  It's refreshing to see real world data being used to inform lawmaking even on subjects exploited mostly for their political appeal. Now if states could also learn from each others' experiments in seeding tech industries.

The crowd-sourcing approach popularized by websites such as Kickstarter could give Wisconsin businesses a fresh source of funding, under a bill being drafted by three Republican lawmakers.  [Jason Stein, Milwaukee Journal Sentinel, Aug 13] New opportunities for picking little pockets by entrepreneurs with a narrative.

The rising mountain of student debt, recently closing in on $1.2 trillion, is forcing some entrepreneurs to abandon startup dreams and others to radically reshape their business plans. [Ruth Simon, Wall Street Journal, Aug 14]  Welcome to capitalism. Having maxed out on debt for Project 1, they need some other investor to fund Project 2. Government program needed?  Paid for by whom?  Not everything bad should be illegal, and not everything good should be done by the government.

The ghost cop movie, “RIPD,” starring Jeff Bridges and Ryan Reynolds, received nearly $27 million in state film tax credits last year on its way to becoming one of this summer’s biggest flops at the box office.  ..... The movie, filmed in Boston, Raynham, and Providence, accounted for more than 70 percent of film tax credits issued by the state last year and 17 percent of the nearly $160 million worth of transferable tax credits — which can be bought and sold — issued or awarded, according to a report released by the state Department of Revenue.   [Boston Globe, Aug 13] Governments have well-honed skills for subsidizing losers. And business has a skill for getting politicians to sign up for stuff that won't pass muster by serious investors. They give "market failure" an new definition. But then, why shouldn't we have the best legislation that money can buy?

Rand Paul is dead wrong. Milton Friedman would have supported the Fed’s bond buying.  [James Pethokoukis,, Aug 13]    Pethokoukis unearthed a Friedman quote on Japan's similar situation of low growth at near-zero interest rates: It’s very simple. They can buy long-term government securities, and they can keep buying them and providing high-powered money until the high powered money starts getting the economy in an expansion. What Japan needs is a more expansive domestic monetary policy.  When a politician makes an economic claim, demand proof. Verify, do not trust.

A $1 million prize in DNA analysis from [DOD] has yet to name a winner, but some top contenders are already saying that the contest is unfair. The Defense Threat Reduction Agency's (DTRA's) Algorithm Challenge tasked competitors with finding a radically faster and more accurate way to identify the species and genes in raw DNA to spot potential bioterror threats. .....  roughly 2700 people signed up for the challenge, and 103 competitors submitted work .... The three qualifiers have now uploaded all of their code for final evaluation. ... If no team meets the requirements, some of those who had been disqualified may be considered, [Christian Whitchurch, the project manager] says. [Science, Aug 2]  Learning as they go for both contestants and agency. DOD agency DARPA has already run prize contests for robotic vehicles. Prize contests get away from leaning on academic credentials "for best efforts" work, by going directly to measurable results.

 The debate [on sharing publicly funded] scientific data is likely to accelerate next week when federal agencies are expected to file proposals for how they would “support increased public access to the results of research funded by the federal government. [John Markoff, New York Times, Aug 12]  Where would the long term archives be, and who would pay for their maintenance? And Congress says there's no new money for federal agencies to do it.

The IRS is questioning small-business owners. Thousands of small-business owners have received letters questioning whether they are underreporting their business income, a harbinger of a broader initiative aimed at boosting federal tax receipts. The IRS sees the failure by some businesses to report all cash sales in order to minimize tax bills as a widespread problem. [John McKinnon and Siobhan Hughes, Wall Street Journal, Aug 10]

Inequality and disruption.  Politicians and bureaucrats do not just confuse entrepreneurship with things they like—technology, small business—they also fail to recognise that it entails things that set their teeth on edge. Entrepreneurs thrive on inequality: the fabulous wealth they generate in America makes the country more unequal. They also thrive on disruption, which creates losers as well as winners. Joseph Schumpeter once argued that economic progress takes place in “cracks” and “leaps” rather than “infinitesimal small steps” because it is driven by rule-breaking entrepreneurs. It might be nice to think that we could have growth and job-creation without a good deal of Schumpeterian cracking. But, alas, some thoughts really are worthless, impossible and stupid.  [The Economist, Jul 20] One problem with SBIR is that the federal mission agencies don't really want inequality and disruption; they want what fits their plans and their operational dogma.

Subsidies become monsters.  The rice subsidy was classic Thaksin populism. ...  government would buy unmilled rice directly from farmers at about twice the market rate ... Since Thailand was the world’s biggest exporter, the government would be able to cash in later by selling its stockpiles of grain at a profit.  So much for the weird theory.  .....  Unable to find buyers, the Thai government has been forced to stockpile 18m tonnes of the stuff and counting—equivalent to nearly half the annual global trade in rice. Buying rice from farmers is ruinously expensive ...  [cutting the subsidy] That only angered rice farmers, her chief constituency. ..... Meanwhile, daily revelations of incompetence and corruption surrounding the rice scheme take their toll . [The Economist, Aug 10]

Lavabit (no SBIR) The email service reportedly used by surveillance whistleblower Edward Snowden abruptly shut down after its owner cryptically announced his refusal to become "complicit in crimes against the American people.  [Spencer Ackerman, The Guardian, Aug 8]  ....  "without congressional action or a strong judicial precedent, I would _strongly_ recommend against anyone trusting their private data to a company with physical ties to the United States.  [Ladar Levison, Owner and Operator, Lavabit LLC, Aug 8, 13] Silent Circle, co-founded by email security guru Phil Zimmermann, has [also] pulled out of the secure email business.  [David Meyer,, Aug 8]

Cracks Appearing in Congressional Support for Sequestration? ...  House Appropriations Committee Chair Harold Rogers (R-KY), who said the bill's failure was a sign that low transportation spending levels under sequestration were politically untenable, adding, "Sequestration -- and its unrealistic and ill-conceived discretionary cuts -- must be brought to an end."  [AAAS, Aug 7] Cuts are palatable and necessary sacrifice only when taken from someone else's bowl. Tech magic needed to create cuts that don't; maybe an SBIR grant.

The five certified business incubators established in New Mexico are proving their value by producing a return on investment that exceeds the national average. According to a report by the Legislative Finance Committee, a recent analysis shows that the state invested $549,000 in business incubators between 2007 and 2010 and received $32 million in tax revenues from the business activity generated. Local governments received another $20.5 million. ...  The 57-1 return from the state’s investment in incubators exceeds the national average of 30-1.   [Gary Gerew, Albuquerque Business First, Jul 22]  Another economic claim without a control group. What would those entrepreneurs have done if there were no incubator? Was the state expense necessary? What percent is the incubator of all that type business creation? How many jobs and tax revenues were lost in the technology that was being replaced by the new enterprises?  The Legislative Finance Committee report answers none of these questions. On balance, the report serves a political audience with data on only one side of the equation. One look by Syracuse University at the economics of incubators, with control groups, concluded that  When the performance of incubated firms was compared with a control group of unincubated firms, the National Census of Business Incubators and their Tenants found marginal benefits due to incubation: Boon or Boondoggle? Business Incubation as Entrepreneurship Policy. .

Long Island seeks a new future.  Long Island's laboratories have recently amped up efforts to encourage scientists to launch their own startups rather than license their discoveries to big corporations. In 2010, for instance, scientists based at Cold Spring Harbor Laboratory started a company, Mirimus (no SBIR), that genetically engineers mice for scientific research.  ....  Canon U.S.A. would consider locating a research and development facility on Long Island, because the division's headquarters are already there and the company could draw on a growing base of science and engineering talent. ... Stony Brook University, located on Long Island's North Shore and considered the flagship of the State University of New York system, houses sprawling incubators for information-technology and life-sciences companies. ... Liabilities include a lack of the venture capital  [Will James, Wall Street Journal, Aug 5, 13]

Tax cuts and Obamacare repeal ...  are the answer ... to every economic problem.  part-time employment jumped almost twice as large as the rise in full-time jobs. Republicans immediately seized upon these figures, attributing them to the imminent arrival of Obamacare, leading employers to shift workers from full-time to part-time in order to avoid having to give them health-care benefits. (The cut-off for the employer mandate is thirty hours a week.)    To put it mildly, there’s not a lot of evidence to support this theory. Evidently, the main reason part-time employment is rising is because a lot of the new jobs are being created in places where part-time work has always been common, such as restaurants and bars.  [John Cassidy, The New Yorker, Aug 2]

Connecticut lawmakers approved Gov. Dan Malloy’s proposal to create a $200 million fund to spur bioscience R&D as part of a broader economic development agenda ...  Connecticut Innovations (CI), a quasi-public venture development organization, over 10 years will provide capital to early stage companies with the goal of driving efforts toward commercialization of new businesses and products. CI also plans to focus funds toward translational research and riskier investments for helping university faculty and students to commercialize bioscience research and ideas, reports the Hartford Business Journal.  [SSTI, Jul 17]

Florida enacted a measure that creates a seed fund to encourage private-sector investment in startup companies. The enacted budget included $5.5 million [SSTI, Jul 17]

Not good enough for the major leagues? major capital efforts in New York and Georgia intended to build local capital ecosystems and help bridge the funding gap for promising companies unable to tap into the national venture capital market. In New York, a $50 million fund will support new companies, particularly startups associated with the state’s new incubator network and university-affiliated tax-free zones, as reported in the April 3 issue. Georgia Gov. Nathan Deal has authorized a $100 million fund, though as of yet, it remains unseeded with actual dollars [SSTI, Jul 17]  What is generally missing in these public seed venture programs is an honest evaluation of their value-for-money. Beyond the political value of making announcements.

Research costs mucho dinero.The Spanish National Research Council, Spain's flagship research agency, has run massive deficits for several years. If the government—which has made drastic cuts in research funding the past few years—doesn't pick up the tab, it may go into bankruptcy before the year is over. [AAAS, Jul 31]

The state-created Biofuels Center of North Carolina issued its own obituary, saying it has begun winding down its operations and plans to shut down permanently by Oct. 31. [John Murawski, Raleigh News & Observer, Jul 29]

Can't solve the economy dilemma?  Do something for your political base that has no economic impact whatever, even though it undercuts claims about limiting government and preserving liberty.  A Republican favorite: North Carolina Gov. Pat McCrory signed into law tougher regulations for abortion clinics [AP, Jul 29]  Whoever said politicians have to be consistent?

Deals don't bind rulemakers.  Google and 3M are among the top patent-holding companies that agreed two years ago to pay higher fees if Congress let the U.S. Patent and Trademark Office use the funds to address a work backlog and improve application scrutiny.  Congress instead held back as much as $148 million in fees due to automatic federal spending cuts under a process known as sequestration -- and the companies are crying foul.  [Susan Decker, Blloberg, Jul 29]  Beware dealing with anyone that controls the rules.

Good news, everybody: The U.S. decision to delay the employer mandate just saved Florida companies $146 million-$218.6 million next year. [Abraham Aboraya, Orlando Business Journal, Jul 3] Which, of course, delays the insurance mandates, and shifts the burden of paying for that $200M care onto public facilitesi paid by the taxpayers. But hey, it's a business journal. 

SBIR Insider Rick Shindell is back online. He's pro-SBIR with a big swallow of the Kool-Aid.

Which President ruled out additional spending cuts or a reduction in the number of government ministries from 39, saying the benefits of such measures to spur economic growth would be minimal  ... that all possible measures to contain budget expenditures have been taken and that trimming the number of ministries might hamper the government's efforts to reduce social and economic inequality. [Reuters, Jul 28]  Champions of austerity as an economic remedy don't make a convincing case in the struggle of governments to improve the nation's economy. Answer:  Brazil.

Florida enacted a law that it thinks will help attract more seed funding for technology startups in Florida. ....  adds a $4.5 million cash infusion to the Florida Institute for the Commercialization of Public Research [which] provides matching loans to Florida startups that commercialize technology developed at state universities, colleges and research organizations. In order to use the fund, startups must secure a one-to-one match by attracting private-sector third-party investors. About 20 tech startups have used the program since is was created in 2010  [Carole Hawkins, Jacksonville Business Journal, Jul 9]  The states all have great hopes for seeding tech startups, but have a hard time proving that their programs make any econoimic difference. No matter, they sound good to the politicians who love kissing small biz babies.

The Ohio Third Frontier Program has established three new funds that will help provide some capital for tech companies that may otherwise have trouble finding funding.  ... • A Commercial Acceleration Loan Fund of $500,000 to $2.5 million to invest in technology companies to help with developing products and services where they may otherwise have difficulty securing funding due to the risk associated with technology development. • The Technology Commercialization Center, a program to create a new $25 million center, which will be self-sustaining after four years, to commercialize research from universities, medical center or nonprofit organization and move it to the marketplace. • A Technology Asset Grant for shared infrastructure projects for new technologies. It will offer up to $5 million per project for up to three years which can go toward facilities or equipment that will benefit at least two Ohio-based companies if it is deemed essential to commercializing technology. [Tristan Nivera, Dayton Business Journal, Jul 1]

Government innovation: Is Obama's goal an oxymoron? President Barack Obama kicked off a new effort to use technology to make government "smarter, more innovative and more accountable."  .... Don't expect Apple-like innovation at the U.S. government, however.  .... The fact the president points to such plain-vanilla services as innovations shows just how clunky government is.  [Kent Hoover, Silicon Valley Business Journal, Jul 8, 13]    Government makes an inviting target for snarky commentary since it cannot sue for libel. But government is notsupposed to be instantly innovative to keep up with market competitors. It provides a steady machine for stability and order. And the politicians who make its rules don't want sudden changes that threaten their bonds with the electorate.   If politicians wanted efficiency, they would for example,  re-write SBIR to focus on economic payoff and not just spoon money into small biz mouths with no standards for return. 

The Senate went to the verge of nuclear war and all businesses got was more regulation  [Kent Hoover, Atlanta Business Chronicle, Jul 16]  Complain, complain, conplain, about political consequences of elections. Business always wants a freer hand, but the nation as a whole voted for a Senate that favors public limits on business operations. Business has had three centuries to demonstrate that the profit motive will take every opportunity to dump its costs on the public.

Public funding for scientific investigations should largely be limited to basic research or proof-of-principle experiments—which can be justified on the grounds that they are public goods. Federal research also should follow recognized experimental methodologies and focus on nontrivial questions or problems. [Henry Miller, Wall Street Journal, Jul 18] Dr. Miller is a research fellow at Stanford University's Hoover Institution. Free marketers carry on  "Golden Fleece" attitude that appears regularly in conservative anti-government talk.

 Today was another bad day for the Internal Revenue Service: Victims of its targeting of conservative political groups got to tell their stories at a House hearing, [Kent Hoover, Austin Business Journal, Jun 4] What a great deal: Congress writes tax laws and appoints IRS as scapegoat for the laws' execution. Then people re-elect the politicians who beat up the appointed servants. Ah, well, the servants' compensation during and after their careers is not stingy, and the entertainment-  sublime.

Sequester bites SBIR advice and advocacy. Due to budget constraints at Pacific Northwest National Laboratory, we will cease publication of the free SBIR Alerting Service at the end of this fiscal year. The final issue will be September 20, 2013. [SBIR Alert]

[A] new Innovate Rhode Island Small Business Incentive Program. Qualifying businesses can receive grant and loan funding for the costs associated with applying for Phase 0, Phase I and Phase II SBIR/STTR proposals. Companies can receive up to $3,000 for Phase 0; up to $100,000 for Phase I; and up to $300,000 for Phase II. Budget language notes that Phase I funding is for matching grants and funding for Phase II is in the form of a matching loan. [SSTI, Jul 10]

InnovatePA will auction off $100 million in tax credits to generate state revenue that will be invested in the funding of tech and biotech startups.  .... Of these auction proceeds, $37.5 million, or roughly 50 percent, would go towards funding Ben Franklin Technology Partners, which provides funding and support for tech and biotech companies across the state. Another $33.75 million, or roughly 45 percent, would support the Ben Franklin Technology Development Authority's Venture Investment Program, which provides loans to in-state venture capital and angel firms. [SSTI, Jul 10] 

Soothsayers stumbling. For decades, hubris has been the common currency of the economic policy world. It is killing the economics profession. In the 1960s and 1970s, for example, liberal economists believed they could eliminate all poverty. In the 1980s, conservatives thought tax policy could permanently raise the savings rate. It turns out other factors also influence a person’s decision to save.   ....For decades, despite a variety of fiscal and monetary stimuli under both parties, middle-class wages and salaries in real terms have stagnated.  [David Smick, The Weekly Standard, Jul 8] 

Mustn't tell stories. Diederik Stapel, the former Tilburg University professor who fabricated dozens of research studies, has reached a settlement with Dutch prosecutors to do 120 hours of community service.  [AAAS, Jul 5]

The Republican-controlled House unveiled cuts to the budget of the IRS.  [Reuters, Jul 9] It's an old story: The rich want fewer tax collectors and the burglars want fewer police.  But the burglars cannot easily pay off lawmakers.

The first day of furloughs for about 650,000 Defense Department civilians begins this week.  [Foreign Affairs, Jun 8]Maybe, sorta.

In the past month, officials at the Defense Dept. and the National Institutes of Health have announced that their commercialization regulations will be finalized by the end of this year, putting the impetus on small companies to move away from early-stage research and into more product-focused ventures. The law establishes commercialization benchmarks and allows for companies that have won multiple early-stage awards to be dropped from the program if they are not following through on developing products for use.  [Karen Klein, Bloomberg, Jun 14]   Yeah, right. Believe it when you see it, as long as the federal agencies have autonomous control over who gets the SBIR money. Some fudge can always be found to let the game continue. At a minimum, the owners of the "commercially delinquent" company can fold up and start a new company, same people, same place, for the price of a new biz registration. Contracts are with for-profit companies, not with people. Congress has had 25 years to set demanding rules for downstream payoff and has done almost nothing except let some adult VC money into some companies, with great political theater.

It’s kind of funny, actually: right-wingers love to praise the power of free markets and declare that the private sector can deal with any problem, but then turn around and insist that the private sector will just throw up its hands in despair and collapse in the face of new environmental rules. The actual lesson of history — for example, from efforts to protect the ozone layer and reduce acid rain — is that business can generally reduce emissions much more cheaply than you think, as long as regulation is flexible to allow innovative solutions. [Paul Krugman, New York Times, Jun 28]  As always, where you stand depends on where you sit. Every innovation has opponents. At one time, not that long ago, innovation was a slur.

Chinese publicly traded companies received $13.83 billion in government subsidies last year, up 23% from a year earlier. ..... China's central and provincial governments have long fed its major state-owned and private companies a steady diet of subsidies to boost growth, support jobs and create national champions.  .... "There doesn't seem to be any end in sight," says Usha Haley, co-author of the book "Subsidies to Chinese Industry" and director of the Robbins Center for Global Business and Strategy at West Virginia University.   [Dinny McMahon, Wall Street Journal, Jun 24] Nor is there any end in sight for US subsidies as politcians struggle for local news headlines.

Where did Facebook chief security officer Max Kelly go after he left the social network in 2010? To the NSA, according to the New York Times, which says it’s the first to report that tidbit. Also previously unreported, says the NYT, is that Internet-call provider Skype developed a program to make it easier to cooperate with law enforcement and the government.  [Levi Sumagaysay, Silicon Beat at San Jose Mercury News, Jun 20] Why would a successful private executive go where salaries are highly restrained and lie-detector tests regular?

Investors in 63 early-stage companies received $12.1 million of tax credits from the [Wisconsin] state in 2012 under a program designed to spur funding for young, high-tech companies, according to a report by the Wisconsin Economic Development Corp. Those tax credits, in turn, helped the companies raise $164.7 million during the year, the report says...... The high-tech companies that are certified for the tax credits are typically the ones that also bring federal research grants into the state, Johnson said. The 160 companies certified under the program pulled in $37.1 million of grants in 2012, she said.   [Kathleen Gallagher, Milwaukee Journal Sentinel, Jun 19] No one knows how much the angels would have invested without the tax credits. But politicians like post hoc, ergo propter hoc announcements. Certainly, the tax credit would affect only investments in marginal companies, just like the kind that most of SBIR funds.

The [Wisconsin] Legislature overwhelmingly voted to provide $25 million in taxpayer money to start-up companies .... "I do not want to lose these entrepreneurs," she said. "I do not want to lose these smart kids with all their great ideas." She and others said they hoped to put more state money toward venture capital in the next year or two.  [Patrick Marley, Milwaukee Journal Sentinel, Jun 18]

The long slow arm.  A federal court has ordered United Technologies Corp. to pay $473 million plus interest for overpricing F-15 and F-16 jet engines it sold to the U.S. Air Force from 1985 to 1991.  ...The Pratt case was initially filed with the federal court in Dayton, Ohio, in 1999 after a government investigation.  [Brian Dowling, Hartford Courant, Jun 18]  Note: government procurement isn't like private contracting in that you are not allowed to keep an ill-gotten gain by over-pricing your product.

Start-up Wisconsin.  A start-up [NitricGen] with a patent pending on a portable device to treat chronic diabetic foot ulcers won first place in the Wisconsin Governor's Business Plan Contest.  .... founded in Madison in 2011 by Duncan Bathe, Frederick Montgomery and two others. Bathe and Montgomery previously created a Middleton medical device company called Sadasis LLC (no SBIR) that they sold to Ino Therapeutics (no SBIR), which was in turn bought by Ikaria (no SBIR), a critical-care company based in New Jersey. The pair has 19 patents and seven medical devices in use, Montgomery said.  [Kathleen Gallagher, Milwaukee Journal Sentinel, Jun 5, 13]

a coalition of local [St Louis, MO] leaders from both the public and private sectors will unveil plans to raise $100 million over five years to invest in and support local startups. The effort is the latest in a series of steps intended to revive an entrepreneurial culture that even local boosters acknowledge has faded over the generations. ..... But it isn't clear how cities can best foster entrepreneurship—or even whether it's possible to do so. Even success stories haven't necessarily been the result of government policies, Mr. Glaeser said.   [Ben Casselman, Wall Street Journal, Jun 12]  Ideas and theories abound on what induces an innovation culture.  America is full of test cases for interstate competition without a lot of obvious understanding of how business innovation and economics really work. Politicians under pressure to do something, do ... something that they think people will believe. St Louis is just one spot in a nation adjusting to global competition with little political recognition that the world has changed.

The Syracuse Post-Standard and the New York Post have stories on Gov. Rick Perry’s upcoming visit to New York state and Connecticut, where he plans to tout Texas’ low taxes, lack of regulations and red tape, and limits on litigation, to businesses, including those in the pharmaceuticals, gun manufacturing and financial industries. [Albany Times-Union, Jun 11] Texas talk not likely to pluck many heartstrings in New York.

Just doing his (Republican earmarking) job for the ....  nation.  U.S. Rep Mike Turner, R-Dayton, has included several provisions in the latest version of the National Defense Authorization Act that stand to benefit southwest Ohio. The full House Armed Services Committee approved the act   [Joe Cogliano, Dayton Business Journal, Jun 6]  Austerity is for the politically weak.

private employees with permission to plug directly into National Security Agency systems have unprecedented access to highly sensitive information   [Siobhan Gorman and Dion Nissenbaum,Wall Street Journal, Jun 11] The Republicans' love of pretending to cut government has shuttled government work and money into private business as an alleged efficiency measure, and a way to reduce federal employment of Democratic voters. The result is a loss of control and devotion to governing.

Don't tax you, don't tax me. Internet sales tax opponents rally House staffers to keep Republicans in line [Kent Hoover, Puget Sound Business Journal, May 31] Tax talk is good for raising political contributions despite the evidence that tax rates and growth don't seem to be correlated: The fastest job growth in the post-war era came in the late 1970s when the top corporate tax rate was 48%, instead of the 35% that prevails today. The second highest job growth was in the early 1950s, when the statutory rate was 52%. [Rex Nutting, Market Watch, Jun 6] Every politican needs to find some public enemy to be against, and taxes are an easy choice. And if there is no public enemy, one will be conveniently invented.

Connecticut in 2012 was the only state to see its economy shrink. .... The most dour view of all is that we're in an inevitable decline brought about by too much entitlement — for the poor, with federal supports; for the middle-class, with rising health and retirement needs; and for the top 10 percent of earners, who are amassing a dangerously large share of wealth without adding jobs. In this view, the whole American empire will slowly fade, starting with rich places like Connecticut, where growth is naturally slowest.   [Dan Haar, Hartford Courant, Jun 7]  Anyone for a cold dose of economic reality on public finance?  Or just another dip in the subsidy pool?

Researchers in Wisconsin over the next two years will strive to bring down the cost to produce energy-saving LED lights, under a pair of federal projects awarded funding Tuesday. Eaton Corp. has been awarded $2.4 million to develop a new manufacturing process to streamline the design of LED light fixtures.  The Department of Energy awarded the funds, which will be matched dollar-for-dollar by Eaton and the other four recipients of $10.1 million in funding. The two-year research projects aim to bring down the cost of manufacturing light-emitting diodes, or LEDs.  Cree, that bought Ruud Lighting and BetaLED of Sturtevant in 2011, was awarded $2.3 million. [Thomas Content, Milwaukee Journal Sentinel, Jun 4, 13]


Ben Franklin Technology Partners claims that it returned $3.60 for each $1 invested by PA. Pennsylvania's tech-based economic development program, released a joint study by the independent Pennsylvania Economy League and KLIOS Consulting, which determined the economic impact of the organization between 2007-2011. ... In total, the activities of the organizations have resulted in 7,485 new jobs in client firms and an additional 12,715 indirect jobs as a result of these clients' activities, for a total of 20,200 jobs. [SSTI, Jun 6]  Standard claims for public investment programs which usually ignore the other effects of subsidizing private entities.  The business the new entity gained came from existing or potential new competitors with some unknown net addition to the state's economy.  But the US economy is so complex that no single source can be identified as a major contributor, Ben Franlkin included, despite all the blather by political entrepreneurs of right and left.  Small biz political entrepreneurs typically count only new jobs started by the subsidy, jobs that often last only as long as the subsidy. Read the report Executive Summary. Venture capital by contrast uses a different metric: total Return on Investment to the investors, with no attempt to measure total effect on any economy. Their metrics are auditable and a basis for taxation. 

Good news for politicians. Shrinking near-term federal deficits, slowing health-care cost increases and partisan gridlock have all but wiped out the likelihood for a deal this year to reduce long-term deficits, perhaps delaying a compromise until after the 2014 midterm elections. [P Nicholas et al, Wall Street Journal, Jun 3] Let's wait until after the next election to tell our base the ugly economics.

No such control subject.  For the first time ever, the U.S. government is giving money to a drug company to help pay for its research. And it's not even an American company. British drug giant GlaxoSmithKline will get about $200 million over the next five years from American taxpayers to assist in its search for new antibiotics. .... Under then-FDA Commissioner David Kessler, a group of FDA statisticians decided that it was important to have better "statistical power" for trials, especially when comparing new antibiotic candidates with older ones. One such idea—and there were plenty of other bad ones—was to require a control group of patients in clinical trials that had never taken any antibiotics. Good luck finding such a person.  [Josh Bloom, Wall Street Journal, May 31]

Lighter baggage. A bipartisan pair of [Wisconsin] lawmakers sought to jump-start a stalled $25 million venture capital bill by removing the state's troubled jobs agency from it. [The pair] said the leading venture capital bill didn't provide enough dollars to draw national investment firms into Wisconsin and said they would introduce their own legislation on Thursday that would provide $208 million over six years to boost venture capital funding, other investments in early stage companies and accelerator centers  ..... Venture capital legislation died in the last legislative session   [Jason Stein, Milwaukee Journal Sentinel, May 29] 

More money, same old controls.  $50 million in new funds to provide grants to technology companies for research and commercialization activities under the Emerging Technology Fund (ETF). A bill to address accountability and transparency of the fund was passed in the House, but later removed from the Senate calendar despite controversy surrounding the decision-making authority of the grants.  [SSTI, May 29]  Evaluation not mentioned because passing out money is easy and fun while economic evaluation is hard and ugly.

Win some, lose some; uncertainty is why government plays the game at all. The Department of Energy's guaranteed loan program has made headlines as automotive company Tesla paid back over $450 million in federal loans nine years ahead of schedule. Tesla's move highlights the potential of federal loan programs to support the growth of renewable energy industries by investing in companies that are developing new technologies such as lithium batteries and electric cars. [SSTI, May 29] Even with two bankruptcy killing $500M in loans,  the program currently is producing 0.8 jobs for every $1 million of tax dollars spent. $1.2M per job makes one wonder how politicians balance their checkbooks. It's not too surprising since if the company and the idea were competitive, the private sector would do it gladly and suggest that government go away.

The Pentagon began to deliver furlough notices this week to more than 650,000 DOD civilians. ..  They face 11 days of lost wages between July 8 and Sept. 30.  [Foreign Policy Situation Report, May 30]  If you were a furloughed worker at home, would you work gratis on SBIR because it is so valuable to the nation?

Two austerity stories: a US Congresscritter elected fron SC in a Tea Party atmosphere notes how many things in his district have his predecessor's name on them as he cannot deliver such bacon while demanding government austerity [from the Washington Post], and the Skagit River bridge in Washington (state) reminds of of the Reaganite government austerity attitude of "it if ain't broke, don't fix it," as the NTSB tells us that 15% of the nation's bridges are in equal danger of collapse because of a design compromise when constructed. And yes, government R&D investment will also be hit by austerity.

Politicians defend their power. Lt. Gov. David Dewhurst has killed a bill that would have stripped him, Gov. Rick Perry and House Speaker Joe Straus of the power to award certain Emerging Technology Fund grants, the sponsors of the legislation confirmed ...  Dewhurst did not allow the Texas Senate to vote on House Bill 3162 after he removed it from the Senate calendar, said state Rep. John Davis, R-Houston, who authored the bill that he said would “take the politics out of the process.”  [Laylan Copelin, Austin American Statesman, May 23]  Unlike federal subsidy competitions, states can write their own rules about who decides and on what basis. Texas seems to have a particular problem with handing out uncompeted awards. But both state and federal subsidizers have little incentive to economically evaluate their subsidy programs. If the recipients are happy, why rock the boat.

 [Florida Gov] signed into law a bill that eliminates state sales tax on the purchase of new manufacturing equipment, the Jacksonville Business Journal reports.  ...  gives manufacturers a three-year break on paying the 6 percent tax . [Orlando Business Journal, May 20]  Got an economic goal? Cut a tax and declare success. Politicians never have to prove economic success, just claim credit for anything good that happens thereafter. Don't blame them, we elect them and reward their fantasies. And a society that does not educate itself will have no rational basis for deciding what is good policy.

Where you stand depands on where you sit. A Tennessee congressman who supports billion of dollars in cuts to the food stamp program is one of the largest recipients of federal farm subsides, according to new annual data released by a Washington environmental group. [Ron Nixon, New York Times, May 22]

535 would-be presidents.A key Senate committee overwhelmingly approved legislation that calls on the U.S. to provide small arms to moderate Syrian opposition groups, underscoring growing sentiment among lawmakers for a change in the U.S. approach to the conflict.   [Wall Street Journal, May 22] They would also be Secretaries of State and dabble in foreign policy for which few have the qualifications and the tone.

Capitalism rules. The Obama administration cleared the way for broader natural-gas exports by approving a $10 billion facility in Texas, a milestone in the U.S. transition into a major supplier of energy for world markets. [Wall Street Journal, May 18] Natural resources are for selling - NOW. For all our preening about innovation, America got a large measure of its wealth by selling what nature provides: non-renewables like iron, oil, copper, silver, timber, and renewables like grain. As far as capitalism is concerned, the cost of a product is its extraction cost (with as many externalities as possible dumped on the public).

Understandably, government typically tries to the fund projects most likely to succeed, especially if a metric of success is whether the subsidy yielded a payoff. But in that case, government risks basing funding decisions on the same criteria the private sector would use. If that happens, the program as a whole may appear to be successful, but if government funding simply replaced private funding then the program was not effective at all. In part for that reason, direct government funding of commercializable industrial research has a mixed track record, at best. The first step in making those programs more successful would be designing them in such a way that they could be rigorously evaluated. Such evaluations would mean, at a minimum, tracking projects and firms that did not receive subsidies as well as those that did, and in the best case, introducing evaluation tools such as randomization. However, government has shown no interest in rigorous evaluation of corporate subsidies in the past, and no evidence suggests it will in the near future, either.[Scott Wallsten, Technology Policy Institute, Sep 2011] In other words, subsidies other than for basic research (how does nature work?) R&D  are just about politics.

Classic pandering.  The Supreme Court rules that states cannot do A, but a lot of people in the state want to do A.  So the politicians pass a law for A which the governor vetoes as unconstitutional. The politicians override the veto with a super-majority. Weeks later the regional federal court strikes down the law as unconstitutional. The politicians give hue and cry as they collect more votes and contributions in the coming election cycle for the kind of politician who will serve the state's people.  Latest example: Arkansas.

If government did not exist, we would have to invent it. And then we’d have to reinvent it, because it would be lousy and everyone would hate it. Since the founders chucked the Articles of Confederation, Americans have been reinventing government, reimagining structures and rules, tinkering to make their union just a little less imperfect. These projects get caught up in the political fights of their times, of course   [Carlos Lazada, WaPo, May 20] As long as we have people, politics, and elections, government will always be imperfect, but probably the best attainable government.

Both sides cite polling — there’s enough polling these days for everyone to find something that suits them — that prove their point.  [Chris Cillizza, Washington Post, May 20] We also have tons of data, especially economic data, enough to "prove" almost any assertion if carefully couched. The difference is that data are facts, and polls are mere opinion.

Reality for science.   The president of the Kansas Bioscience Authority said the agency is looking at a new way of conducting business in the state, The Lawrence Journal-World reports. President Duane Cantrell said the KBA is shifting away from feeling "entitled" to state funding and instead has learned that it needs to earn the state's support. Cantrell said the agency will now focus on reaping a return on its investments instead of looking more grants to be awarded, the report says.  [Kansas City Business Journal, May 1] What a novel idea - sci/tech funding should show a return on investment. 

Political science.Kansas Gov. Brownback proposed to divert more than $1.2 million from the state’s bioscience investments to instead fund the Midwest Stem Cell Therapy Center at the [UK] Medical Center. Brownback signed a bill earlier this month establishing the center at the urging of anti-abortion conservatives. It would focus on producing clinical-grade stem cells from adult tissue and cord blood, rather than embryos.  [Brianne Pfannenstiel, Kansas City Business Journal, Apr 30]  When the political goals override the science, top class scientists would seriously question any public commitment to the non-political pursuit of scientific truth. Kansas at least wants their public employees to feel safe on the job by passing a law allowing Kansas employees of public schools and colleges to carry concealed weapons, the Lawrence Journal-World reports. [Kansas City Business Journal, Apr 18]  Kansas politicians cater to public idea that nobody gets abortion and everybody gets guns. 

On the Top Ten Competitive States of 2012 list, Texas led with 414 points, followed by Indiana (411), Georgia (409.5), Tennessee (403.5) and North Carolina (385). Atlanta-based [magazine] Site Selection determines the list based on 10 factors, including new and expanded facilities, new jobs, state tax climate and career-readiness certificates per 1,000 residents, among others. ...  highlighted Texas’ tax climate in particular, focusing on Gov. Rick Perry’s $1.6 billion tax-relief proposal.   [Olivia Pulsinelli, Houston Business Journal, May 7]  Low taxes are loved by politicians, but business needs a lot more out of a place.

[Texas Gov Perry] has requested a federal emergency declaration for McLennan County following the explosion at a fertilizer plant in West, the Texas Tribune reports.[Apr 19] "Cut taxes, and send us federal money" challenges basic government math. But math, like evolution science, is different in Texas.

Homeland Security latest Phase I SBIR award list emphaiszes security of accomplishing the task by funding what sound like rather straightforward engineering and awards to companies with much, much SBIR experience, occasionally in many tens of millions of SBIR dollars "invested". In typical mission agency style, they buy what they need and with little risk of failure.  If you have bleeding edge non-life-science technology with a great future, take it to DARPA.

Energy Dept,usual stuff for the usual suspects in the latest list of Phase II SBIR winners for a nominal $1M (few ask for less than the max and the Department has only two judgment stamps - YES or NO).  Almost all winners have already had many SBIRs and the brief description sounds like a short stretch from what the company already sells as either government R&D or small scale commercial.The companies are not making headlines even in the local booster press.

POTUS signed a new executive order requiring that future data generated by the federal government be made available in open, readable formats to the public. Details to be messy and controversial by the for-profit journals that have traditionally archived research results. [SSTI, May 8]

Louisiana's Senate backed off on a proposed law that would open a door to creationism in science class rather than just in religion class which is not allowed in public schools. But the creationists will certainly not stop probing for openings. Those who  "truly believe" see a moral duty to force-feed those beliefs in the public space.

Didn't get all the SBIR you asked for? Try to sue the government for breach of promise.  SolarCity  lawsuit that alleges [that] some of the taxpayer-funded grants it received weren't as big as originally promised.  ....  a federal grant program that has paid out about $4.1 billion to solar projects since the 2009 economic-stimulus law created it. ....  The government is looking into whether SolarCity and other firms misrepresented the fair-market value of solar systems in order to boost the value of the grants they received. In its suit, SolarCity says two of the company's subsidiaries received smaller-than-expected grants. The company doesn't say exactly how much funding it applied for originally, but it says the final grants issued by the Treasury Department were $8 million less than was proper under the law.   [Cassandra Sweet and Ryan Tracy, Wall Street Journal, May 7]  Sounds like an old story: grantee or contractor asks for and receives funding for a project with boilerplate terms that allow the govetrnment to stop funding, although usually with a damage clause for a unilateral government decision not based on failure by the grantee. Taking government funding with a prospect of future continuation has always been an uncertain proposition.

FBI agents who raided the home of a former suspect [since released and another suspect arrested] in the ricin-laced letter case brought along a mini throwable robot [with cameras] made by ReconRobotics (Edina, MN;  no SBIR) ... Benjamin Wittes, a senior fellow at the Brookings Institution, identified the robot — seen resting on an agent’s knee in a photo [Katherine Grayson, Minneapolis / St Paul Business Journal, Apr 24, 13]

 the Missouri Innovation, Development and Entrepreneurship Advancement (IDEA) program, makes equity investments into Missouri startups. ...   established with federal funding that was part of Small Business Jobs Act of 2010. ... had $21 million of funding and is now down to $3.4 million  .... [vested interests] in the state pushing for $15 million in annual funding. [Amir Kurtovic, St Louis Business Journal, Apr 19, 13]  Of 33 companies on the benficiary list, only one company had SBIR -  Vasculox (St Louis, MO; $400K SBIR).  SBA hyped the federal law as  the most significant piece of small business legislation in over a decade. ...  providing critical resources to help small businesses continue to drive economic recovery and create jobs  with provision for $21B in SBA lending.  In practice, the amounts and the loan structure are insufficient for technical validation of new technology with high economic potential it it works as envisaged. Instead, the money seems earmarked to kiss huge numbers of SBs and pretend to do something of notable value. Naturally, the Iron Triangle - law makers, administrators, and beneficiaries - will all see something of quite notable value, while Tea Party libertarians complain about government intrusion and growing debt creation. 

Watering the dead plants.  Corporate welfare for speculative business ventures is a dismal way to go about reviving the economic fortunes of [Arkansas]'s rural areas, however. But Arkansas legislature passed a law that will take $125 million from state taxpayers to subsidize the flagging steel industry. .. an industry with a world over-capacity ... It also is no time for state politicians to pose as venture capitalists when they could more productively be making the business environment hospitable for every industry. Arkansas ranks near the bottom in the nation—at 40th—for its lack of regulatory freedoms [Carrie Sheffield, Wall Street Journal, May 2]  Politicians love the publicity stage of subsidy programs for favored constituents, including SBIR, and will invent whatever excuse necessary to continue them. 

 Austerity as default. Keynes’s anti-austerity ideas had their day of course—and a very successful day it was, lasting from the mid-’30s to the mid-’70s. But austerity ideas never went away because, as outlined above, they are rooted in an entire philosophy about the state and public debt that is not subject to disproof, especially among the conservative forces and big economic interests who embrace it. As a result, when Keynesian economics appeared to falter in the 1970s, austerity-based economics came roaring back and dominated economic thinking for decades.   [Ruy Teixera, The New Republic, May 1]  The present debate among taxes, growth, debt, default, unemployment makes for great theater with dozens of think factories cranking out demanded theories that favor the establishments paying for the thinking.And there are enough data to feed all theories simultaneously.

A provocative new book* by Usha and George Haley, of West Virginia University and the University of New Haven respectively, points to another reason for [the coutnry's] industrial dominance: subsidies.  ... Worse yet, the bosses of [the busineses] are not in business principally to make a profit: they are often encouraged by the government to pursue other goals, such as resource acquisition, foreign policies and technology transfer, regardless of cost.  .... The unhappiest consequence of [the country's]subsidy policy may be that it has created beasts too powerful to rein in.  [The Economist, Apr 27]  What businesses in what country, do you think?  Not an easy question since governments the world around seek competitive advantage for home cooking. Evne little subsidy programs like SBIR, which are more directed to internal constituent advantage, throw in international competuition in the justification.  Free markets as idelized by political conservatives exist almost nowhere, even in America the conservatives angle and get substantial subsidies through tax breaks and market distortions like marketing orders. SBIR has contunied for three decades with no showing of any economic gain that wouldn't have occured anyway. Usha and Haley got the universal picture with their analysis of China's state-owned enterprises.

 Can't keep spenders down. consumers spent 3.2 percent more on an annual basis in the January-March quarter than in the previous quarter — the biggest jump in two years.  ...  Consumers have shed debt. Gasoline has gotten cheaper. Rising home values and record stock prices have restored household wealth to its pre-recession high. And employers are steadily adding jobs, which means more people have money to spend..   [Christopher Rugaber, AP, Apr 29]  Before austerity even got biting in the US, Europeans are rebelling against it. Good life now, payments in the future by people who don't yet vote. With no threat from an economic god, laissez les bon temps rouler. Don't worry, the politicians will not stand in the way of a consumer bandwagon.

DOD is on the SBIR street again with a pre-solicitation in which you get to quiz the topic writers.  Propoals by June 26. You can ask whatever you want and they will answer the reasonable questions that give you no advanatge over your many competitors. Remember that they do not see themselves as investing in you, only buying your knowledge for their pruposes, after which they own the technology for any government use. 

Keeping the trains on time.  The one and only time that Phase II proposals based on the 13.2 Phase I awards may be submitted by Phase I awardees from the 13.2 is during this 13.2 Phase II solicitation window. Advantage goes to well organized companies thoroughly familiar with government procedures. Disadvantage to new companies with new and exciting ideas and no government experience. Which agency, that sees itself as on the bleeding edge of military technology for a nearly impossible task of hitting a bullet with a bullet a thousand miles away, would have such a rigid policy?   The one that wants to trains to run on time.  Missile Defense Agency.  Do you feel that the MDA is giving itself the best shot at capturing new technology breakthroughs with their SBIR program?  

chairman Lamar Smith (R-Texas) suggested that every NSF grant include a statement of how the research "would directly benefit the American people." [AASA, Apr 25] He represents the state that wants to attract science and tech business to the state. Why would a smart person of science want to depend on the good opinion of politicians with such an attitude? 

Former President Bill Clinton joked at the dedication ceremony that the Bush library "was the latest, grandest example of the eternal struggle of former presidents to rewrite history."    [Alan Greenblatt,, Apr 25]

The New Mexico State Investment Council approved $10 million for Sierra Ventures of California. .... will invest in 15 to 20 startups, although only some of them will be in New Mexico, the Journal reported.  [Gary Garew, Albuquerque Business First, Apr 24]  Apparently ROI will take precedence over local job creation in new industries.

State gives subsidized loans .. The announcement included laudatory quotes from politicians. ... Connecticut will borrow the money to fund the 10-year loans. [Hartford Courant, Apr 24, 13] Government competing with private capital for pure business risk investment - must be a Democratic state, although any money pushed to constituents will elicit laudatory comment from politicians.

Poaching. Texas Gov Perry is taking his message of “low taxes, predictable regulations, fair courts and a skilled workforce” to the Windy City. .... just two months after he launched a radio promotional program inviting California business owners to check out Texas’ strong jobs climate. [W Scott Bailey, San Antonio Business Journal, Apr 15] Perry may well not have mentioned creationism, the Civil War, Enron, drought, nor the political dominance of oil money.

Stand by to go nowhere.  FAA says unavoidable furloughs of air traffic controllers will mean frequent flight delays of up to 2-3 hours.  Politicians will try to shift the blame to anybody else available that cannot fight back, like FAA management. Federal furloughs mean that advantage goes again to SBIR firms near the flagpole or with established connections to agency technocrats. Since total SBIR will shrink by up to 10%, and the management ability will also shrink, and the big SBIR agencies favor experienced service firms, the chances for really inovative firms and ideas will shrink by at least twice the 10%. Shrinking government has consequences. Many more such stories will appear that challenge tyhe politicians to find a lower balance point in government services and the revenue to pay for them. Some myths are going to be exposed.

Experience counts. NASA picked 295 SBIR Phase I winners from 216 conmpanies of which maybe two were first tine SBIR awards.  The April 3 press release doesn't talk about such stats. A lot of the firms are easily recognized by long-time SBIR watchers.

We want to stop our addiction, just not yet.  Over the last 30 years, a significant proportion of economic growth and the wealth created relied on borrowed money and speculation. Since 2001, borrowing against the rising value of houses contributed to around half the recorded economic growth in the US.  [Satyajit Das,, Apr 15] Abandoning the debt powered prosperity is not easy. Resistance to pursuing austerity as the cure for Europe's debt crisis grew as the French government said it would slow its deficit-reduction efforts to avoid tipping the economy into recession. [David Gauthier-Villers, Wall Street Journal, Apr 18] If total employment is roughly proportional to total economic activity, cutting debt would proportionally cut total employment unless you believe the small government fantasy that private capital would step in to create at least that much new wealth.

Cut somewhere and somebody else. Eighth District U.S. Rep. Austin Scott says a new request for a Base Realignment and Closure Commission is not likely to gain traction in Congress, the Macon Telegraph reports. Scott, a Republican from Ashburn, serves on the House Armed Services Committee, which would have to approve it, [Carla Caldwell, Atlanta Business Journal, Apr 13] Government efficiency and responsible spending are for talking purposes only. 

I predicted last year that the biggest economic story of the year would be the end of full-time employment in the retail service industry. The nation's largest movie theater chain has cut the hours of thousands of employees, saying in a company memo that ObamaCare requirements are to blame. Regal Entertainment Group, which operates more than 500 theaters in 38 states, last month rolled back shifts for non-salaried workers to 30 hours per week, putting them under the threshold at which employers are required to provide health insurance. The Nashville-based company said in a letter to managers that the move was a direct result of ObamaCare. [Coyote blog, Apr 16]  Employers get to dump their employee health insurance costs on the government as the price for getting more people any insurance at all. As always, the present losers in any political move shriek louder than the future winners. In this deal the winners are the companies and the potential losers are the employees who will have to switch from company to private insurance, which at least they are guaranteed to qualify.  We should remember that since employee health programs wee invented a dodge against taxes and limitations on wages, they arenot a factor in economic productivity.

Texas Republican solution: cut biz taxes Gov. Perry endorsed $1.6 billion in tax relief for 109,000 Texas businesses, including allowing 85,000 small- and medium-sized businesses [less than $20 million in gross receipts] to deduct the first $1 million in gross receipts from their franchise tax bills. [Laylan Copelin, Austin American Statesman, Apr 15]  If you ask a true-red Republican for a solution to any problem, expect a tax cut suggestion.

Nationalism sees the nation as eternal and essentially unchanging; it fosters an undifferentiated approach to the past that is tantamount to the denial of history.  Discontinuities and contradictions are transcended to produce a seamless linear national narrative.-- Peter Makridge, British Academy Review, Jan 2012

Political leaders today likewise find it pays to think no more than two years ahead, disregarding long-term consequences. ‘We borrow capital from future generations, with no intention or prospect of repaying’. Our descendants ‘can never collect on our debt to them, [for they] do not vote; they have no political or financial power’  [World Commission on Environment and Development, 1987]  25 years later, even larger debts. Because the future still does not vote in the present and our "must-haves" are endless.

A bigger hole needed filling. The Life Sciences Discovery Fund announced plans this week to distribute more than $2 million in grants, demonstrating an ongoing decline in state funding for the organization created to drive Washington state’s life sciences industry.  The fund was formed in 2005 with the intention of using the state’s tobacco settlement money. But after the economic downturn, the state Legislature drained the fund, redirecting millions to the general fund to close a massive budget deficit.  [Valerie Bauman, Puget Sound Business Journal, Mar 12,13]  Since its tough for state investment schenmes to prove thier economic value (beyond their political value of getting started announcements), the spirit is soon diverted to more directly measured  spots. 

Don't cut us, we're special.  More than 50 Nobel laureates are urging Congress to spare the federal science establishment from the looming budget cuts known as the sequester, saying that research has endured years of budget reductions and that additional cuts could endanger “the innovation engine that is essential to our economy.”   [William Broad, New York Times, Apr 9]

So why do so many governments still subsidize energy so much?  Because their populations are hooked on subsidies and don't grasp their downsides, energy producers and other vested interests defend them, and because they are seen, incorrectly, as primarily helping ther poor. [David Wessel, Wall Street Journal, Mar 28]  Concentrated beneficiaries and diffused payers. Who, except the university researchers, outside the federal agency sees themselves as payers for SBIR, for example?

In its Economic Review of 1968, the [British Trades Union Congress] stated that Britain stood "on the threshold of a great leap forward, if, and only if, the opportunity offered by devaluation is fully grasped." [Benjamain Choo, paper in Economic History 2013 Annual Conference, Apr 5] Instituions have their pet self - serving ideologies that the members want to hear regardless if the economic facts of life.  When the devaluation happened with only minor effects, new scapegoats and rationalizations were invented. Governments, even democratic governments, listen to such ideologies at their peril. 

New York state lawmakers approved in the FY14 budget startup funding for a new statewide incubator program that provides grants for the incubators and tax incentives for client companies. ....   Other innovation-focused initiatives approved in the recently enacted budget include a $50 million innovation venture capital fund, a third round of funding for the SUNY 2020 program, and $55 million to launch the CUNY 2020 challenge.  [SSTI, Apr 3]

New Jersey has provided more corporate tax breaks in the past three years than in the entire previous decade, yet the state's economy continues to lag, according to a [new] report [by New Jersey Policy Perspective, the liberal think-tank] .... The report said that the state should focus more on economic development funding for education, infrastructure and job-training programs.  [Hillary Russ, Reuters, Apr 1]  No matter the problem, one ready conservative solution is tax breaks with no subsequent accountability for provable economic effect. For liberals, the answer is more and better public infrastructure, including education that hires more teachers. Myths, not facts, rule.

Louisiana still in thrall to religion. For the third year in a row, New Orleans-based state senator Karen Carter Peterson has a bill to repeal the Louisiana Science Education Act, which calls on education administrators to help promote "critical thinking...of scientific theories being studied including, but not limited to, evolution, the origins of life, global warming, and human cloning," and which allows teachers to use supplemental materials to help students "understand, analyze, critique, and review scientific theories" if allowed by their local school boards.  [AAAS,Apr 3] That's a world where aggressive devotion to religion  myths wins over intellectual standards for evidence - based policy.  State efforts to attract scientists have little chance of moving the best scientists in their direction. 

NIH recently posted notice of the launch of their new Twitter Feed on their SBIR/STTR News Flash Page at   This week we launched a central NIH SBIR/STTR Twitter Feed. Follow us @NIHsbir.  [SBIR Alert, Mar 29]

The Missouri Supreme Court on Tuesday struck down a state incentive fund for science andtechnology businesses, ruling legislators had illegally linked it to an unrelated economic development bill.  ...a lawsuit by the Missouri Roundtable for Life and other groups concerned the fund could have been used to pay for human embryonic stem cell research.  [St Louis Business Journal, Mar 20, 13]

DOD R&D likely down 9% for FY13 (thru Sept 30), says AAAS. SBIR newbies may be losers as agencies favor predictable SBIR junkies with known track records.  FY14 game still dealing political wild cards.

Congressional robots. Last week a multi-sector group of researchers presented a new robotics report (PDF) to the Congressional Robotics Caucus. The report outlines the potential for robotics research to "transform the future of the country," and "identifies both near-and long-term applications of robotics technology. [AAAS, Mar 27]

Lower taxes, more education, and economic pixie dust. A business group is calling on the Legislature to more fully fund higher education and tech training after its study showed there are 25,000 unfilled high-skill jobs in Washington.  [Katherine Long, Seattle Times, Mar 26]  Doesn't the state exist to supply what business wants?  

Why DOD dislikes foreign SBIR workers.  a Chinese citizen who worked at L-3’s space and navigation division, was sentenced in federal court  to five years and 10 months for taking thousands of files about the device, called a disk resonator gyroscope, and other defense systems to China in violation of a U.S. arms embargo. [Peter Finn, Washington Post, Mar 26]

the Michigan Economic Development Corporation announced its new Michigan Venture Match Fund, a $5 million pot of money from the Michigan Strategic Fund for early-stage companies in the state that have already gotten funding commitments from at least one venture firm. The fund just invested $2.76 million in six companies across a variety of sectors: Stik (social networking website, no SBIR), Livio (internet car radios, no SBIR), Amplifinity (manage advocacy programs; no SBIR), Gema Diagnostics (Ann Arbor, MI; no SBIR, human embryo screening), nanoRETE  (Lansing, MI; no SBIR, real-time detection of pathogens), and Tissue Regeneration Systems (Ann Arbor, MI; no SBIR, bone reconstruction). [Sarah Schmid,, Mar 12, 13]

The U.S. government’s fiscal predicament has many causes. But if you had to reduce them to one sentence: “Congress responds to the short-term demands of particular groups, not the long-term needs of the nation as a whole.” Case in point: the seemingly unstoppable growth of medical benefits for former military personnel under Tricare,  [Charles Lane,Washington Post, Mar 26]  Congress is the sum of all wants from separate interest groups. After all, we elect our representatives (one House member and two Senators) to do what we want: give us something and get someone else to pay for it.

Raise taxes for stimulus.  With much of the global economy apparently trapped in a long and painful austerity-induced slump, it is time to admit that the trap is entirely of our own making. We have constructed it from unfortunate habits of thought about how to handle spiraling public debt.  ....   the spending cuts only worsen the problem. This is the paradox of thrift: Belt-tightening causes people to lose their jobs, because other people are not buying what they produce, so their debt burden rises rather than falls.  ...  Some form of debt-friendly stimulus might ultimately appeal to voters if they could be convinced that raising taxes does not necessarily mean hardship or increased centralization of decision-making. If and when people understand that it means the same average level of take-home pay after taxes, plus the benefits of more jobs and of the products of additional government expenditure (such as new highways), they may well wonder why they ever tried stimulus any other way.   [Robert Shiller, Slate, Mar 25]  Again myths, elections, and public education standings don't promise such realistic policy will ever be adopted. The people with money to be taxed have big megaphones, the politicians need money from them to get and stay elected, and the average public knowledge of economics can't be good if we look at the products of our public high schools.

Fast Track, dead track. DOD says its last Fast Track SBIR award was two years ago. And a large number of "third-party" investors for the 300 awards ever made in 15 years were a DOD agency.  Fast Track was an interesting answer to company complaints that the government was too slow in funding project with time-sensitive market appeal.  The people who invented it from a DOD Process Action Panel (a Clinton administration device) were given an Al Gore Hammer Award (anyone remember that?)  The reality is that DOD does not care about commercialization and third-party investment and economic goals. It buys what it wants for its own purposes, as clearly allowed by the law's handing the agencies unilateral authority for selection of awards. DOD does do matching award funding to extend Phase II projects (as started by SDIO in 1991), after enough success was shown to attract buyers, as opposed to Fast Track's commitment before Phase II starts. About 400 since 1999. Almost all of the "enhancement" goes to match money from DOD agencies. The National Academy even ran an extensive Best Practices project, as a substitute for true economic evaluation, where the Navy and others, demonstrated adoption of SBIR technology by Navy forces. The original SDIO plan favored co-investment from private sources that provided third-party validation and real market potential.  Congress doesn't concern itself with lack of economic impact because the extra money goes to its political targets - small biz.   

The Georgia Senate overwhelmingly passed legislation calling for the creation of a $100 million [over five years] venture capital fund.   .... Of every $1 invested in venture capital in Georgia, 92 cents comes from out of state, he said. “With the exception of Alabama, all our sister states have such funds,” [state Senator and chief bill sponsor] Golden said. “Other states, because of these funds, are raiding Georgia companies after we get them established.    [Dave Williams, Atlanta Business Journal, Mar 5]  Maybe if Georgia changed its attitudes, it might atract industries in which the new companies can succeed in Georgia. More state investment by politically controlled "investors" isn't the way to build industries. Can a state whose politicians hate government make smart government investment choices?  Even the people who love government don't do a very job at it.

San Francisco Mayor Ed Lee has fought hard to keep startups from leaving the city as they grow, and some say his plans to raze a 30-acre area for housing and office space would complement, not compete with, efforts in other parts of Silicon Valley. ... reshaping a 30-acre stretch of freeway and rail yards into high-density housing, shops, restaurants and more than 2 million square feet of high-rise office space. [George Avalos and Peter Delevett, San Jose Mercury News, Mar 20]

as many as 800,000 DOD civilians will be forced to take unpaid leave between now and September, equating, typically, to one day off per week for 22 weeks  [Foreign Policy Situation Report, Mar 19]  For SBIR that means Contracting Officers, COTRs, CO assistants, DCAA, finance and accounting processors of vouchers, proposal reviewers, etc, etc, etc.

Wisconsin, which lags much of the nation in venture capital funding, on Tuesday saw the creation of a new $30 million early-stage venture fund focused on information technology. The new Madison-based fund will be jointly capitalized by the Wisconsin Alumni Research Foundation, the patenting and licensing arm of the University of Wisconsin-Madison, and the State of Wisconsin Investment Board, which manages the assets of the Wisconsin Retirement System and other state trusts. It will be called "4490 Ventures" and "focus on early-stage companies primarily in Wisconsin," ]John Schmid, Milwaukee Journal Sentinel, Mar 19]

The steady growth of the 7-year-old Pennsylvania Biotechnology Center of Bucks County is paying off in jobs and economic activity both locally and across the state.  A report shows the biotech center and its affiliated organizations generated $579 million in economic impact and 573 jobs from July 1, 2009, through Dec. 31, 2012.  [John George, Philadelphia Business Journal, Mar 8]

Good politics (for some), but no economic value.  there’s no clear evidence that lower tax burdens have helped the United States grow faster than other advanced industrial nations with higher tax rates and much heavier tax burdens .... While high taxes do have an effect on variables that affect growth, many other factors are much more significant and overshadow whatever taxes do     [Eduardo Porter, New York Times, Mar 13] We live by a collection of myths that don't stand up to serious economic evaluation: low taxes, patents, SBIR, diets. Since low taxes are a political wish for the wealthier Republican supporters, Republican political wannabes have no choice but to advocate them. We have a democracy that runs on votes and money, not on economic truths.

Cut taxes and government, and send us more money. In a classic Republican state, Six Indiana counties (around Kokomo) are joining forces to spur economic development and bring more federal money into the state. [AP, Mar 11]  How many SBIR recipients make speech for lower taxes and less government?

Sticking to the story.  Republicans are losing elections they could win by slavishly clinging to untenable solutions for skyrocketing health-care costs that voters reject. ....  Conservatives believe seniors could shop for health insurance, as they do for groceries, ... Already, large employers operate in a similar market space -- free to negotiate with health insurance companies -- and even they have not been able to harness rising health insurance premiums.  ....  Similarly, it is doubtful that the states, acting individually, can do a better job of negotiating reimbursement for Medicaid services for the poor than does the federal government. In fact, the Ryan solution could drive up prices because providers could play off states against each other.   [Peter Morici,, Mar 13]  As long as the big donors want to hear the story, the politicians have little choice than to keep flogging it. Myths. in rich and poor alike, die hard. One long term solution is to de-politicize House Congressional re-districting to force politics toward the center.

On Saturday, the first-inventor-to-file provisions of the Leahy-Smith America Invents Act, a new patent reform law, go into effect, putting a priority on the person who first files a patent application. The law is a contrast to the expiring system, which awards patent claims to the person who can show he or she invented a concept first.The changes, which are the most significant to the patent system since 1952  [Virginia Bridges, Raleigh News & Observer, Mar 11]

Today, the [Massachusetts] state government is kicking off its new MassTech Intern Partnership, which promises to reimburse qualifying companies for half the cost of their interns’ salaries.[Curt Woodward,, Mar 11]

"From highway bills to homeland security, small states make out like bandits." SARAH A. BINDER, a political scientist at George Washington University, on the voting power of less populous states in the Senate.  --[New York Times, Mar 11]  The 1787 Constitutional compromise at work. 

So what the bad predictions [about market doom resulting from Obama administration economic policies] tell us is that we are, in effect, dealing with priests who demand human sacrifices to appease their angry gods — but who actually have no insight whatsoever into what those gods actually want, and are simply projecting their own preferences onto the alleged mind of the market.  [Paul Krugman, NewYork Times, Mar 8]  Earlier this week David Brooks skewered the predictions by Michael Boskin, dogmatic conservative economist who told Republican presidents what they wanted to hear. Warning: conventional theories about US economics usually miss the nation's adaptability to change.  Believe them at your peril.

Growth Escapism. The hesitancy to embrace even this minimal amount of austerity raises the question of when will the U.S. begin to cut costs and thereby stave off the eventual financial collapse of our nation. Small changes now can have a huge impact later. You may be thinking that the answer is found in a 4% growth rate. I have heard this answer espoused by both sides of the aisle, but neither proponent has offered a plan as to how this would be accomplished except by government enablement.  Here is a quick reality check: the average growth rate over the last 20 years is 2.6% (adjusted for inflation). Waiting for a 4% growth rate to take care of our national balance sheet is simply refusing to deal with reality.  [Alan Beaulieu, Industry Week, Feb 21]  Hey, the myth worked for Reagan and his supply-siders. Even the venerable Cheney proclaimed that "Reagan proved deficits don't matter."  (Maureen Dowd puts several spears through the venerable Cheney's pretensions  in today's New York Times op-ed.)

Should Congress support President Obama's plan for a $1 billion network of 15 manufacturing innovation institutes? *Yes, *No *Not Sure. Vote now at

Slicing grants.  NSF expects its overall budget will be cut by five percent. ...  existing grants will be largely unaffected, but new grants will take a major hit—a thousand fewer will be funded this year....  NIH plans on [salami slicing] passing the cut on to every grant renewed during the coming fiscal year. [John Timmer, Ars Technica, Feb 27]  Of course, until Congress enacts appropriations, all bets are tentative. Congress could also nip professors' salaries by 5% in the grants. After all, what's 5% in government?  ... unless it's your salary getting nipped. 

Air Force (USAF) selected Sierra Nevada (Sparks, NV; $1M SBIR, founded 1963, 2500 employees) and its partner Embraer (Brazil) Defense and Security for its Light Air Support (LAS) program.  ...   deemed the A-29 Super Tucano aircraft, and the overall solution offered by SNC, to be the superior choice for this critical mission. The initial $427.5 million delivery order is to supply the USAF with 20 A-29 Super Tucano aircraft.    ...  for. light air support, reconnaissance and training capabilities to the Afghanistan military. As such, it is a vital element of the United States’ Afghan withdrawal strategy   .. work will be in Jacksonville, FL  [company press release Feb 27, 13] over the years it has gathered up companies:  Space Dev (Poway, CA; $5M SBIR) ;MicroSat Systems (Littleton, CA; $11M SBIR) ; Straight Flight  (Denver, CO; no SBIR) ; Waveband (Torrance, CA; $17M SBIR); Aviation Resources Delaware (no SBIR); Inter-4 (San Francisco, CA; no SBIR); Turtle Mountain Communications (no SBIR) ;  Plano Microwave (Plano, TX; no SBIR) ; Spectral Systems (Beavercreek, OH; no SBIR) ;Advanced Countermeasure Systems (Sacramento, CA; no SBIR) . 

Once a spy, never trusted. The concerns arose over Kim’s service as a director of the External Advisory Board at the CIA from 2007 to 2011 while he was president of Bell Labs. He also served as a director at In-Q-Tel, an Arlington venture capital firm set up in 1999 with CIA funding.  [Thomas Heath, Washington Post, Mar 4] Kim was trying to be different things to different people, running for a senior post in the South Korean government, even saying he would surrender his US citizenship.

[ARPA-E's] mission of pursuing potential breakthroughs hasn’t changed. But four years after launching, it’s increased the emphasis on commercialization, says deputy director Cheryl Martin. “We believe big ideas are important but only if they make a difference,”  ....  Bringing some business savvy to energy researchers can certainly help produce the technology home runs ARPA-E was created to produce.  .... This week the agency announced that 17 projects, started with $70 million, have attracted $450 million in follow-on funding. Twelve were launched as new companies and over ten partnered with other government agencies for additional investment. [Martin LaMonica, MIT Technology, Mar 1]

Because of budget pressures and looming sequester cuts,   .... Federal R&D spending will decline sharply as a share of GDP.  ...   Many economists agree that private companies tend to under-invest in basic scientific research, because it’s hard for one firm to reap the full benefits from those discoveries. So the federal government, which now funds 60 percent of all basic research in the country, is likely irreplaceable here. What’s more, studies have found that many types of government R&D spur companies to do their own research.   .....  some federal programs are so focused on demonstrating to Congress their usefulness that they stick with “safe” research that the private sector would have done anyway. [Brad Plumer, Washington Post, Mar 3] When R&D spending is politically driven, expect low returns. 

Worried and irate. The Congress is getting an earful about the big spending cuts beginning to hit government services from worried and irate constituents, including one senator's own spouse. ....  said his wife, "my most important constituent," asked him, "Why can't you guys get your act together? [Thomas Ferraro, Reuters, Mar 2]  Cut somebody else! No doubt the SBIR advocates will be adding thier chorus. 

Sequester Day is here and the axe is falling. SBIR Insider Rick Shindell reports that the SB Tech Coalition (a lobby group of SBIR beneficiaries)    has drafted a don't-cut-me letter to the political worthies urging them to take steps to ensure that small businesses are not disproportionately and unfairly targeted by the upcoming cuts. ....  asking every technology-oriented small business to read this letter, and if you agree with it, add your company’s signature. Complete details are available at:

[White House says] as many as 12,000 scientists and students would be hit by cuts to research and innovation; ; and small businesses may see $900 million in reduced loan guarantees." [AAAS, Feb 27]  And the Washington Monument will no doubt close.

[The administration] called for scientific papers that report the results of federally financed research to become freely accessible within a year or so after publication. The findings are typically published in scientific journals, many of which are open only to paying subscribers.....  The agencies have six months to submit plans for how they would carry out the new policy. [New York Times, Feb 22]  Public money, public exposure.

Jet noise is the sound of freedom. says bumper stickers in Sumter SC as budget cuts threaten a nearby airbase. [Tamara Keith, NPR] The freedom loving, anti-government Republicans there make an exception for their money flow from Uncle Sugar. Ain't democracy fun?  A range of companies have raised alarms about the potential impact of the sequester, but most say they have no clear sense what the precise impact would be.  [Wall Street Journal, Feb 23] SBIR companies should expect no mercy, and writing your Congresscritter will gain nothing. States are increasingly alarmed that they could become collateral damage in Washington’s latest fiscal battle, fearing that the impasse could saddle them with across-the-board spending cuts that threaten to slow their fragile recoveries or thrust them back into recession. [Michael Cooper, New York Times, Feb 23] In other words, the states want their Congresscritters to invent a fantasy scheme that cuts government spending somewhere else and keeps federal money pouring into their state. Our problem?  We keep electing the politicans that promise the biggest free lunch.

White House has released a document detailing the administration's manufacturing strategy. The strategy includes the formation of a new national network of Manufacturing Technology Acceleration Centers (MTACs), which will focus on moving technology into the products and processes of small- and medium-sized manufacturers. NIST's Manufacturing Extension Partnership program would oversee the initiative [SSTI, Feb 21]

Republicans head into the next budget battle torn between two long-standing goals: Strengthening the military and cutting federal spending..... A split within the GOP could occur if the cuts have drastic implications, particularly in communities that rely heavily on military spending. There are already signs that some Republicans from such districts might be willing to break from party leaders' pledge not to raise additional tax revenue.   [Wall Street Journal, Feb 22] It's the same story in every part of government: cut and tax somebody else.

At the national level, Republicans have a winning message for a nation that no longer exists. [Michael Gerson, WashPo, Feb 22] Is SBIR similarly relying on a 1970s small biz investment climate that no longer exists?

Anadigics (Warren, NJ; $600K SBIR 25 years ago, 540 employees) down 14% [Feb 20, 13]

Be practical, guv, they're offering money.  Another Republican governor decides to take the federal healthcare money for Medicaid instead of standing on political principle that we're broke and over-governed.

Key senators are exploring an immigration bill that would force every U.S. worker—citizen or not—to carry a high-tech identity card to prove a person's legal eligibility to work.  [Wall Street Journal, Feb 21]  Libertarians alert: another national ID card debate coming up.

A strange and disturbing new [American] social pattern: growing dependence on government handouts ... the old counter-cyclical relationship between the unemployment rate and dependence on government entitlement transfers has apparently broken down. In good times or bad, evidently, America's dependence on government largesse is now always on its way up  [Nicholas Eberstat, AEI, author of A Nation of Takers: America's Entitlement Epidemic (2012), Feb 20]  AEI represents the economic class with the wealth they want to keep in the family. Of course, SBIR beneficiaries, especially the companies living on it, don't see themselves as lunching on entitlements, despite no evidence ever presented that SBIR had any effect on the US economy by diverting government biz from open competition to sheltered and entitled competition

If sequestration does come to pass, AAAS estimates that we would lose $54 billion in federal scientific R&D funding between now and the year 2017  [AAAS, Feb 19] AAAS implores everyone to Speak Up for Science, as if any serious ctiizen one was against science.

About 87 percent of startups nationwide are hiring, but the same proportion of startup execs say that it is "somewhat or extremely challenging" to find the talent they need to fill those jobs, according to a new report.Silicon Valley Bank's annual startup outlook report surveyed 758 executives of startup companies with less than $100 million in annual revenue and fewer than 500 employees  [Lauren Helper, Silicon Valley Business Journal, Feb 15]  The report sounds less like an analysis of small biz and more like a political polemic for immigration of cheap engineers.

 Gov. Scott Walker is setting aside $25 million in his two-year budget bill to boost venture capital investment in the state, but isn't putting forward a plan for how such a program would work.  The amount of money the governor is recommending and the lack of details provided differ dramatically from his $400 million venture capital proposal in 2011. That effort failed after getting bogged down by political disagreements and the use of out-of-state investment managers with questionable track records.  [Jason Stein and Kathleen Gallagher, Milwaukee Journal Sentinel, Feb 18]  A big state operated investment program invites political favoritism in handing out the money, as in Texas.   Politicians also conveniently over-estimate the ROI from government investment in specific businesses. They typically write glowing press releases at input time, and then ignore any economic evaluation which would only occur after a couple of intervening elections when a lot of the program initiators are out of office.

Pharmaceutical and biotech companies axed something like 150,000 workers from 2009 through 2012. Now guess what? Those same companies are now complaining, in a recent report from the consulting firm PwC, that they are unable to find enough qualified workers to fill key positions they need to grow.  ....To me, this report raised more questions than it answered. What is the industry doing to develop its own people to fill these jobs?  ....   Is this part of some lobbying push to get Congress to allow more H1-B worker visas, so that more skilled foreigners can come to the U.S. and do these jobs for lower wages?   [Luke Timmerman,, Feb 18]

Bloomberg says that defense contracts fell 67% last month. Stand by for big trouble with SBIR contracts

America’s free-enterprise system is what enables our manufacturers to be the most innovative. No one is suggesting that the government pick winners or losers. Some bets on new companies, such as Solyndra, are bound to fail. But such failures should not deter the government from investing in DARPA, or ARPA-E, which can propel innovation, new technologies and new industries. We also must help keep manufacturers at home through tax incentives, attract immigrants and better prepare a skilled workforce. And we must continue the collaboration between government and business that helped make America an economic superpower.  [Ro Khanna, Washington Post, Feb 17] Remember that an innovation program with no failures is a failure of imagination. SBIR has the structure to start new innovation ideas, but its capture by the federal agencies' mainline managers has practically nullified its potential. The basic problem is that politicians cannot invent a subsidy program that will not tbe captured by the Iron Triangle of  legislators, beneficiaries, and managers. And SBIR is no exception.

Texas fights money with money. Biotech companies, Lowe said, “incinerate cash.” Many venture capital firms, seeking to reduce risk, wait to invest later in a company’s lifespan.  So why should taxpayers invest early?  “The venture capital perspective is strictly financial,” Lowe said. “We’re losing the ability to take all this (cancer) research and turn it into new medicines. That’s a role for government to play.”   Texas’ Achilles has been a shortage of venture capital compared to the West and East coasts.  “Yes, the attitude is that there’s only two places to set up a biotech company — California and Massachusetts,” Lowe said. “CPRIT financing has gotten people’s attention.”   ....  Texas's answer to the brain-drain is another Texas institution — the Cancer Prevention and Research Institute of Texas [CIPRIT}, the $3 billion cancer-fighting fund. ...   CPRIT spends the bulk of of its money on research and prevention programs, but there is a debate at the Capitol over how much it should dedicate to commercializing research into marketable products. It hasn’t helped that the state agency is under criminal investigation and legislative review because it mishandled at least three of its largest grants, totaling $56 million   [Laylan Copelin, Austin American Statesman, Feb 18]

A recent academic article from NIST research analyst Gregory Tassey suggests that a major overhaul of U.S. economic policy is needed to ensure the country's long-term economic growth. A set of policies based on strategic investment in technology development and commercialization could boost the nation's productivity and help reverse the trend of falling incomes. These investments should not focus simply on short- and middle-term research missions, such as national defense or renewable energy, but on a wide variety of technology areas with the potential for long-term growth.  [SSTI, Feb 13]  In-house government economist, whose normal mission is economic rationale for NIST programs, opines on politically loaded subject.

The embattled Texas Emerging Technology Fund  received a lot of praise at the committee meeting [of the state House Committee on Technology ] ....  After investing $184 million, Boswell said, current asset capital is valued at $186 million and $5 million has already cashed in ...   The ETF has also attracted criticism due to investing in companies that failed. Two company CEOs appeared before the committee and explained how ETF investments enabled their companies to grow, generate jobs and succeed.  [James Jeffrey, Austin Business Journal, Feb 12]  Of course, some of the complaints were that a few companies failed, by the people whowant to uinvest in brand new ideas thathave been thouroughly rested. Any emerging company fiund that has no faliures is itself a failure of enterprise. Teh cited return numbers are certainly not impressive from a venture investor. Texas has the same problem as any government investment program - conflict of politics and capital. Politics is not about Return On Investment.

Tooth-fairy economics.The sequester, along with the tax increases, would slow growth for a quarter or two, perhaps to 1%. But thereafter the slower growth in government debt levels and less uncertainty attached to fiscal policy would lead to greater private investment, increased economic growth and substantially reduced deficits.    [John Makin,  AEI, Wall Street Journal,  Feb 14] Sounds like a unprovable political claim as economists would have a hard time making a cause-and-effect correlation for so vague an input condition as market confidence after a reduction in economic activity in an economy as powerful and diverse as America's. The politicians are having a hard time selling any "solution" to restore the economy to a desired annual growth rate, and more important, a "satisfactory" level of employment and simulltaneously restoring stability to the government's finances.In the past three recoveries from recession, U.S. growth has not produced anywhere close to the job and income gains that previous generations of workers enjoyed. The wealthy have continued to do well. But a percentage point of increased growth today simply delivers fewer jobs across the economy and less money in the pockets of middle-class families than an identical point of growth produced in the 40 years after World War II. ... Many lawmakers have yet to even acknowledge the problem. [Jim Tankersley, Washington Post, Feb 14]   Unfortunately for the politicians, the problem is too complex for sound-bites in a cacophony of competing vested interests. And advances like Twitter and YouTube have reduced the national attention span to hours. For entertainment, watch the politicians scramble to keep up.

Every state does it.  In 2011 Connecticut paid Alexion Pharma (Cheshire, CT $1.7M SBIR) $46 million to commit to hiring 200 new employees. At $230,000 per job, this still far exceeds the threshold for a sound investment in the state's economy.  .... Oklahoma's Small Business Capital Formation Incentive Act provides a 20% tax credit for investments in Oklahoma small businesses. In 2009, reported the Oklahoma Tax Commission, the program cost the state $17 million but generated only 21 new jobs. .... Politicians want to be re-elected, and a solid record on nominal job growth—regardless of the cost—tends to be more important to officials' re-election prospects than is the prudent management of public funds. That is one reason most such programs are structured to yield job creation immediately while deferring the cost of the incentive into the future—preferably when other politicians will be in office.     [Tom Foley and Ben Zimmer, Wall Street Journal, Feb 9] Mr. Foley, the 2010 Republican nominee for governor of Connecticut, is founder of the Connecticut Policy Institute, of which Mr. Zimmer is executive director. 

SBA launched a website and blog to educate small-business owners about the Affordable Care Act. (Obamacare, which the Republicans may regret calling  by that name).

If your SBIR handlers in the government seem distracted and can't quite meet your expectations on processing your stuff, remember that they are worried about a furlough - fedspeak for layoff - especially in DOD which would be hard hit by the sequester. They are also probably facing commands to hold SBIR "money" until the sequester smoke clears.

The debt ceiling law as it stands today places a fixed-dollar limit on the level of federal debt. It originated a century ago as a reasonable limit on borrowing for specific (micro) programs, but gradually morphed into an absurd limit on the entire (macro) budget. For decades it has been a self-imposed financial weapon of mass destruction, and its only effect so far has been to enable political opponents of the party holding the White House to grandstand for the cameras [Steve Conover, The American (AEI), Feb 7]

Asking hard questions. The [Texas] Legislature has temporarily zeroed out the [Emerging Technology] tech fund’s budget as lawmakers study the fund’s performance..... Companies funded by the Fund have done a better job of attracting outside investment dollars than of creating jobs, the fund’s 2012 annual report shows.   [Leylan Copelin, Austin American Statesman, Feb 4, 13]  Politicians love to talk about big input but have trouble finding great output tales. And it's really hard to find job creation beyond the jobs paid for by the government money. Never mind, SBIR will keep riding the political small biz myth.

Texas Gov. Rick Perry quietly came to San Diego last week to lure biotech companies seeking to escape from higher income taxes under Proposition 30 to the Lone Star State. [Jonathan Horn and Bradley Fikes,, Jan 31] If taxes were all that mattered to business, Florida and Texas would dominate the world. But New York, Massachusetts, and California dominate because .... you name them. Taxes are the price of civilization.

Half of the sequestration would apply to the military budget, an area where most cuts would probably enhance rather than damage future growth. Reducing the defense budget by about $55 billion a year, the sum at stake, would most likely mean fewer engineers and scientists inventing weaponry and more of them producing for consumers.  [Tyler Cowen, New York Times, Feb 2] SBIR would take a hit also, which means several small companies will have to exit the government gravy train and create something that makes wealth. Meanwhile, the SBIR junkies who live on that dole will be advocating higher award amounts. There's no interest like a vested interest. What the big SBIR dog, DOD, with a smaller SBIRremains to be seen.

Safe, ready, and reliable.  NASA needs things that go into space and work there for a long time without maintanence. So, its SBIR plan is obviously to fund safe and reliable technologies that can be engineerd into flight readiness (which requires much, much, testing and reviews). Its latest Phase II SBIR list (for FY11) sounds like good work for level-headed engineers with no chance or risk for a technology leap. Leaps are seen as just too dangerous. It's also the kind of stuff that only a government could love with no chance for noticeable wealth creation.

Training academies only need apply. North Carolina Gov. Pat McCrory is pushing for state funding of higher education to be based on the success that community colleges and universities have at placing their students in the job market. “I don't want to subsidize (a course) if that's not going to get someone a job ... it's the tech jobs we need right now,” stated McCrory on the nationally syndicated “Morning In America” radio broadcast. North Carolina recently was recognized by the Brookings Institution and The Atlantic for its SuccessNC Initiative that establishes curriculum-based college and career pathways for the state's community college system. The initiative was put in place to support the state's goal of doubling the number of students completing career credentials by 2020. [SSTI, Jan 30]  And the bright kids who don't yet know what they want to study will have to go elsewhere that welcomes bright students?  Will the best history and English faculty follow them?  Will only NC jobs count as success?  Or is the Guv just pandering again?

Increased immigration would boost the U.S. economy. Immigrants are 30 percent more likely to start new businesses than native-born Americans, according to a research summary by Michael Greenstone and Adam Looney of The Hamilton Project. They are more likely to earn patents. A quarter of new high-tech companies with more than $1 million in sales were also founded by the foreign-born. A study by Madeline Zavodny, an economics professor at Agnes Scott College, found that every additional 100 foreign-born workers in science and technology fields is associated with 262 additional jobs for U.S. natives.>  [David Brooks, New York Times, Feb 1]  But since many immigrants can't vote, the political system can ignore the economics and pander to US business appeals for government handouts. 

Don't cut you, don't cut me, cut that guy behind the tree. The future of science is uncertain as we continue to await action by our policymakers on the proposed across-the-board budget cuts. It seems inevitable that there will be reductions in federal spending, but will these cuts be allocated in a way that devastates science research and education, threatens future economic growth, and erodes America’s competitiveness in the world?  [AAAS, Jan 30]Every government beneficiary has the same story of tragic loss from budget cuts.

How silly can they get?  As the stats show a sickly econ for the latest quarter,our representatives spring into action.  McConnell added, “Why is the federal government funding Chinese studies on pig manure, and research into the smoking habits of Jordanian college students and reality TV shows in India? Are Democrats prepared to cut this kind of waste?"  If the government cut such research for any reason at all, the economy would suffer a proportional decline. The politicos pretend fantasy math that cutting spending will magically increase national total economic activity. Unfortunately, magical math feeds political ideology and has nothing to do with real economics. The more likely basis for the decline: “Federal defense purchases declined at an annual rate of 22.2 percent in the fourth quarter of 2012, the largest quarterly decline in 40 years,” Krueger said. “The decline in government spending across all levels reduced real GDP by 1.33 percentage points in the quarter.”  The war drawdown and sequestration imminence meant great savings for defense spending and less money going into buying stuff for the war machine. Hurricane Sandy slowed a lot of economic activity, but not to worry, the re-building will boost economic numbers as disasters boost GDP growth as they destroy physical capital. Just don't expect partisan politicians to sound rational. Meanwhile, will the people of Kentucky find their Senator insulting their intelligence? Unfortunately for emlightening debate, the White House is mouthing some of the same juvemile "gotcha" stuff.

Imagine that: too much early capital for the companies' good while SBIR slogs on with the fanatasy claim that small high tech firms are starved for early government capital.  The problem is not lack of early capital but a competitive culling of new technology to what the markets can profitably absorb. Government just wastes capital by funding companies and ideas with no realistic business prospects even if the technology works. Why? It's just politics.

Smell a competitor, go political. In statehouses around the country, some of the nation’s biggest biotechnology companies are lobbying intensively to limit generic competition to their blockbuster drugs, potentially cutting into the billions of dollars in savings on drug costs contemplated in the federal health care overhaul law.  ....  “We’re still dealing with chaos,” said Craig A. Wheeler, [CEO]of Momenta Pharmaceuticals which is developing biosimilars(generic act-alikes).  [Andrew Pollack, New York Times, Jan 29, 13]

Silicon Valley has long prided itself on avoiding the lumbering relationship between big government and most industries, but somehow it has become one of the top lobbyists in Washington. The Center for Responsive Politics reported last year: "Tech firms have doled out more and more lobbying money even as the amount spent on lobbying by all industries has decreased since 2010."   Google has a former congresswoman, Susan Molinari, running its Washington office. [Gordon Crovitz, Wall Street Journal, Jan 28] Politicians in their unending quest for financial support foster government intrusion in the marletplace. Firms respond with seeking the best deal, including begging for subsidy or tax favoritism.  As a result, we get the best Congress that money can buy.

States intrude in markets also. The Connecticut Bond Commission authorized state borrowing of $9.5 million, which will be lent to a manufacturer, a kitchen cabinetmaker/installer and an investment research firm at subsidized rates. The 10- to 12-year loans will be partially forgivable if companies meet their employment growth targets. Beneficiareis of cheap loans are: Hedgeye Risk Management LLC,  Express Countertops, Kitchens and Flooring LLC,APS Technology. [Mara Lee, Hartford Courant, Jan 25] One commenter says:  Here’s a wild and crazy idea, how about letting these businesses borrow this money from banks just like everyone else. Business have done everything in their power to destroy good decent government and then comes crying for State and federal dollars. Give them Mitt Romney’s address and let’s see if Mitt’s going to write them a check. After all, he’s in the business of making money. If he doesn’t deem them good enough for a loan, why should we? 

Many advanced economies are continuing to live at the expense of future generations, while all central banks have achieved by flooding the world with liquidity is to push underlying problems further down the road. “We are trying to keep a speed for our economies which is simply unsustainable,” he said. Quite so. ....   Though the likes of Weber and Weidmann condemn loose money and currency wars, they are perfectly prepared to accept the advantages a depressed currency does to the German economy. Everyone speaks with forked tongue on these issues  [Jeremy Wagner, The Telegraph (London), Jan 24]  Everyone is for growth, but no one has a sure answer how to get it at an acceptable price. The voters want the politicians to promise growth while they grumble over every recipe.

As politicians consider ways to use [Wisconsin] state money to fund high-potential start-ups, the former director of the [NIH]  Elias Zerhouni, who is now president of R&D for the large pharmaceutical firm Sanofi, said the system for developing new drugs is broken and requires a more open, smarter innovation network that includes scientists and others from industry and academia. Five years ago, there were 500 venture funds that would invest in biotech companies, Zerhouni said. Today, there are fewer than 200, and only 10 or 15 of them fund very early-stage research, he added.  [Kathleen Gallagher, Milwaukee Journal Sentinel, Jan 22]   The discussion talks only of input, not of results from Wisconsin's or any other state pseudo-VC programs.

DOD Deputy Dog authorized a civilian hiring freeze and termination of temporary employees, .. and other nibble stuff. ... DOD currently stands to lose more than $6.5 billion a year in R&D funding under sequestration [AAAS, Jan 16]  Everybody's still wishing for miracle math (or politics) to avoid the knife in their backs. But no economist has promised them such miravles as politicians ignore and ridicule economists anyway who don't tell them what they want to hear. Think tanks all over DC have their home-cooked economists to breathe wonderful numbers in the sponsors' ears that their ideas deserve full funding (or tax avoidance). The economy has so many numbers and economists that any combination of numbers can be baked into a great looking cake.

most of the academic literature is supportive of high long-run returns to infrastructure and research and development spending on private-sector productivity and economic growth).  Nevertheless, the declining level of trust in government since the 1970s is a fairly close mirror for the growth in spending on social insurance as a share of the gross domestic product and of overall government expenditures. We may have gone from conceiving of government as an entity that builds roads, dams and airports, provides shared services like schooling, policing and national parks, and wages wars, into the world’s largest insurance broker. Most of us don’t much care for our insurance broker.  [Nate Silver, New York Times, Jan 16]  R&D is clearly an economic growth investment, but its return is too long term for the political competition. So, naturally, the government's R&D structure is tainted by political needs, which do things like target geography and interest groups, rather than ROI, for "investment."

those who don't want to fix  Medicare, the heart of the nation's deficit problem, have a continuing excuse - don't take anything away from the elderly, continue borrowing a trillion or so a year, and above all don't do anything to harm the limping economy.  [Ron Haskins, Real Clear Markets, Jan 14]  All the politicians are groping for new magic math that will tame the deficits without invadng anyone's comfort zone.  They don't understand what we learned in science, every system has only a limited number of degrees of freedom, which once specified, must leave the rest of the variables to the math. A simple three variable system: Keep Medicare + cut the deficit = recession. Keep Medicare + avoid recession = bigger deficits. Cut deficits + avoid recession = cut Medicare. Two degrees of freedom in a three variable system. 

SBIR Eligibility Webinar On Wednesday January 16, 2013 the SBA will host a special webinar explaining the new final rule on SBIR/STTR size regulations. This includes but is not limited to items such as: a) When SBA Determines Size and Eligibility; b) Certification of Size and Eligibility; c) If a business concern can self certify its size and eligibility status; d) Size protest or request for a formal size determination; and of course, e) The VC/Hedge Fund/Private Equity issue. This one hour webinar will start at 1:00pm EST, Wednesday January 16. Virtual attendance is "somewhat limited" [SBIR Insider, Jan 13] The real issue is how to deal with the question of VC ownership under the new SBIR law.

The EU will pick two futuristic computer modeling research proposals and shower them with up to €1 billion each.  Six candidates for super-model: massive data mining for planetary simulator;  graphene; guardian angel sensor network; simulate human brain; personalized model for 500 million Europeams; robot companions. Like most research, modeling can absorb any money thrown in its direction.  [Science, Jan 4]

Fearing that Congress and the president may not reach a deal on spending and the deficit, the Pentagon’s leadership is freezing civilian hiring, limiting maintenance work and delaying approval of some contracts.[New York Times, Jan 11]  SBIR is sure to be on the list of wait-and-see contracts because (1) they are not mission critical work, and (2) the mangers and contract officers may be on furlough. Longer term, the SBIR is likely to remain as law, but in the scramble to re-adjust operations, SBIR would naturally take a low priority for attention. DOD may even go further in pushing SBIR work into mainline support contracts.

Connecticut Innovations announced that it will underwrite up to $250,000 in stipends for high-tech startup founders this spring in Stamford, with guidance from two men with startup experience. Eight to 10 teams will get $20,000 to $25,000 in exchange for 6 percent equity in their businesses. To be eligible, they must be working full time on the concept, have at least one technical expert, and have been working for three months or more before their application.  [Mara Lee, Hartford Courant, Jan 8]

Economists across the ideological spectrum will cheer [Bruce Bartlett's] rebuttal of the myth that individual income tax cuts from current levels raise revenue, a fallacy that remains surprisingly and disturbingly widespread in the popular and political debate. [AD Viard reviewing Bartlett's The Benefit and the Burden: Tax Reform ..., Journal of Economic Literature, Dec 2012]  Supply-side tax ideas, like most new tax proposals. start with the objective of justifying lower taxes for the author's group. Tax fairness, like beauty, is in the eye of the beholder.

Hatteras Venture Partners of Durham, N.C., has been chosen as the first firm to receive an investment from the [SBA] Early Stage Innovation Funds initiative.  Hatteras is eligible to receive as much as $50 million from the SBA to invest in seed and early stage companies. The firm has already raised $88 million from outside investors, said Dennis Byrne, an SBA spokesman. [Kathleen Gallagher, Milwaukee Journal Sentinel, Jan 8]

Most experts think the global recession was caused by a collapse in demand -- and so, in good Keynesian fashion, they want governments to ramp up spending to compensate. But the West’s recent growth was dependent on borrowing. Going even further into debt now won’t help; instead, countries need to address the underlying flaws in their economies. ....But the U.S. economy will emerge from its trauma stronger and widely restructured. [Roger Altman, Foreign Affairs, J/F13]

Because fights attract contributions.  The new Congress convened Thursday to an all-too-familiar backdrop of looming fiscal showdowns, leaving incoming members to ready themselves for the same kind of divisive battles faced by the last Congress. [Sara Murray and Patrick O"Conner, Wall Street Journal, Jan 4]  Only voters and contributors can discipline a representative democracy.

iRobot  up 11% [Jan 2, 13]