Government Stories 2015

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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Idealized strategies founded on hypothetical scenarios are no longer useful. , says right-wing AEI's John Bolton about 2016 election. ISIS, collapsing national governments (indeed, chaos) in Iraq and Bashar Assad’s Syria, and Iran’s continuing nuclear-weapons program together constitute a critical focus for the new realism and specificity candidates must now demonstrate. But specificity is not what politician can deliver no matter how they talk to get thenselves selected. The electroate will be surely disappointed when the real world refuses to cooperate with the promised strategy.  We cannot rule the world by standing on our shore shouting platitudes. Which applies to both politics and economics. Cheap goods still require cheap workers, especially low cost robotic workers.

The U.S House and Senate have approved legislation reauthorizing funding through 2020 for two programs that support medical treatment derived from adult stem cells. It’s a move that will directly impact GenCure  (a subsidiary of BioBridge Global, San Antonio, TX; no SBIR), which is engaged in stem cell work and the advancement of regenerative medicine to help heal patients suffering from traumatic injuries and diseases. [W. Scott Bailey, San Antonio Business Journal, Dec 17, 15]

Ugly New Budget Deal Shows Why Americans Hate Washington [Investor's Business Daily, Dec 17]  Politics masquerading as news.  We don't hate Washington; it's a perfectly nice place for visiting or city living. We resent that we have to compromise with people who want things other than what we want. It's just that our representatives and their representatives assemble to do the needed compromise in a place called Washington. If our wants are so compelling, why can't we convince a goodly majority of the country to agree with us to give us what we want and send the bill somewhere else?

Reprise. Tax cutters get to cut, spenders get to spend, and the future gets to pay for it, as Congress agrees a budget for the year, and defer tough decisions until 2017. Meanwhile, presidential candidates make promises they couldn't ever make happen, basically because the voters want to hear promises.  But in 2017, the line-ups will probably be the same because the voters like it that way, and no politician has a better answer.

Overwhelming majorities of voters across the nation and in key swing states support a comprehensive initiative designed to parlay the United States’ strong research base into greater economic prosperity and a higher quality of life for all. These findings come from a new survey conducted for the Innovation Advocacy Council, an initiative of SSTI .... After learning about the new Innovative Science & Technology for Economic Prosperity (iSTEP) initiative, 89 percent of voters say they would support the effort, which would convert scientific and medical research into new businesses and jobs, bringing the benefits of the innovation economy to the American people.   [SSTI, Dec 9] Imagine that: voters want a free lunch.  Where would the enormous money come from and who could produce such magic? The step of convert-the-research is private capital investment which is neither lacking nor invisible just demanding of a competitive return on investment commensurate with the technical and market uncertainty. America does not lack for willing capital, only the likelihood of competitive ROI in most science research. Innovation advocates like to pretend that they have a new magic solution to the well known game of investment, when all they really know is how to spend government R&D money.

President Nixon declared war on cancer and with so many new weapons in our arsenal supported by big budgets and a decidedly aggressive posture, when is it O.K. to give up? When is it best to ­surrender?    [SANDEEP JAUHAR reviewing "The Death of Cancer" by DeVita Jr. and DeVita-Raeburn, New York Times, DEC. 11, 2015]  Beware presidential declarations of "war on [something]."

Too much crowd protection?  if you talk to people building startups around equity crowdfunding, you’ll discover an open secret: As a mechanism for funding startups like Oculus (no SBIR), it is basically a nonstarter.   ... These rules stipulate that any company that takes on more than 500 individual investors or grows to a size greater than $25 million in assets must start filing regular disclosures just like a publicly traded company. It is all the pain of an IPO without the benefits of the IPO.  [Christopher Mims, Wall Street Journal, Dec 7]  Protecting the gullible conflicts with attracting them, or what's a government for.

Talk small, give big. Recent actions by [Indiana] lawmakers create supportive climate for startups but most tax credits and grants go to larger, more established companies, report says.  ...  They’ve made it easier to be a small business in Indiana, compared to other places, such as California, where there’s a myriad of obstacles to running a small company, she said.  ...  The study, released by Good Jobs First, which tracks subsides and promotes accountability in economic development, evaluated more than 4,200 economic-development incentives across 14 states and found that large corporations almost always receive the biggest incentives — between 80 and 96 percent of their dollar values.  ...  For Indiana, 87 percent of the $618 million awarded under the Economic Development for a Growing Economy (EDGE) tax credits went to large businesses. About 96 percent of the $80.4 million distributed under the Hoosier Business Investment Tax Credit program went to big business.   [Kris Turner, Indianapolis Star, Dec 4]

 Australia's government announced new economic policies Monday aimed at attracting entrepreneurs from abroad and promoting innovation in an economy that has slowed after a mining boom.  [Raleigh News & Observer, Dec 7]

Something for everybody. Republican and Democratic negotiators closed in on a major package of tax cuts for businesses and individuals that could exceed $700 billion in forgone revenues over a decade   [New York Times, Dec 4] Government revenue loss of $700B to be ignored; send the bill to the future and then complain about debt limit. Ah well, politics has its own logic. Be sure to vote for your share of the mythical free lunch so your children and grandchildren can honestly label you the "me generation."

National education level taking a back seat to the politics of state sovereignty. The bill, called the “Every Student Succeeds Act,” comes after years of complaints from critics who argued the George W. Bush-era education law spurred excessive testing in public schools and used unrealistic goals to label too many schools as failing. [Leslie Brody, Wall Street Journal, Nov 30] Low-tax states want the option of falling further behind any national education standard. So, the better educated states decided to keep their existing advantage in attracting companies that want smarter employees.

Pretty good muddling. After dodging the perilous political question - should SBIR exist at all - an investigative panel found the NIH was muddling well through SBIR's non-economic objectives after spending $774 M (oh, yeah, investing).   The commercialization results would have gotten a real investor a long vacation. But meanwhile, the politicians will take credit for the good results, some spectacular if one does not look deeply into how much impact SBIR had on the company's economic success. On balance, how good was the SBIR lemonade? The commercialization results are impossibly hard to calculate the way a private investor would because the private beneficiary companies can and must shield their business from the prying eyes of competitors. The good news is that several NIH SBIR beneficiaries made gigantic economic gains; the bad news is that the government has no good way to assess SBIR's contribution. These pages report many of those gains as they appear in the business press around the nation. The report spills a lot of ink on how the engine works but not much on how well the machine delivers profitble products. Like typical government reports, it focuses on easy to measure input rather than hard to measure output. The authors recognize the evaluation problem:  NIH faces broad challenges in tracking commercialization, at both the company and project levels. Companies move in and out of the program, and tracking is harder once a companies have left. More generally, commercialization may come years after an award, and may involve multiple awards plus considerable additional funding. All this makes it difficult to assert that any specific outcome “results from” an SBIR/STTR award, particularly if developments are tracked for only a limited time.  Longer term tracking of outcomes is essential for effective program management: without outcomes data and analysis it is impossible to determine what is working and what is not. For now the taxpayers will have to rely on the opinions of program beneficiaries who got free capital, politicians from states that get a good-sized piece of the pie, economists who can count how much money went in, and the various people who make a living on it.   The report  SBIR/STTR at the National Institutes of Health is available from NAP at

Magic technology. Nobody intended this of course, but social networks like Twitter and Facebook have evolved into the most powerful terrorist recruiting tools ever conceived, offering susceptible users instant access to a vision of terrorism as glamorous, exciting, and meaningful. [David Frum, The Atlantic, Nov 26]

A major obstacle to consumer spending in China is its high -- and rising -- savings rate. It was 30 percent in the first quarter, compared with just 4.8 percent in the U.S.  .... Warning: Chinese statisticians have no doubt been inflating their GDP numbers since Mao's Great Leap Forward in the 1950s demanded big output gains -- or else. Overstatements are probably greater now that growth is slowing.   [A Gary Shilling, Nov 18] With no safe retirement programs, Chinese people have to do their own social security and medicare. The difference is when they do retire, the savings drain will appear as consumer spending. In America, the retirement programs appear as present consumer spending because the programs are pay-as-you-go with little money withdrawn from the economy.  And the Republican blather about getting more economic punch from lower taxes and less government is mostly myth.  The taxes paid in are immediately paid out as government buys what the programs call for. For even more economic punch, the federal government pays out more than it collects in taxes. Of course, the Republicans oppose that also.  For what it's worth, the government is supporting the economy as both political parties fight to get spending on their pet programs and compromise by merrily borrowing the difference between taxes and spending. Political Econ 101.

 Republican presidential candidate is backing a broad U.S. military buildup in the wake of the Paris attacks, including 40,000 new Army troops, 4,000 more Marines and new submarines and aircraft. [Wall Street Journal, Nov 18] Unfortunately, he seems to have forgotten to say how to pay for it. Maybe one of David Stockman's asterisks.

Congresscritter utters simple solution that his lowest IQ Texan constituent can grasp. Isn’t there something we can do to shut those Internet sites down?” — congressman from Texas, referring to the Islamic State during a House committee hearing Tuesday, according to the Washington Post. Barton asked the [FCC] if it might be able to shut down sites and pages used by ISIS. FCC Chairman Tom Wheeler — whose net neutrality rules Barton once criticized as government overreach — said no.  Later, Barton said he was “in no way suggesting we shut down the Internet,” according to the Washington Post.  [Levi Sumagaysay, San Jose Mercury News, November 18, 2015]

Growing problem, shrinking solution.  [in the presidential debate] there was little real grappling with the fact that every recovery since the early 1990s has been weaker, and taken longer, regardless of which party was in charge. That’s really the key problem for Republicans – there have been serious changes in the nature of the global economy since the Reagan era, and the old formula of “cut taxes, cut red tape, get growth” just doesn’t hold up anymore. Indeed, there’s little evidence that is has held any water for a couple of decades now – Bill Clinton raised taxes in 1993 and got plenty of growth; George W. Bush cut them in 2001 and 2003 and got anemic growth, and Obama didn’t do any better creating substantial growth via post-financial-crisis tax cuts.    Yet tax cuts were the main answer that all candidates proposed to bolster growth, and create new jobs, particularly in areas like manufacturing, which has traditionally created the most middle class jobs in the country [Time, Nov 11]  Age-old politics: tell them what they want to hear; adjust to reality later. They love the tax cut stuff because it promises them something for nothing - lower taxes and no loss of useful government function. The tax cut would be real but the rest is an unprovable myth that less government is better. The real economic problem, for which they have no solution, is growing world competition from productivity technology and foreign labor. As for the effect of tax cuts on useful governmnt function, ask Kansas.

Where was ours?  the 2008 financial crisis has reshaped the Republican Party by unleashing a potent populist strain that could further scramble an already unpredictable primary contest. Candidates vying for the 2016 GOP nomination have grown distinctly more leery of big banks, corporations and international trade deals, and outright hostile toward the Federal Reserve.  [Nick Timiraos, Wall Street Journal, Nov 11]  The people's complaint:  biggest biz got a handout help and we got none. Is that a measure that people don't understand economics and the dependence of our financial system on trust?  Surprised that politicians cater to people's cries at election time and hand out the goodies to big biz in the committee chambers after election? That will continue, of course, as long as money is considered protected speech.

“If middle-class Americans need or want bigger government, they will have to pay for it. Sooner or later, a tax increase is coming their way. There is no tooth fairy.”  [Robert Samuelson, qouted by Tom Friedman New York Times, Nov 10] The same applies to Republicans who want overwhelming military power to conquer the Middle East and deter all foreign enemies foreign. The Democrats would have no trouble hiring the people needed to adminster their bigger government, but the Republicans have no solution for the reluctance of American youth to volunteer for military service.

They want action - paid by someone else.  [AZ]State lawmakers who hoped to build fencing along the Mexican border using private donations are instead directing the money to buy equipment for the Cochise County sheriff’s office after the state received just a tiny fraction of the donations needed. ...  hoped for as much as $50 million in private money for the project; the state received about $265,000.   [AP, Nov 9]  Hey, real government costs real money. Another example of people wanting more government than they are willing to pay for.  What's more, they want their taxes cut while balancing the budget.  I wonder where they slept through math.

Biz unwelcome in desert. Leaders of a rural Arizona county want help from the governor and other state officials to protect their water supply [underground aquifer] as companies from the Middle East move to the state to grow alfalfa they intend to ship overseas to feed their cattle. ...  Companies from Saudi Arabia and the United Arab Emirates have bought thousands of acres of land in the Arizona desert for large-scale farm operations.  China-based companies have done the same in other parts of the West. Some of the companies are moving to the U.S. and elsewhere after running low on water in the Middle East.   [FELICIA FONSECA, AP, Nov 6]  1980 state law limited cities' water draw but left rural counties alone.

Straight to Phase II SBIR at at NIH, DARPA, and USAF.  One specified topics the agency will give a direct Phase II if you meet the standards at least until Sept 2017. Thanks to the Greenwoods for laying out the rules in their recent SBIR advice e-mail.

NASA has technologies and wants startup companies to make use of them. NASA’s Technology Transfer Program is making some 1,200 patented technologies available to young businesses for no up-front licensing payments, and no minimum fees for three years. The licenses are not exclusive, but exclusive agreements can be negotiated. The patented technologies are grouped into 15 categories including: sensors, propulsion, power generation and storage, materials and coatings, aeronautics, IT and software, and optics.   [Benjamin Romano,, Oct 16, 15] You might consider that these  technologies are likely stuff that only a government could love, since NASA systematically overlooks market appeal of new tech when deciding what to spend its SBIR mandate on.  And don't expect any NASA money.

Subsidies galore even for the wealthy. Gov. Jerry Brown's administration has proposed giving more than $10 million in tax credits to San Francisco tech companies as part of its California Competes program, including more than $3 million to the online financial service firm NerdWallet. The state doles out tax credits through California Competes to companies that promise to bring jobs and investment into the state. If approved, NerdWallet would receive five annual installments of $650,000 in return for adding nearly 800 full-time jobs and investing more than $18 million in the San Francisco personal finance advice startup.   [Allen Young, Sacramento Business Journal, Nov , 15]

Growth and tax rates unrelated. consider what the world would look like if tax rates produced permanent differences in growth. Countries with tax rates just 1 percent lower than their neighbors, or regulations slightly less onerous, would eventually be infinitely richer. That's not only implausible, but it also doesn't fit the facts.   What we actually see is that rich countries all grow at about the same rate. [Noah Smith, Bloomberg, Nov 2]  Smith's bottom line: we can't get the Republican-promised growth by fiddling with taxes. But you are certainly entitled to be wooed by their half-baked economics. If they are telling you what you want to hear, beware, it's too good to be true.

Magic fading. Only 17 percent of Americans consider themselves Tea Party supporters, the lowest level of support since the movement rose to prominence six years ago, according to a new Gallup poll. ... The drop among independents who lean Republican fell by 29 percentage points during this period, from 52 percent to 23 percent.    [Kent Hoover, Washington Business Journal, Oct 16]  Novelty has a hard time against the grind of real-world politics and economics.

On Oct. 20, naval armed forces from nine different nations teamed up to shoot down a mock ballistic missile high above Earth's atmosphere [the first time that a ballistic missile threat was intercepted over Europe] . The fiery interception was part of a demonstration by the Maritime Theater Missile Defense (MTMD) Forum   ....  warships from the U.S., Spain and Norway teamed up to destroy one ballistic missile, as well as two anti-ship cruise missiles   [Elizabeth Palermo, Reuters,  Oct 30]

Watervliet Arsenal [200-year-old manufacturer of cannons] is faced with filling the space [about 40,000 square feet] in the arsenal, which has been left emptyleft over by its best-known tenant. [Chelsea Diana, Albany Business Review, Oct 27, 15]  The back faces the railroad and the front faces the Hudson River and an Interstate.

Political tactics. Every seasoned politician is good at answering a difficult question with the answer to something entirely different. But Carson — who isn’t supposed to be a politician at all — was possibly the champ. Where do you think he picked that up? It’s a little unnerving to think this kind of talent is useful in the operating room. ...  the big takeaway was probably that when there are 10 people onstage, nobody is going to have to explain how that flat tax plan adds up. When in doubt, complain about government regulations.  [Gail Collins, New York Times, Oct 29]  If you think the polticians are silly, ask yourself why.  Because we reward such behavior with votes.

Caesar speaks in the Forum. Our government is "too big to succeed" so we need to find ways to better manage the people's resources and the best way of doing that is bringing to Washington the best leaders we can find.  [a Presidential candidate] Leadership is usually attributed to anyone doing what you want. A "leader" President who wants to dramatically shrink the govrnment and install subordinate "leaders" would soon find raging public opposition as he names the program victims of his house-cleaning. What a situation we have created when politicians run against "Washington" where the people's elected representatives assemble to do the people's bidding. Which they do, all too well, until it comes time to pay the bills.

Pundit says spend your nest egg.   If Washington wants to get the economy moving, it needs to do what I’ve been proposing for a long time: Change the rules on retirement accounts so those who want to can spend some of that prosperity — perhaps by investing in real estate. [John Crudele, New York Post, Oct 26] At least he didn't spout the standard conservative growth bromide: cut my taxes.

Profits, not government, drive innovation.  When you examine the history of innovation, you find, again and again, that scientific breakthroughs are the effect, not the cause, of technological change.  ... For more than a half century, it has been an article of faith that science would not get funded if government did not do it, and economic growth would not happen if science did not get funded by the taxpayer. ...  In 2003, the Organization for Economic Cooperation and Development published a paper on the “sources of economic growth in OECD countries” between 1971 and 1998 and found, to its surprise, that whereas privately funded research and development stimulated economic growth, publicly funded research had no economic impact whatsoever. None.    [Matt Ridley, Wall Street Journal, Oct 23, 15]

Korean official seeks Minnesota [import] deals to make ...   In the Twin Cities, Shinn visited Land O’Lakes, the Minnesota High Tech Association and the Mall of America ....  The Minnesota Department of Employment and Economic Development last year hired [the director of the state’s Korea trade office, Imm Han-kyong] to promote goods produced by the state’s companies and farmers in South Korea.  [Evan Ramstad, Minneapolis Star Tribune, Oct 19] Maybe tech innovators can do themselves more long range good dealing with Korea than begging the USG for subsidies.  Maybe even elect politicians who speak a foreign language. Every subsidy for Minnesota is mostly paid for by the other 50 jurisdictions, who collect their own subsidies partly paid for by Minnesota.   In the full accounting, the only net gainer is the people who run the subsidy system  -- your politicans and government adminstrators. Full disclosure: I made a tidy salary running SBIR.

The University of Texas at Austin professor John B. Goodenough who invented the lithium-ion battery has won an international $1 million innovation Eric and Sheila Samson Prime Minister’s Prize for Innovation in Alternative Fuels for Transportation awarded to researchers working on novel ways to power our modes of transit. [Austin Business Journal]

Extrapolation too simple. Strategists in many domains are guilty of taking excessive comfort in the present and extrapolating present-day assumptions to describe the future, only to find themselves unequipped when the next big crisis hits. As a U.S. four-star general once told me in frustration, "We always have the wrong maps and the wrong languages when we go to war."   [Reva Bhalla,, Jul 29]

Ergo propter hoc. If you believe that the commander is responsible for all that happens with his unit: Donald Trump blames George W Bush for 9/11. 'Say what you want, the World Trade Center came down during his time.'  Be prepared to vote next year, including perhaps with Trump rationalizing his bankruptcies.

The level of new U.S. businesses being created has been stalled since the end of the recession, according to an analysis of recently released Census data by Arnobio Morelix, a senior research analyst at the Kauffman Foundation. ...  the net number of new jobs created by new firms was 2.3M in 2013, down 0.4% from 2012 and a historic low. [Ruth Simon and Joe Shoulak, Wall Street Journal, Oct 14]  What's a government to do about that, if anything?  Politicians will feel the urge to be seen doing, or at least saying, something.  

Presidential candidate has brilliant tax plan: cut rates (mandatory Republican move) with transferring responsibility for Medicaid, welfare and highway-construction funding to the states.  [Wall Street Journal, Oct 15] Shifting from one tax authority to another won't do much good.  But this candidate would claim he conquered deficits. The question of federal versus state functions goes back to the early 19C with no way ever found for a free lunch in either place. The people still want all those functions done; they just want someone else to pay for them.

Most small business owners are very concerned about the size of federal budget deficits, and getting them under control should be Washington’s top economic priority, according to a survey conducted for the National Federation of Independent Business. Two-thirds, however, oppose raising the retirement age for Social Security   [Kent Hoover, Washington Business Journal, Oct 12, 15]  When faced with a choice between lower deficits and program benefits, people choose the concrete over the abstract.  The politicians want us to believe that deficits can be eliminated with little pain to individuals, which is they squirm when they have to actually cut something to deliver on their deficit-cutting myths.   The long term prospects?  A deficit is permanent, and political speeches about it ending it can be safely ignored.

Love home cooking. Sen. Chris Murphy [CT], coming off a victory in his quest to boost Buy American rules, has re-introduced a bill that would narrow exemptions to the procurement law for federal agencies.  ...  bill that Murphy introduced Wednesday would narrow the overseas exemption, saying it could only be applied if the foreign equipment were 50 percent more costly than American-made versions, or if "the item is needed urgently for national security purposes."  [Mara Lee, Hartford Courant, Oct 14] Like SBIR and Social Security, Buy American is a feel good idea for politicians. But the DOD carries a big stick and can use the word "urgent" as needed, especially when Congress avoids pork. 

Send money for our plan. The [NY] Capital Region's economic development group has bid for $40 million to $65 million in state money toward entrepreneurship. It's part of the region's pitch for $500 million in the Upstate Revitalization Initiative. ... Growing an ecosystem could create up to 5,900 jobs and contribute $900 million in GDP, according to the report.  [Chelsea Diana, Albany Business Review, Oct 9, 15]   Of course it's all hypothetical and wishful that the politicians would hand them $500M that would have to be collected from taxpayers who are allergic to more taxes. Just listen to any Republican. Can the development people make any binding promise of return for the money? Of course not, it's all wishing. But, don't despair, politicians love the press coverage of their starting a grand sounding project. And whatever's good for the Capital Region must be just as good for every other region. Then they are soon talking about real money in one of the taxest state of the Union.

The defense [authorization] bill aims to bring more small businesses back to federal contracting by giving them a better chance of winning a piece of the action. The legislation would:  • Combat the consolidation of contracts into deals that are too large for small businesses by making sure that agencies justify and identify bundled contracts. ;  • Require that small business procurement advocates at the [SBA] are properly trained (whatever that means).  ; • Ensure that the past performance and qualifications of team members are considered when small business teams and joint ventures pursue large contracts. ; • Create an independent office at the SBA (more government) to hear challenges to the agency’s industry-specific size standards, instead of forcing small businesses to go to federal court with these challenges. ; • Hold agency officials accountable for meeting their small business subcontracting goals (only real criterion: small biz gets the money). [Kent Hoover, Washington Business Journal, Oct 7, 15]  The pushing of DOD contracts into small biz relies on a myth of small biz innovation, which is true only for market-demand stuff where market agility matters.  Government contracting doesn't work that way and the products are mostly for government contracts where agility matters little. Thirty years of SBIR have shown the futility of expecting any economic impact from shoveling money into government-minded small biz. Oh well, myths are the mothers-milk of politics.

The European commission president memorably said in 2013 that European politicians know very well what needs to be done to save the economy. They just don’t know how to get elected after doing it.  [Joris Luyendijk, The Guardian, Sep 30]

Greg Ip, econ writer for Wall Street Journal, notes that discretionary federal funding, which includes R&D, is likely to be progressively squeezed as growing entitlement funding, particularly aging population programs, consumes more of the annual budgets.  Since that entitlement money goes to present voters, and R&D has merely diffused long term benefits, and a large fraction of the Congress thinks government has to be shrunk in total, the politics is likely to squeeze R&D.  Expect even shriller shrieking of platitudes over chairs at the free lunch table. 

Ergo propter hoc.  The Kansas economy has been growing far slower than the rest of the nation, and a report forecasts sluggish growth in the state next year as well.  [ROXANA HEGEMAN, Associated Press, Oct 1]  The tax-cutting supply-side governor who projected economic growth from the liberation of good Kansas capitalism now has to explain why his theory produced a bigger economic hole relative to US total economics.Beware politicians speaking economics.

Meanwhile farther north, Gov. Scott Walker and local officials say they will try to convince General Electric Co. to keep a Waukesha plant open that’s scheduled to close as the result of a dispute over the U.S. Export-Import Bank. [Milwaukee Journal Sentinel, Sep 30]  Walker's political party derided Ex-Im Bank as corporate welfare even as Walker campaigned to represent that party as POTUS.

The Badger Fund of Funds, a state initiative aimed at pumping more venture capital into Wisconsin startups, could begin investing later this year, general partner Ken Johnson says. The fund of funds will manage $25 million from the state and at least $8 million in private investments.   [Jeff Buchanan,, Sep 25, 15]

Pat Dillon is back in Minnesota as executive director of MNSBIR which help technology-based entrepreneurs and innovators toward SBIR and STTR.  She knows the game from years of SBIR advice in Minnesota Project Innovation [now defumct] and an interlude in Wisconsin. Sounds like Minnesota has the standard political attitude toward funding help for start-ups - maximum political announcements from minimum appropriated funds.   In 2001, she was recognized by City Business (Minneapolis/St. Paul Business Journal) as one of the 25 Most Innovative Women in Minneapolis.  [,  Apr 29]

St. Louis native and [legendary] venture capitalist John Doerr calls Obama "the greatest president of my lifetime."   [Veneta Rizvic, St. Louis Business Journal, Sep 24] In politics, the smartest and most capable people can disagree, but they maintain a civil tongue and respect for the opinions of others.

Texas continues to lead the nation in the percentage of people lacking health insurance coverage [19%], according to data released by the U.S. Census Bureau. .. national average is 12%.   [Michael Theis, Austin Business Journal, Sep 22] Butevery governor claims that Texas is a great low tax place for business. If you can afford to buy public services privately.

Three Kansas City-area entrepreneurial organizations will share $1.19 million in grants from Missouri. LaunchKC will receive $565K;  Digital Sandbox KC will receive $500K;  Independence Economic Development Council will receive $125K.   [KC Business Journal, Sep 18] Spread small amounts around like birdseed and claim that thousands were helped. But none has enough to start anything serious.

A common American error is to believe that freedom is the absence of state authority.  [Timothy Snyder, Hitler’s world may not be so far away, The Guardian, Sep 16]

Love those handouts.   The U.S. Department of Defense has awarded $7 million in federal funds to the Dayton region for collaborative effort, according to a news release from the Wright State Research Institute.  The Dayton region will be assisted in an effort to diversify job opportunities and grow the local economy through the grant from the Department of Defense Office of Economic Adjustment’s Defense Industry Adjustment Program. The new funding, entitled The Dayton Metro Plan for Economic Diversity, was secured through a collaborative effort of 11 local entities comprised of government, institutions of higher education, and business.  The group sought funding to build the region’s commercialization infrastructure and support workforce development in the Dayton Metro area.  [Dayton Business Journal, Sep 16]  When will there be an economic evaluation of the project? Probably never. It has already met its prime objective: money for the folks back home.  Meanwhile, in the Republican prinary election show, the state's governor will be railing against too-big government interference with private enterprise.

“You sit with one crowd, and he’s an evil billionaire,” [a political candidate] said. “You sit with Republicans, and they say they’ve finally got a guy who’s going to get things done. It’s going to have to get uglier before it gets better.”   [Julie Bosman, NewYork Times, Sep 15] In politics, "better" is not a well defined term because democracy by its nature encourages undeliverable promises in a system designed for competing power centers.

The dilemma for democracies is clear. Voters expect governments to cater to their needs and wants - and one person's special interest is another's way of life or moral crusade. But if governments cater too aggressively to interest groups, they may undermine (or have already done so) the gains in productivity and economic growth that voters also expect. ... So this is another possible explanation for the productivity slowdown, which afflicts many advanced countries. These societies are riddled with programs and policies promoted by various interest groups that "can increase the income [of the groups' members] while reducing society's."  .... Even with a jobless rate of 5.1 percent - getting close to "full employment" - the Congressional Budget Office projects a 2015 federal deficit of $426 billion. That's one measure of overcommitment: Americans desire more government than they're willing to pay for in taxes. [Robert Samuelson, WashPo, Sep 14, 15] Samuelson appeals to the ideas of Mancuur Olsen to explain the mysterious tiny national productivity increases.  SBIR champions could look at the larger aspects of their handout program which assumes whatever is good for small biz must be good for America. Where is the honest economic evaluation?

the opening of a brand-new Pentagon office located near San Jose staffed by a team of military and civilian Pentagon officials who will be working with tech firms full-time.  [Foreign Policy SITREP, Sep 10] Meanwhile, an influential Senator says he is deeply concerned by a new proposed Defense Federal Acquisition Regulation rule on commercial item acquisition (DFARS Case 2013-D034), which could effectively preclude any significant participation by commercial firms in defense programs. [] Of course, the mandatory competition for DOD contracts cannot simply go away so DOD can "work with" Silicon Valley.  We're still waiting to see the dirty details of "work with."

Pentagon romance forum.  The Pentagon will press its effort to build ties with the nation’s scientists and engineers at a three-day conference [named “Wait, What? A Future Technology Forum,”] this week in St. Louis that will highlight a range of future technologies and serve as a forum to promote collaboration across diverse science and technology fields. The event is the brainchild of [DARPA head] Arati Prabhakar, a physicist who studied at the California Institute of Technology and a longtime Silicon Valley venture capitalist  ... to find a technological compromise. In March Darpa began a new program, nicknamed “Brandeis,” after Louis D. Brandeis, the Supreme Court justice who helped develop the concept of the right to privacy.  The program aims to give individuals more control over their data while maintaining lawful access. [John Markoff, NY Times, Sep 8]

Presidential candidate proposes 'simple, fair and clear' tax code" with a different mix of rates and deductions so we can have 4% economic growth.  Can't we have a tax regime that stays put and gives everyone a firm base for planning?   History tells us that opening the tax code for change invites wholesale lobbying for special treatment, a force that politicians cannot resist. And we have no hard evidence that the tax structure has much to do with economic growth.  Only political speculation. Says the candidate "Today, the tax code is a labyrinth littered with thousands of special-interest giveaways" which is true and unavoidable in a democracy because everyone of those special-interest things promises a good economic result.  As in a recent Minnesota case where Two northern Minnesota legislative leaders are behind an effort to create a multimillion-dollar windfall for the state’s mining companies by diverting tax money that goes to the state’s general fund. .. The proposal was not introduced as a stand-alone bill and never received public discussion.   [Ricardo Lopez, Minneapolis Star Tribune, Sep 6] It's just the way representative government works, with regular blasts of blather about a better tax system.

U.S. Air Force is planning a $4 million [technology transfer pilot project] to find better ways to commercialize its emerging technology. ...  bring down costs for the military while driving economic development opportunities for businesses and the communities where they operate. ... AFRL expects to award multiple contracts on the pilot project   [Joe Cogliano, Dayton Business Journal, Sep 2]  Words, words, words. USAF has no faith that the private market can find and exploit anything marketable without any AF "help".  But Congress wants to pretend that there is some magic formula for turning military technology into public benefit. If it really wanted such a benefit, it would re-write SBIR in a way that forced the federal agency to prefer projects with provable market potential.  No, it is easier to just appropriate $4M for another episode in a long history of pretending. Meanwhile, the Republicans are seeking ways to lower the competence of government people to do the job by lowering the federal employee compensation. Invent a useless program and hire cheap labor to do it, and then complain about government inefficiency.

Minnesota bet goes south.  Elk Run, a $1 billion biotech business park launched in 2007, was promoted as a medical technology hub that could become Minnesota’s version of Silicon Valley.  The fast-growing biotech companies and high-paying jobs never materialized on the land formerly devoted to an elk farm. ...  The state Department of Transportation built the $45 million interchange, but then slapped Pine Island with a $3.65 million penalty when job-creation targets were missed. ....  It launched in 2006, just before the recession hit. By the time the economy recovered, Rochester officials were unveiling a massive plan [20-year redevelopment plan known as Destination Medical Center just 15 miles to the south] to remake downtown Rochester with the very same biotech businesses Elk Run hoped to draw.   [Matt McKinney, Minneapolis Star Tribune, Sep 5] Can you hear the echoes of the politicians trumpeting their new grand plan?

Have faith, we got a plan. most of the economy fixes aren’t complicated. They are fairly obvious: cut tax rates, restore a sound and stable dollar, promote an America-first energy strategy, and roll back Obamacare, Dodd-Frank, and EPA regulations that are strangling American industries. That agenda could be enacted in less than 100 days, and, yes, it would trigger 4 percent-plus growth and a rise in what Reagan used to call “real take-home pay.”   [Steven Moore, Weekly Standard, Sep 14 issue]  Too bad Moore makes no defensible economic argument that all his faith-based policies would actually produce 4% growth.  But he has a chance of winning because elections are more about faith than defensible economics. If every voter could pass a final exam in Econ 101, we might get sensible political choices.

Connecticut Innovations, the state-funded, quasi-public technology development agency, invested in 61 companies for a total of $20.8 million in the fiscal year that ended June 30, the agency reported.  CI also made loans to 18 companies and gave small grants to 114.  ...  Just over half of those deals were in information technology, and 46 percent were in bioscience [which leaves nothing for anything else]  [Mara Lee, Hartford Courant,Sep 1, 15]

Caveat emptor, as ever. On paper, the prospects for FiberPop Solutions of Owatonna appeared mesmerizing: profitable speed-of-light fiber-optic networks and data centers scattered across the Upper Midwest worth billions of dollars. The Securities and Exchange Commission says the reality is in stark contrast. “To date, FiberPop has no data centers, no employees and no operations,” the SEC said in a lawsuit filed Tuesday against the company and owner James Louks. “It has never earned any revenue. It has no contracts with either content providers or customers.”In doubt is the fate of 90 investors who pumped “at least” $4.3 million into a project that promised a 100 percent return on investment.   [David Phelps, Minneapolis Star Tribune, Sep 1, 15]

SECDEF initiative.  announced the Pentagon would contribute millions of dollars in seed money to develop a new technology incorporating “flexible” electronics that could replicate human skin on wounded troops or be used in ships and jets.  ...  contributing $75 million toward the effort known as a Flexible Hybrid Electronics Manufacturing Innovation Hub in San Jose, CA  [Gordon Lubold, Wall Street Journal, Aug 28] How to enter the game and how the gaame will be played within DOD procurement regs has yet to be announced.

Still hoping solar.  Attempting to jump-start research on novel solar technology, the U.S. Department of Energy’s Advanced Research Projects Agency–Energy announced new funding for concentrated solar photovoltaic projects. Awarded under ARPA-E’s Micro-scale Optimized Solar-cell Arrays with Integrated Concentration (MOSAIC) program, the money will go to 11 projects at 10 organizations, including MIT, Xerox PARC, Texas A&M, and the solar manufacturer Semprius. [Richard Martin, technology, Aug 26]

NSF has invested $55.5 million in three new Engineering Research Centers (ERCs) to create novel technology platforms and transform industries. Located in Tempe, AZ [soil engineering], Urbana, IL [electro-thermal systems], and Houston [water treatment], these three ERCs will seek to address national challenges in energy, sustainability and infrastructure. Over the next five years, the flagship centers are expected to generate knowledge and high-tech innovations while contributing to U.S. economic opportunities and the preparation of engineering graduates. [SSTI, Aug 26]  Only NSF and the politicians know how such collections of engineering will be better than normal competition for NSF support.

U.S. Department of Defense’s Defense Innovation Unit Experimental (DIUx) launched a new pilot office last week at Mountain View’s Moffett Federal Airfield.  “Innovation in areas such as big data, analytics, autonomy and robotics is going on in [Silicon Valley] and we want to tap into it,” Deputy Defense Secretary Bob Work said in a press release. [Gina Hall, Silicon Valley Business Journal, Aug 14, 15] Happy words, but DOD has a habit of spreading a wet blanket over any innovation fire and has no interest in bringing an innovation to market, even though it would help DOD in the long run to have private capital invest in technology that would be good for DOD when it gets ready-to-use. DOD has had three decades to show otherwise in its SBIR program which specializes in wet-blanket technically safe projeccts. When DARPA's chief actually sought dual-use ideas, Bush-41 fired him.

Business Oregon, the state’s economic development agency, will invest $250,000 to support a new Inclusive Startup Fund that will invest in Portland-area startups founded by women and people of color. Fund leaders hope to raise a total of $3 million and match portfolio businesses with mentoring and business advising services. [SSTI, Aug 19]

Trump’s immigration plan includes a lot more than just building a wall on the Mexican border and making Mexico pay for it. The billionaire businessman also wants to force employers to pay higher salaries to foreigners who work in the U.S. through H-1B visas, a program designed to help companies find highly skilled workers. He also would require companies to first try to find American workers for these jobs.  [Kent Hoover, Silicon Valley Business Journal, Aug 20, 15]  Ah well, Republican candidates are competing at the moment to pander to the right-est parts of Republicanism. Actual economics of immigrant work visas are irrelevant in Platitude-ville.

Forget Jeb Bush's bold promise of 4% economic growth, which Chris Christie subsequently matched. Never mind Scott Walker's attempt to one-up them both, with a pledge of (wait for it) 4.5% growth. And ignore Mike Huckabee's slightly higher ambition, recently offered in Iowa, of a whopping 6% growth. How to get a astounding growth?  1. start a really big war, 2. open the borders, 3. count the illegal economy, too.   [CATHERINE RAMPELL,,  Aug 18]  What promise do you want to hear next?  It's the siily season of competing for wishful voters. No president candidate can deliver any such stuff which is beyond the reach of the presidency in an economy driven by world competition.

Members of VentureOhio are studying the feasibility of forming a private "fund of funds" of $100 million or more to invest in venture capital groups and thus draw investor attention to Ohio startups. ... The Ohio Capital Fund, a bond-backed state fund of funds, attracted $1 billion in outside capital to the state but has no more to invest, and lawmakers have not renewed it.  ... The group's big goal is to make Ohio the top state in venture dollars per capita   [Carrie Ghose, Columbus Business First, Aug 11, 15]   If private capital is not coming into a state, the solution is probably not a public substitute driven by political considerations which usually cannot survive the next election.

Taxes as a flexible tool. Republican presidential candidate's plan for replacing [Obamacare] would extend refundable tax credits to help pay for private health insurance. [AP, Aug 17] In the next breath, no doubt, the candidate will champion the mantra of flatter, fairer, simpler taxes.  Meanwhile, the candidates will stick with vague principlkes to avoid questions about how to actually change anything protected by existing beneficiaries.

big-data and intelligence juggernaut.  The amount of visual data collected by drones each day is the equivalent of “five seasons’ worth of every professional football game played,” a total that will only increase over time. As William M. Arkin reports in “Unmanned,” the drone technology of tomorrow will have staggering power. “The next generation of wide-area motion imagery sensors will be capable of collecting 2.2 petabytes per day, bringing 450 percent more data into the network than all of Facebook adds on a typical day.”   [Gordon M. Goldstein reviewing Arkin's Unmanned, WashPo, Aug 13]

Big state, big taxes, big bet.  Gov. Cuomo talked about the role of state incentives during an event at the new SolarCity (no SBIR)  factory in Buffalo that will make solar panels. The state offered about $750 million in subsidies to bring the company to New York. As competition heats up with more states positioning themselves to attract business, Cuomo said government incentives are an important tool. New York has some of the highest taxes in the country and has a reputation as one of the most difficult places to do business.  [Marie French, Albany Business Review, Aug 5, 15]   SolarCity, based in Silicon Valley, will lease it, essentially for free, and has committed to spending $5 billion on its Buffalo operations over the next decade. ... The rail cars that once carried iron ore around Republic Steel’s sprawling plant at the edge of downtown Buffalo, New York, were plowed under when the steel company abandoned the location in 1984. They were recently discovered when excavation began for the so-called gigafactory to be operated by SolarCity, the country’s leading supplier of solar panels. ...  Fears about what will happen when the tax breaks decrease are fueled by an unfortunate reality: in most locations and under most conditions, unsubsidized solar power is still far too expensive to compete with other sources of electricity. And rooftop solar is especially expensive. Subsidies and other government incentives are the reason the solar market is booming  [, Aug 14]  When the smoke clears in several years, everyone in power will conveniently forget to evaluate this subsidy, as the next big thing begs for a new can't-afford-not-to subsidy.

Republicans aspirants should remind themselves of what Bill Clinton's campaign maestro James Carville famously said in 1992: It's the economy, stupid. ... Attack the Obama economy and couple this with bold proposals on taxes, health care and money.  ... put something like the flat tax on the table and trumpes it across the land. [Steve Forbes,, Aug 10]  Everyone wants to bell the cat, and of course Forbes with his perennial cut-my-taxes, but no one has a defensible economic program based on more than platitudes.  Because economics defies predictions since all its participants can adapt their behaviors. And the US economy reacts to too many events to be predictable, no matter how hard a politican pretends.

In 2008, the Air Force spent $7.56 billion on jet fuel. New “adaptive engines” could use 25 percent less fuel.  ... adaptive engines are able to switch seamlessly between operational modes that enable high thrust or increased range.   [Jack Karsten and Darrell M. West, Brookings, Aug 10]  But as AF R&D folks report, every pound of weight saved by better engines re-appears in more electronics.

the Pentagon has put an engineer and Navy SEAL in charge of its new Silicon Valley outreach office. ... they (sort of) have a website  and email [Defense One, Aug 10]

A new picture. Vice President Joe Biden and Gov. Andrew Cuomo made a trip up to Rochester, New York, to announce the new Integrated Photonics Institute for Manufacturing Innovation. That public-private investment in the center is expected to exceed $625 million and have an impact across upstate.  The research center is expected to create thousands of jobs and help revitalize Rochester, a city that had been hit hard by job losses at Kodak. [Chelsea Diana, Albany Business Review, Aug 3, 15]  Don't expect a realistic economic evaluation after the money is spent. Politics will have moved on to new announcements of salvation.

Promises, promises. [Presidential candidate]vows to bring back the millions of American jobs lost to China and other foreign competitors if voters put him in the White House.  Economists say he wouldn't stand a chance:  boundless self-confidence is no match for the global economic forces that took those jobs away. [PAUL WISEMAN, AP, Aug 4]

Seeking Counter Cyber. DARPA is looking for some help managing its darker side. The organization will host what it is billing as a “proposer's day” in September to give researchers a heads up on its new Extreme DDoS Defense program. DDoS attacks use networks of hacked computers to flood websites or Internet-connected applications with traffic in a bid to knock them offline or make them inaccessible. For an organization like the Pentagon, which runs military command and control systems and other important networks, the threat is obvious. So Darpa's in the market for defenses and mitigations that improve on existing approaches to the DDoS threat.  [Paul McLeary with Adam Rawnsley, Foreign Policy SitRep, Aug 4]

Soliciting investors illegally. [Indicted on] serious charges, first-degree securities fraud, Mr. Paxton [Texas recently elected AG while a member of TX legislature] is accused of misleading investors in a technology company, Servergy (McKinney, TX; no SBIR) his hometown. He is accused of encouraging the investors in 2011 to put more than $600,000 into Servergy while failing to tell them he was making a commission on their investment, and misrepresenting himself as an investor in the company, said Kent A. Schaffer, one of the two special prosecutors handling the case.   .... Servergy has also been the subject of an [SEC] investigation centered on whether Servergy and its founder, Bill Mapp, made misleading statements about the company to induce investors to buy Servergy stock. [MANNY FERNANDEZ, New York Times, AUG. 1, 2015]

Scientist jailed for faking data. A former AIDS researcher at Iowa State University in Ames was sentenced to more than 4.5 years in prison last week and ordered to repay more than $7 million to the U.S. National Institutes of Health in a rare case of a scientist receiving prison time for faking data. Dong-Pyou Han was found to have tampered with rabbit blood to alter the results of an AIDS vaccine study. In December 2013, Han agreed to a 3-year ban on federal funding after an investigation by the U.S. Office of Research Integrity. But Han's case also caught the eye of Senator Charles Grassley (R–IA), who protested that the penalty seemed “very light”—and prosecutors apparently agreed. Han pleaded guilty to two felony counts of making false statements, joining a tiny number of U.S.-based researchers sentenced to prison for misconduct. [Science, Jul 10]

Speaker of the U.S. House of Representatives told reporters he supports lifting a 40 year-old ban on crude oil exports. Naturally, capitalism, with the best government money can buy, grabs for the shortest term profit with no regard for the larger societal cost or benefit. [Wall Street Journal, Jul 28, 15]

Innovation suppression.  Invoking the corporatist tenet of social protection, established corporations—their owners and stakeholders—and entire industries, using their lobbyists, have obtained regulations and patents that make it harder for new firms to gain entry into the market and to compete with incumbents. A result is that the outsiders have been stifled—though some entered new industries before those too could put up barriers. And some insiders, now protected from new entrants, feel it is safe to drop whatever defensive innovation they used to do.   [Edmund S. Phelps, New York Review of Books, Aug 15]

long on platitudes and short on policy specifics ...“You want job creation — you balance the books. Am I right?” Kasich said ... vows to balance budget, reduce regulatory burdens.[Kent Hoover, Washington Business Journal, Jul 21]  The last Republican with a budget surplus could not stand the pressure; he insisted on giving back their money to the people instead of paying off any debts. And then launched programs, including war, to incur more debt.    Don't worry, it's the platitude season; none of them can actually do what they promise, and there is no connection between balanced budget and jobs anyway. Consider the Greeks who are rioting to avoid balancing the budget becasue it would destroy jobs.  If Kasich can produce his miracle, we should offer him to the Greeks as an economic miracle.

The N.C. Biotechnology Center, a nonprofit whose state funding is in jeopardy, is hoping its track record as a “a catalyst” for the state’s life science companies will enable it to survive. ... is in essence a support group for the state’s life science industry.  .... Entrepreneur Richard West, who has co-founded four life science companies,talked up the benefits of the biotech center.  He said his third company, Advanced Liquid Logic (RTP, NC; $10M SBIR, sold for $96 million in 2013 ), parlayed $500,000 in loans from the biotech center into $60 million in additional funding.   ...  was created in 1984, when Hunt, a Democrat, was governor. Today, Gov. Pat McCrory is a Republican and the GOP holds a majority in both the House and Senate.   [David Ranii, Raleigh News & Observer, Jul 21, 15] Republicans are allergic to public subsidy of anything except tax breaks for existing business. R&D subsidy programs are equally allergic to ROI accounting.

Texas in Wisconsin. The Republican presidential candidate led the Wisconsin Economic Development Corporation [once billed as the centerpiece of his plan as Wisconsin's governor to bring 250,000 jobs to the state] until stepping down earlier this month after allegations about shoddy lending and favoritism at the agency. A review by The Associated Press found the agency gave $1.2 million to a company whose founder had been sued dozens of times by banks, state tax officials and even a jeweler. Four years later, the company is in a court-appointed receivership. [Jeff Horwitz, Reuters, Jul 21, 15]  But his idea had such promise???  Economic development plans always sound grand in their announcements. In this case, sunshine may be the disinfectant that restores economic reality to a political program.

Marauders eyeing SBATo conservatives, keeping the Export-Import Bank from coming back to life would represent the first victory in their battle against corporate welfare, a crusade that eventually could put the Small Business Administration on their target list. [Kent Hoover, Washington Business Journal, Jul 15, 15]  After that they might think to ask what SBIR has done beyond temporary jobs for a protected political class.

The presidential candidate of the party controlling both houses of Congress vows to shake up Washington's culture if he reaches the White House, saying an "era of excuses" in the nation's capital must end.  Which culture does he have in mind? The one created by his father and brother as president for twelve years? He also plans to disrupt that establishment and make it accountable to the people, when the real problem is that it is too accountable as it tries give something to everybody, and people like him tell everyone what they want to hear.

Russian billionaire Yuri Milner [a venture capitalist known for investing large amounts of capital into relatively unproven tech startups] plans to personally provide $100 million for an effort to scan the skies for signs of intelligent alien life.  [Douglas MacMillan and Gautam Naik, Wall Street Journal, Jul 20, 15]  Of all the basic investments Russia needs, what could be more important than alien interglactic life?

Thinking Russia? A proposed Kremlin law is threatening to ban some foreign scientists and western research foundations in Russia. Lawmakers in the country are claiming that organizations seeking scientific talent in Russia and providing opportunities for Russian scientists to study abroad are destabilizing the nation, politically and economically. ... Already included on the scientific blacklist are several US organizations that promote scientific scholarship in Russia. Among these are EF International Academy, the US Department of State’s Bureau of Educational and Cultural Affairs, the German Goethe cultural center, the Soros Foundation, and the MacAurthur Foundation.   [Bob Grant,, July 17, 2015]

Five Energy Department National Laboratories will lead the $20 million Small Business Vouchers Pilot program, a public-private partnership connecting small businesses with DOE scientists, engineers, and facilities. The labs will provide vouchers, ranging from $50,000 to $300,000, to more than 100 small businesses in an effort to help leverage the expertise and tools at the labs for product testing, validation, introduction, and expansion. The Energy Department will also launch the Small Business Central Assistance Platform, a web-based tool to assist in communication between small businesses and DOE Labs and facilitate the vouchers. [SSTI, Jul 15]

The politician believes that far too many nonviolent offenders are in prison and that the war on drugs has been a failure. ... But also maintains that marijuana and other drugs should remain illegal, and that he would not allow states to decriminalize pot  .... he also opposes making reductions in mandatory minimum laws retroactive, which could free thousands of nonviolent federal prisoners who were put away under harsh drug laws that have since been relaxed. [Liz Goodwin, Yahoo, Jul 18] Meanwhile, he would cut taxes which would curtail the goverrnment's ability to do much about anything. The world of illusory politics.

Dancing on the ceiling.[Barry Ritholtz]  National debt limit time again for the politics of it as Congress pretends it can't afford all the programs it has already enacted into law.   “Men stumble over the truth from time to time, but most pick themselves up and hurry off as if nothing happened.” -Winston Churchill

Hurry up and gamble. The House plans to vote Friday on a bill to boost federal funding for medical research, but the measure’s changes to drug approvals have drawn the ire of medical-safety advocates, who contend it would jeopardize safety by lowering scientific standards. [Wall Street Journal, Jul 10]

“One of the melancholy facts of political life is that your convictions tend to align with your paycheck,” he writes.  [Carlos Lozada reviewing Barton Swaim's THE SPEECHWRITER: A Brief Education in Politics, WaPo, Jul 12]

After a two-year delay, Minnesota’s much hated 1989 sales tax rebate program for capital equipment purchases ended last week.  ...  According to the Minnesota Department of Revenue, about 2,000 factories spend $4 billion each year on new equipment and repair parts and then shell out $270 million for a sales tax they eventually get back. ... The change makes newly purchased capital equipment, parts and repairs tax-exempt.   [Dee DePass, Minneapolis Star Tribune, July 5, 2015]

White Republican male Texas politician contends that his record in Texas shows that African Americans would be better off under Republican leadership than under Democrats.   [Kent Hoover, Washington Business Journal, Jul 2]

lawmakers eliminated funding for the Life Sciences Discovery Fund (LSDF), a key source of money for early-stage biotechnology and biomedical companies in Washington [state]  ... has helped approximately 40 startups take shape or expand, supporting more than 3,500 jobs in the state and bringing in an additional $550 million in private funding . ... [the fund] came from the 1998 settlement agreement between the state and tobacco companies concerning the advertising, marketing and promotion of tobacco products.  ...  leaders in Washington’s biotechnology industry say they can’t understand why the state would cut funding for what the Washington Biotechnology and Biomedical Association calls the fifth-largest employment sector in the state.   [Coral Garnick, Seattle Times, Jun 30] Was it just politics, or is the economic payoff more talk then substance?

New report from DOD's purchasing arm and the SBA finds that small businesses have actually fared very well, thanks to policies aimed at preserving and cultivating them. Roughly a quarter of all Pentagon prime contracts went to small businesses last year, the highest percentage since 1997. [Foreign Policy SITREP, Jun 29] No one seems to know, and DOD is too feared of Congressional reaction to assess such a question, whether DOD was best srved by such a result. If Congress keeps shrinking government workers, DOD will be forced to give more biz to big firms to manage DOD procurement.

The expanded New Mexico Angel Tax Credit makes $2 million in total tax credits per year available to all investors (up from $750,000), while increasing the total amount each individual investor can make to $62,500 per year (up from $25,000). The update also increases the number of credits individual investors can claim to five per year (from two) and the time the credit can be carried forward to five years (from three). [SSTI, Jun 24] All the conservative calls for fairer, flatter, simple tax are defeated by the urge to use taxes as the incentive for desired action. Just to get the credit for doing something without fighting over budget appropriations.

Enthusiasm plus subsidy.  Few doubt that some genetic testing companies are doing valuable, cutting-edge research — in cancer treatment, for example — that has the potential to change the course of medicine. But many of the genetic tests, which can cost $1,000 each, have not proved valuable in improving patient care.  Until the tests are proved useful, Medicare generally should not pay for them, said Dr. Elaine Jeter, a medical director at a Medicare contractor responsible for paying for care in Virginia and elsewhere. [REED ABELSON and JULIE CRESWELL, New York Times, JUNE 24, 2015]

Almost all governors brag about their economic development programs — hey, it’s economic development! But we could have an excellent conversation about how often these things really work. They’re frequently huge, thudding wastes of money. Louisiana, for instance, covers about a third of the in-state production costs for any movie that’s filmed there, a policy that will pay off only if it turns out that tourists visit New Orleans just because it was the site of “Abraham Lincoln: Vampire Hunter.” ...  Gov. Rick Perry claimed that his Texas Enterprise Fund created more than 12,000 jobs with a $50 million investment in an institute for genomic medicine. It was actually more like 10 jobs once you stopped counting every single biotech job created anywhere in the entire state for the previous six years.   [Gail Collins, New York Times, JUNE 24, 2015]  True economic evaluations of subsidy programs don't happen because they would be too embarrassing. 

the Oregon Growth Fund [is] no longer in the state budget that is working its way through the Oregon legislature.  ...  goes to angel conferences and other startup funds  [Malia Spencer, Portland Business Journal, Jun 24, 15]

Let the economic claims roll. Wisconsin created jobs at a rate of 5.7%, compared with 9.3% for the nation, in the four years from 2011 through 2014. ...  ranked 35th overall in the nation in private-sector job creation  [John Schmid and Kevin Crowe, Milwaukee Journal Sentinel, Jun 18]

North Korea says it has succeeded where the greatest minds in science have failed.  The authoritarian, impoverished nation better known for pursuing a nuclear program despite global criticism announced Friday it has a drug can prevent and cure MERS, Ebola, SARS and AIDS.  The secretive state did not provide proof ... said scientists developed Kumdang-2 from ginseng grown from fertilizer mixed with rare-earth elements    [AP, Jun 19]

The silly season flourishes as one candidate has a three sig figure flat tax rate and another promises 4% economic growth with no credible mechanism for getting there.
It's a comment on the economic gullibility of the their party's electorate.

a devout Catholic and a long-shot contender for the Republican nomination, told a Philadelphia radio station: “The church has gotten it wrong a few times on science, and I think we probably are better off leaving science to the scientists and focusing on what we’re good at, which is theology and morality.” [The Guardian, Jun 12]  Politicians good at theology?  Theology has no science; it is what you believe when you have no data.  Politiicians are also weak on morality since their success depends on popular opinion, not on any fundammental precepts.

Saudi Arabia said it shot down a Scud missile fired by Yemen's Shiite rebels and their allies early Saturday  [AP, Jun6]  Yeah, maybe.  For sure they shot an arrow into the air; it fell to earth (they hope not) they know not where.  25 years ago, we shot the same arrows that exploded in the sky with debatable effect. Perhaps the Patriot has improved since then, whereas the SCUD has probably not.

Texas Gov. Greg Abbott has signed legislation that establishes a new Governor's University Research Initiative and ends the state's Emerging Technology Fund (ETF). ... will not take equity in companies, but instead will focus on university research and commercialization grants. [SSTI, Jun 3]  Away from politically tinged development grants.

Citing the work of the University of Chicago professor Frank Knight, Mr. Varoufakis [Greece finance minister] pointed to the difference between risk and uncertainty. Betting on the flip of a coin involves high risk, but the potential outcomes and probability are known. “Uncertainty is when you can’t know all the outcomes or the probability with which each potential outcome will occur,” he said. [James Stewart, NY Times, Jun 4]  That boundary between predictability and uncertainty is what should drive government support for new technology.  If the risks have a knowable probability, the decision for investment should be left to the markets.  Government should fund only the "uncertain" ideas, and only until the probability of success becomes known. Most SBIR programs do not use that criterion; rather, they fund what they can use in the short run with high probability of success.

belief that tax cuts are a universal elixir that cures all economic ills is the ultimate zombie idea — one that should have died long ago in the face of the facts, but just keeps shambling along. Nothing that has happened in the past quarter century has supported tax-cut mania, yet the doctrine’s hold on the Republican Party is stronger than ever. [Paul Krugman, NY Times, Jun 5]  Tax cuts survive as a goal because they have a powerful beneficiary class who are willing to part with some of their wealth to support their cause. And all tax improvement scheme proposals start with "cut my taxes".

NSF is revising its Proposal and Award Policies and Procedures Guide. Significant changes include the incorporation of the NSF's new Public Access Policy as well as the NSF's implementation of the U.S. Government Policy for Institutional Oversight of Life Sciences Dual Use Research of Concern. The public is invited to comment on the draft Guide until July 20, 2015 on both the policy changes and the estimated burden of information collection. [AAAS, May 28]

The N.C. Biotechnology Center launched a new program to help scientists in the very early stages of their research.  ....  Called Biotechnology Innovation Grants, the program would provide up to $100,000 to full-time faculty scientists at North Carolina universities to help evaluate the likelihood of commercial success for life science inventions. ...  Already, the Biotech Center helps fund North Carolina life sciences companies in the early stages of existence, ...  Now the center wants to invest even earlier, at a time when scientists are still deciding if they even have a viable idea.  [Jason deBruyn, Triangle Business Journal, May 7]

According to the Pew Research Center, more than three-quarters of conservatives believe that the poor “have it easy” thanks to government benefits; only 1 in 7 believe that the poor “have hard lives.”  [Paul Krugman, NYTimes, May 29]

Mariana Mazzucato, a professor of economics at the University of Sussex in Britain who specializes in science and technology policy ... argues that the distribution of risks and rewards in the American economy looks nothing like the myth spun by free-marketeers, which posits a nation populated by entrepreneurial risk-takers overcoming the obstacles thrown up by an overbearing, bureaucratic state to produce the innovations that spark economic growth.   Her book ...  notes that government often takes the biggest risks, financing early scientific breakthroughs and providing early support to companies and organizations that will eventually become champions of innovation.  [Eduardo Porter, NYTimes, May 26]

70 Percent of NSF’s Research Dollars Should go to 'Core' Sciences. John Culberson (R–TX), chair of the appropriations subcommittee that funds NSF and several other federal science agencies, has thrown his weight behind a campaign by some Republicans to earmark more of NSF’s budget for what they have labeled the “pure sciences.” Their definition covers only four of NSF’s six research directorates—biology, computing, engineering, and math and physical sciences. It leaves geoscience and the social and behavioral sciences out in the cold. [SSTI, May 21]  Today's anxious politicians could remember that NSF was invented by earlier politicans with the idea that scientists could best decide how to pursue science.  Who, what, where, and how. 

Two companies that claim to hold patents for technology being used by federal agencies are suing the government for $1 billion.  Baltimore-based Discovery Patents LLC and 3rd Eye Surveillance LLC (Plano, TX;  no SBIR), filed a complaint Monday in the U.S. Court of Federal Claims, alleging that the U.S. has violated three video and image surveillance patents both through surveillance systems developed internally and also through systems developed by companies under contracts with government agencies. In the case of the latter, the lawsuit points to 11 specific companies.  None of the companies are part of the litigation.   [Jill R. Aitoro, Washington Business Journal, May 19, 15]

"I want to be a (fill in the subject du jour) President", says a candidate.  Hillary Clinton said she favors regulatory relief and tax simplification for small businesses, as well as encouraging community banks to make more loans by rolling back regulatory burdens on them. [Kent Hoover, Washington Business Journal] That regulatory relief for the burdened banks will encourage another round of over-valued sub-prime mortagages, among other benefits ---  to the banks.  Then once the regulatory relief counter opens for business, the gifts will cascade. Law-makers can never eat just one potato chip.

Imaginary math, again. The question is whether G.O.P. primary voters, used to promises of deep tax cuts, yet desirous of higher military spending and wary of old-age entitlement cuts, will allow a candidate to dance around their unreasonable expectations — or whether they will push their nominee into promises that prove unpopular in a general election. [Josh Barro, NY Tinmes, May 19]  As usual, the voters demand that the candidates tell them what they want to hear, with no recognition of mathematics.

A Senate committee voted to repeal Michigan's 50-year-old law requiring union-scale wages and benefits for construction workers on state-financed public works projects  [DAVID EGGERT, AP, May 13]   Basic econ: cheap goods require cheap workers, but cheap workers cannot buy many products.  Our current political system, with the best legislators that money can buy, seems bent on reducing taxes without regard to the public cost of building an aristocracy.

A disappearing Army.  The Army is looking for companies to make them [invisibility] cloaks in the next 18 months. But since science says that is impossible for now,  perhaps a cloak that remains invisible under certain types of light, for example, making the cloaked soldier appear to be a ghostly image..   [Akshat Rathi,, May 8]  Canadian military contractor HyperStealth Biotechnology has been making waves claiming to have invented a perfect, passive, and cheap invisibility cloak hyperbolically named "Quantum Stealth," designed to keep the fashion-conscious soldier concealed in any situation.   [Max Eddy, pcmag, Dec 12, 12]

Venture capital firms often take a shoot-the-moon approach, willing to accept a long list of losers so long as their portfolios include some huge winners. [Andrew Ross Sorkin, New York Times, May 11]  Government pseudo-VC programs, like SBIR sometimes pretends for itself, don't think that way.  Politicians want high percentage success, which means safety-first "investing" in incremental technology (or mere service), and they do not want close examination of the economics.  Sorkin talks about VC unicorns like Pinterest, and politicians babble about their own unicorns --  jobs from "investment" in constituencies. The VCs will get rich sometimes; the constituencies, never.  Which means that the beneficiaries who get the money applaud, and the rest of the world sees no effect. In programs like SBIR there is not even any net growth of jobs because the money has been diverted from other programs which would have produced the same number of jobs somewhere.

[SECAG] Vilsack announced the launch of two new private funds, known as Rural Business Investment Companies (RBICs), which make equity investments in rural businesses, helping them grow and create jobs. ... part of USDA's ongoing efforts to help attract private sector capital to investment opportunities in rural America to help drive more economic growth in rural communities. ...  Innova Memphis and Meritus Kirchner Capital can now begin raising capital  [SSTI, May 6]   Another test of government's ability to attract private capital for likely low return investment. If returns looked good, the world's sloshing capital would have already found them. But politics being what it is with two Senators from even the smallest states, .....

aka America’s Seed Fund.   ~$2.5 billion a year is awarded to bleeding-edge, STEM-driven and high tech innovators and small businesses across a very broad swath of the economy.  [SBA Associate Administrator Office of Investment and Innovation, May 6]

SBA head Maria Contreras-Sweet on her one-year report card, cutting red tape and being part of Obama's inner circle  ...  Her target audience: entrepreneurs — a group she has been committed to supporting since President Obama nominated her to the post last year. ...  The federal government has a congressionally mandated goal to direct 23 percent of the hundreds of billions in federal procurement dollars to small businesses. We had not met our goal, and last year we did, for the first time in eight years.  [Caroline McMillan Portillo, Bizwomen reporter, May 7]   Unfortunately, the 23% goal is pure politics, not economics.  I've never seen anything approaching quantitative analysis for the benefit to the nation of such a goal for government contracting. Certainly, there has been no economic justification for SBIR, despite the hoopla on SBA's new website with a decided post hoc, ergo propter hoc approach.

aka America’s Seed Fund.   ~$2.5 billion a year is awarded to bleeding-edge, STEM-driven and high tech innovators and small businesses across a very broad swath of the economy.  [SBA Associate Administrator Office of Investment and Innovation, May 6]

SBA head Maria Contreras-Sweet on her one-year report card, cutting red tape and being part of Obama's inner circle  ...  Her target audience: entrepreneurs — a group she has been committed to supporting since President Obama nominated her to the post last year. ...  The federal government has a congressionally mandated goal to direct 23 percent of the hundreds of billions in federal procurement dollars to small businesses. We had not met our goal, and last year we did, for the first time in eight years.  [Caroline McMillan Portillo, Bizwomen reporter, May 7]   Unfortunately, the 23% goal is pure politics, not economics.  I've never seen anything approaching quantitative analysis for the benefit to the nation of such a goal for government contracting. Certainly, there has been no economic justification for SBIR, despite the hoopla on SBA's new website with a decided post hoc, ergo propter hoc approach.

USAF announced a $2 million prize for the U.S. citizen who can design the best new engine. It’s the largest prize ever from a military service, according to Air Force Lt. Col. Aaron Tucker.  Specs: A successful 100-horsepower turboshaft engine [that] must operate on Jet A fuel, demonstrate a brake-specific fuel consumption greater than 0.55 pounds of fuel per horsepower per hour, and generate at least 2.0 horsepower per pound   [, May 5]

More accessible angel investors and capital, more physical office and lab space for biotech companies and a better tax climate for companies large and small.  Those are some of the suggestions Gov. Jay Inslee got when he asked Seattle-area biotech company leaders how Washington state can improve its environment for the industry   [Annie Zak, Puget Sound Business Journal, May 4] Politicians want to know how to boost their economies, but they have a hard time sticking with a long term plan and sensibly evaluating it.  Their long term is usually the next election. This particular survey didn't really answer the serious question of building a long term base for innovation, only what the present hopefuls would like.   Unmentioned are a mobile tech labor pool, a wide intellectual talent pool for idea exchenge, large companies in the industry, world-class university research in the technologies, stable politics and education,  etc.

Meanwhile in Ohio. [Ohio Third Frontier] officials have been slower than expected in awarding [money], so there’s $350 million yet to spend. And in contrast to the past 13 years in the overall $2.1 billion program, these last dollars will be directed almost exclusively to startup and early stage companies – and in the form of loans and investments.  ...  What it means is no more $3 million rodent MRI centers at the Cleveland Clinic, no more $5 million grants to Columbus corporations with combined net income approaching $5 billion.  ....  A state Development Services Agency study of $1.4 billion in Third Frontier awards since 2006 found that only 29 percent went toward programs to help startups.   [Carrie Ghose, Columbus Business First, May 1]

 Ohio’s $150 million state-backed fund for venture-capital investments is showing stronger returns and has attracted more than $1 billion investment to the state, but still is performing below expectations. ...  generated an 8.7 percent annualized return from 2006 through the end of last year, ...  has invested $150 million in 27 venture capital funds, which are required to make at least half of their investments in Ohio companies.  [Evan Weese, Columbus Business First , May 1]

Since it was created in 2005, the [Texas] Emerging Technology Fund has invested more than $200 million in about 145 early-stage technology companies. Now that Texas is on track to kill the fund, a big question remains: Who will manage the investments already made?   [Kimberly Reeves, Texas Business Journals, May 1]  Intriguing question: can the Texas legislature, dedicated to brief sessions, find a non-political answer?

On May 2, 1945— seventy years ago — President Truman signed Executive Order No. 9547.  It designated Justice [Robert] Jackson to act as U.S. representative and chief of counsel in preparing and prosecuting charges of atrocities and war crimes, against leaders of the European Axis powers and their principal agents and others, before an international military tribunal.   [John Q. Barrett, Elizabeth S. Lenna Fellow, Robert H. Jackson Center, Jamestown, NY]  Jackson was the last Supreme Court justice to never have attended college nor obtained a law degree. Jackson's funeral in Jamestown was the only time all SC justices were outside Washington at the same time.

 Purdue University President Mitch Daniels announced plans to create a 980-acre Purdue Research Park Aerospace District in West Lafayette housing public and private aerospace research facilities that will provide jobs for Indiana residents and learning opportunities for Purdue students.  ...  will house a $50 million Indiana Manufacturing Institute to support research in advanced composite materials. ...  apparently funded by The Purdue Research Foundation,  a private, nonprofit foundation created to advance the mission of Purdue University   [Purdue press release, Apr 21]

A Few Simple Fixes Could Unleash An Economic Boom, says yet another corporate leader, this time of Eli Lilly.  And, of course, the first remedy is to cut my taxes. The second is to cut regulations which were enacted for a societal purpose.  The third is to allow more smart immigrants to be hired in place of US talent.   All these things could certainly raise Lilly's profits, at least in the short run, at the expense of everyone else.

  In 1968, the U.S. spent 9.1% of the federal government’s annual budget on R&D, or $16.2 billion out of $178 billion, according to the American Association for the Advancement of Science. Today the percentage has shrunk to 3.6%  ... U.S. companies also have reduced the kind of basic research that led to breakthroughs like the laser, invented at Bell Labs, and the personal computer, much of which was developed at Xerox PARC. ...  the MIT authors say basic research—the study of core scientific concepts that may or may not have commercial applications—has essentially vanished from corporate laboratories. Instead, such research is generated almost exclusively by federal projects. ...The MIT] report, titled “The Future Postponed,” lays out the funding challenges for research in 15 areas as diverse as plant sciences and robotics.   [Robert McMillan, Wall Street Journal, Apr 27]

[SECDEF] Carter, an admirable mix of theoretical physicist and medieval historian, is trying to reconstruct the collaboration between the academic world, industry and government that existed in World War II and the Cold War but appears to have died out in recent years.  ... The Pentagon requested $69.8 billion for [R&D] next year, with $12.3 billion sought to “support the breakthrough science and technology research done at universities and companies and [Defense Department] labs across the tech community,” Carter said. ...  Carter pointed to AOSense (Sunnyvale, CA; $1M SBIR) as “a company we work with” that is designing alternatives to GPS satellites using new optic sensors ... [AOSense] got its first prime contract from DARPA in 2006 and has subsequently worked on projects for the military services and other government agencies, including the intelligence community.    [Walter Pincus, Washington Post, Apr 27, 15] 

State Treasurer Janet Cowell announced a new $250 million North Carolina Innovation Fund.  Two-thirds of the sum will be earmarked for co-investments in diverse industries, including growth sectors in the state. The remaining third will have a multi-stage focus, according to Cowell’s office: venture, growth, buyout and mezzanine.   [Lauren K. Ohnesorge, Triangle Business Journal, Apr 22]

a new program to develop sensors that remain dormant, waking up only when something actually important happens. ...   DARPA invites concepts by April 23. ... a solicitation for the Near Zero Power RF and Sensor Operations program (N-Zero). The goal is to increase the lifetime of a sensor from months to years  See solicitation.   [Jill R. Aitoro, Washington Business Journal, Apr 16]

The Pentagon plans to open its first office in Silicon Valley in an effort to tap commercial technology to develop more advanced weapons and intelligence systems.  ... part of a broader effort by the defense department to field technology more quickly and cheaply amid concerns that potential adversaries such as China are closing the gap or surpassing U.S. capabilities. ...  The Pentagon’s planned office in Moffett Field is expected to be up and running in a month, with around 15 staffers drawn from active-duty military and reservists. ....  Mr. Carter will announce plans for the Defense Department to create its own funding vehicle. ...  plans to use In-Q-Tel, a venture-capital firm set up by the U.S. intelligence agencies in 1999, as the conduit. It will provide a small amount of seed capital during a one-year pilot program with the firm, whose past investments have included Keyhole Inc., which later provided the core technology for Google Earth.   [Doug Cameron, Wall Street Journal, Apr 22, 15] DOD might start its tech acceleration with a re-examination of what its sub-departments are doing with SBIR.  But, don't worry, new SEDEFs often make pronouncements like this that bog down in implementation.  Witness, for example, Clinton's Technology ReInvestment program as the Cold War collapsed. That program initally put a single mind in charge and got a winners list in line with the stated objective.  But the system could not easily tolerate a single mind decision maker with advice from committes of experts. As a result it accepted Phase I selections under time pressure and then switched to the same safe committee process that doomed the military SBIR program to mediocrity. Watch also for free-market Republicans to object to meddling with private investment as the Bush 41 White Hiouse did to DARPA's dual-use designs. 

Double NIH, again.  N.I.H. should be a priority. Doubling the institutes’ budget once again would be a change on the right scale, although that increase should be accompanied by reforms to make the N.I.H. less bureaucratic, to give the director more flexibility to focus resources on the most common and expensive health problems, and to place a stronger emphasis on truly breakthrough research.  [Newt Gingrich, NY Times, Apr 21]  The arch-conservative bomb thrower advocates for more government in the New York Times, not the Weekly Standard.

Enduring political myths.   Maybe it’s time for politicians to drop their rhetoric about small businesses creating most of America’s new jobs — since 2008, it’s actually been middle-market companies that have driven job growth.  That’s according to a new analysis from American Express and Dun & Bradstreet. It found that middle-market companies — businesses with revenue between $10 million and $1 billion — created 2.1 million of the 2.3 million net new jobs added over the past seven years.   [Kent Hoover, San Antonio Business Journal, Apr 14, 15]  Oh, don't worry about the SB handouts; the voters still believe the warm-fuzzy myths about SB (and anyone can be president). They do not read serious analysis.

While there is a growing consensus among policymakers, from heads of state to local mayors, about the need to support entrepreneurs, there remains a dearth of data and analysis around what works and what does not in creating vital and vibrant entrepreneurial environments.  ...  A new Kauffman Foundation report is intended to offer policymakers across the country, and perhaps the world, a solution. Authored by Dane Stangler and Jordan Bell-Masterson, the report recommends that policymakers look to four baseline indicators — density, fluidity, connectivity, and diversity — as a starting point for evaluating and measuring entrepreneurial vitality. [Jonathan Ortmans, Kauffman Foundation, Apr 13] Just throwing money and policy announcements at self-proclaimed innovators will make the recipients happy, but few others. SBIR and dozens of other public allegedly entrepreneurial programs could take guidance from Bill Gates, If you can’t measure it, it doesn’t exist.

Sovaldi, a pricey pill made by Gilead Sciences ($1.2M SBIR), caused Medicaid spending on hepatitis C treatments to soar last year, even as most states restricted access to the drug, leaving many low-income patients untreated.   ...  a wholesale cost of $84,000 per person over the course of treatment, or $1,000 per pill. The price has sparked an outcry from insurers, members of Congress   ...  Texas, which has the nation’s third-largest Medicaid population after California and New York, spent nothing on Sovaldi in the first nine months of the year, according to the data, making it the only state in the U.S. to not pay for the drug.   [Joseph Walker, Wall Street Journal,  Apr 8, 15]

many of the tech and commercial [Silicon Valley] firms [DOD] have reached out to have expressed little interest in working with the government, seeing the limited profit margins and draconian acquisition rules as something they don’t want any part of. [Foreign Policy, Apr 9] Why SBIRs for DOD and NASA get little commercialization interest: what's good for government ain't what makes return on capital. And as long as DOD focuses on low project risk and making government smarter, the commercialization programs are mere window dressing.

CoLucid Pharmaceuticals  (no SBIR), a company that in January announced it had raised $37 million to advance its experimental migraine treatment, will leave the Research Triangle area [for]for office space in Cambridge [MA].  ...  Many life sciences companies from North Carolina, and RTP in particular, are one step away from leaving, largely because there isn’t the investment capital base here that exists in the two other major life sciences hubs of Boston and Silicon Valley.   [Jason deBruyn, Triangle Business Journal, Mar 25, 15] Again, the SBIR advocates who sometinmeds argue that SBIR should enable small Nebraska companies to remain in Nebraska, are faced with the question of what SBIR is for. Their arguments usually revolve around "fair share", a purely political line.

More than half of the [at least 93] businesses that applied for Start-Up NY tax credits in the first year of the program have been approved, according to a new report from Empire State Development.   Read the report. [Chelsea Diana, Albany Business Review, Apr 2]

Albany Medical Center will receive more than $520,000 in federal grants from the U.S. Economic Development Administration to support biomedical research and commercialization of new medical products and technologies.  ....  The center, at the second-largest hospital system in the Albany area, has space in the incubator for between eight and 10 companies. The incubator at Albany Med is among several accelerators in the region that are aiming to tie research to commercialization and create a regional support system for entrepreneurs.  [Tom Caprood, Albany Business Review, Mar 31]  Politicians throwing money at a problem (opportunity), but not enough money to power real market change. It's only enough to pick low-hanging fruit for incremental change in low risk projects.  Real market potential would be attracting big money that can smell opportunity.  Politicians like to pretend that they can invest like the vast and liquid world capital pool.

Let's try a social program.  The Watervliet Arsenal is bringing in three new businesses after M+W announced last week that it is moving some of its operations from the arsenal to SUNY Polytechnic. ...   Peter Gannon, president of the Arsenal Business and Technology Partnership in Watervliet, said the arsenal has gone back to the drawing board, focusing on helping veterans start businesses. [Chelsea Diana, Albany Business Review, Mar 31] The amounts and profit prospects are small, because politicians like to spread money as thinly as possible over the max number of constituents.

If you're schizo enough to condemn the bloated government while applying for SBIR, know that the House proposes to reduce the federal workforce by 10 percent.  Since SBIR is not a priority for any agency, expect that SBIR management could shrink noticeably.

A new study says New Mexico is No. 1 among states that rely on federal spending, according to a report in the Albuquerque Journal ...  New Mexico ranks ahead of Mississippi, Kentucky and Alabama as states most dependent on federal funding. The least dependent states were New Jersey, Delaware and Illinois.   [Mike English, Albuquerque Business First, Mar 30] Complaining about federal intrusion in their sovereign affairs while holding out their begging cups. "states rights" has always been a policy-dependent issue as a by-product of our federalism system of competition for power.

State funds earmarked for the Missouri Technology Corp.— $6.36 million in fiscal 2014 — were allocated to support eight investments through the IDEA Funds, 11 grants through the MOBEC program, and the innovation center program.  [Brian Feldt,  St. Louis Business Journal, Mar 20, 15]   Missouuri Tech's investment portfolio is concentrated in high risk, high tech companies, with a few low tech risk software and app makers unworthy of market-failure label.

A new software company and a Norwegian-American engineering firm are projected to invest $29 million in Cobleskill, New York [population 6400, not exactly on the road to anywhere, dates from 1712] over the next 10 years. The two technology companies have been approved to operate tax free in Cobleskill for 10 years under Gov. Andrew Cuomo's Start-Up NY program.  [Chelsea Diana, Albany Business Review, Mar 24]

A unanimous Supreme Court says investors can't sue companies for making misleading statements of opinion prior to a public stock offering just because those statements ultimately turn out to be wrong. ...  unless it omitted important facts [AP, Mar 24] It left the lower courts to decide what was important and omitted.

SBIR stats.  SBIR projects are less likely to fail if research teams are smaller, have more experience and include women investigators, according to a new working paper by Albert N. Link and Mike Wright. The authors also found that larger SBIR awards lower the chances that a project will be discontinued before completion. ...  Link and Wright reviewed data from 1,878 Phase II projects funded through SBIR at DOD and Energy, NIH, NSF, and NASA. Of those projects, about a third failed, meaning they were not completed and were discontinued by the research team. A variety of reasons were given for these failure. The most common (24 percent of cases) was that the potential market for the new technology was too small. Another 15 percent reported that insufficient funding was available to complete the project, and 14 percent said that technical problems stood in the way. [SSTI, Mar 18]  Too small a market should have been known before approving Phase II; insufficient funding means they took what they could get despite the poor prospects for success; technical problems is a valid reason to fail because there was enough uncertainty to make it a candidate for true market failure.  On balance the agencies were being too rigid and playing too safe for "success". No surprise! except for NIH, safety-first has been the story for three decades.   Link and Wright acknowledge that more research is needed. No kidding! But Congress will not allow any economic evaluation that embarrasses their devotion to small biz as their political engine for economic growth. Read the report.

In November 2014, the Congressional Budget Office (CBO) presented the incoming members of the 114th Congress with "Federal Policies and Innovation", a report arguing that "market failure" - whereby "[I]nnovation produces some benefits for society from which individual innovators are not able to profit - results in those innovators tending to "underinvest" in such activity. Public policymakers, says the CBO, must "endeavor to promote innovation to compensate for that underinvestment."  There are three innovation-related issues which Congress will likely address in this Congress: the re-instatement of the federal R&D tax credit, patent reform, and regulatory reform.   [Thomas Hemphill,, Mar 16]  Although market-failure actually exists in high tech, our political system cannot overcome serving vested interests in the making of programs that would actually correct for market-failure. 

DARPA Grant for Future Arctic Sensing Technologies. DARPA is soliciting innovative research proposals
in the area of novel Arctic sensor systems. In particular, DARPA is interested in concepts for low-cost, rapidly-deployable, environmentally friendly, unmanned sensor systems which are able to run for a minimum of 30 days between refueling stops. DARPA intends to grant a cash award of $500,000 to $750,000 each to one or more applicants to build out a design, and the agency is committing an initial $4 million to the program. The new surveillance system will likely have roles outside of military missions, such as in monitoring drifting ice that poses a threat to shipping. The deadline for submissions is April 14.  [AAAS, Mar 14]

Rep. Hakeem Jeffries visited Silicon Valley this week, where he found a host of similarities to his home district in [Brooklyn and Queens] New York — not all of them laudable. ...  "In many ways (Silicon Valley) mirrors the dynamic that we are experiencing at home, both in terms of the failure to marry jobs with local opportunity, and also in the context of the crushing housing market that's pushing out working families and middle class." [Jeffries said]  [Ben Soriano, Silicon Valley Business Journal, Mar 13]

The U.S. Patent and Trademark Office branch that's preparing to open in Silicon Valley will start recruiting for up to 80 patent examiners next month.   [Greg Baumann, Silicon Valley Business Journal, Mar 13]  It will take a considerable while to install a staff as competent as the Silicon Valley patent firms.

Thanks for the subsidy, bye.  In 2011, $20 million of state money helped lure Chiquita Brands headquarters from Cincinnati to Charlotte. But after a buyout completed last fall, Chiquita’s new owners plan to close the headquarters, and community leaders are now working to recover as much money as possible. ....   The John Locke Foundation released a report in April summarizing the results of more than 680 peer-reviewed journal articles that studied how state and local policy affects economic growth. Fifty-five of the articles addressed the impact of targeted tax incentives, and the results are not encouraging. More than 70% of studies found that incentives either did not substantially contribute to economic performance or produced mixed results.....   Nevertheless The McCrory administration has pledged nearly $300 million to companies that promise to create 15,356 jobs by 2026.  [Mitch Kokai, John Locke Foundation, a free-market public policy think tank in Raleigh, Wall Street Journal, Mar 14]

Americans continue to view the U.S. government as the number one threat to their country. A new Gallup poll released this morning reveals that for the fourth consecutive month more Americans—18 percent—identify the government as the country’s biggest problem, beating out the economy and unemployment.  ... Of course, it shouldn’t be any surprise that Americans aren’t happy with the government. After all, their elected officials consistently have embarrassingly low approval ratings.  [Brianna Ehley, Fiscal Times, Mar 12] While 18% accept conservative drumbeat complaints about government, they hardly make a majority.  The main problem is that since few people outside government understand what and how government does, the sour opinion of the minority doesn't mean much. Politicians will nevertheless strain to get those people to the polls so that different politicians can make the same mistakes. The forces that generate those mistakes lie outside the reach of the politicians who are straining to do what the uninformed public demands.

[CIA] has begun a realignment that Director John Brennan said attempts to narrow blind spots and marshal more cooperation between spies and intelligence analysts, embarking on what could be a sweeping reworking of the agency’s chain of command. [Damian Paletta, Wall Street Journal, Mar 6] Every problem triggers the urge to re-organize.

Evolution will follow. U.S. regulators for the first time are proposing limits on the planting of some genetically engineered corn to combat a voracious pest that has evolved to resist the bug-killing crops, a potential blow to makers of biotech seeds. The measures proposed by the Environmental Protection Agency represent a bold step to thwart the corn rootworm, a bug that ranks among the most expensive crop threats to U.S. corn farmers.   [Jacob Bunge, Wall Street Journal, Mar 5]  You show me a new life form, I will show you evolution to feed on it. Physics problems stay solved; bio problems evolve.

Jeb Bush: Grow the economy, and there'll be plenty of jobs for Americans and immigrants.  Surprise: political candidate predicts great things once somebody solves the puzzle of goosing the economy.  But he has no workable plan for doing so, just the usual Republican pro-business mantras that would improve business profits but do little to create the wished-for boost in good-paying permanent American jobs.

Air Force will offer a $2 million prize to the first research team that develops a small, lightweight, fuel-efficient turbine engine. ... twice the fuel efficiency of today's small turbines and three times the power-to-weight of a typical aviation piston engine, among other criteria.   ...  AFRL will hold industry days about the contests at two sites: March 24 and 25 at the Wright Brothers Institute in Riverside and at a West Coast location TBD.   More detail.   [Joe Cogliano, Dayton Business Journal, Feb 24]

Technology works better. The $1.3 billion that the United States government has spent since 2005 encouraging Africans to avoid AIDS by practicing abstinence and fidelity did not measurably change sexual behavior and was largely wasted, according to a study presented on the last day of an AIDS conference. ...    [In 2003] Conservative Republican leaders in the House of Representatives successfully included a provision that one-third of AIDS prevention money go to programs to encourage abstinence and fidelity.  [Donald McNeil, New York Times, Feb. 26]  Bet on technology, not against human nature.

The Department of Energy (DOE) has formed the Office of Technology Transitions (OTT), a DOE-wide unit that will "coordinate the commercial development of DOE's research outputs" in order to expand the commercial impact of DOE research. ....  The OTT will also house the DOE's Energy Technology Commercialization Fund, a $20 million fund that is used to support the commercialization of applied energy technologies by matching private investments.  [AAAS, Feb 25]  First, do something only a government could love, then take more government money to pretend to commercialize it. The government, if it really wante dcommercialization, would have started with stuff that clearly had commercial appeal if it actually worked. Such appeal could be demonstrated by third-party validation of some kind of co-investment.

Three [venture] firms were awarded $5 million from the state, according to Gov. Andrew Cuomo's office.  ...  part of the governor's $50 million Innovation Venture Capital Fund program. It will be matched by at least $5 million in private investment capital from the three firms - Excell Partners (Rochester, NY),  SCP Buffalo Incubator/Z80 Labs (Buffalo, NY) and CenterState CEO's Grants for Growth (Syracuse, NY).   [Chelsea Diana, Albany Business Review, Feb 11, 15]

Bigger honeypot for legal bribery.  [The NC legislature is considering a] proposal would infuse more money into the Job Development Investment Grant program, which [Gov] McCrory has said is nearly out of money. The amount available for the program would double from $22.5 million for the current two-year period to $45 million, allowing McCrory to promise millions to employers before the end of the year.  [Raleigh News & Observer, Feb 24] If you love collecting government subsidies, you'll love all these bribery ideas. Who pays for them?  The state taxpayers. Do they work?  Dig deep to find honest evaluations of political handouts.

Political science, as ever.  [Representative Andy Harris (R–MD)] wants NIH to develop an overarching strategic plan that sets priorities for money allotted to it. That idea flopped when the agency last attempted it more than 2 decades ago. And Corb's group is troubled by a proposal that the director of each NIH institute personally sign off on every grant, taking into account whether its goals are “a national priority and have public support” and are “worth the potential scientific discovery.” Those criteria don't make sense for basic research, because payoffs can be difficult to predict, Corb says. [Kelly Servick, Science, Feb 6, 15] Who has the gold makes gthe rules, however ill-advised. Politicians like to point to objectives and success that basic research cannot promise any specifics. 

The [SBA] SBIR Road Tour “Seeding America’s Future Innovations”, is a nationally focused outreach initiative targeting advanced technology communities in states that have underutilized this funding opportunity. Over the course of 2015 more than 20 individual program managers from the 11 participating agencies will travel by motor coach to convey the non-dilutive technology seed fund opportunity.  ...  The first series will take place the week of March 23rd, with stops in Louisville, KY, Nashville, TN, Atlanta, GA, and Columbia, SC.  The next stop is the week of April 27th in Long Beach, MS, Ruston, LA, Oklahoma City, OK, Wichita, KS, and Columbia, MO.  Trips to the North Central region is planned for July and the last to the Northwest in August. [Javier Saade, SBA website]  Almost all the fed people who do such outreach travel can tell you how to apply; they rarely can tell you how the deciders think. 

The initial draft of [Wisconsin governor] Walker’s budget bill also proposed to rewrite the university’s 110-year-old mission statement, known as the Wisconsin Idea, deleting “the search for truth” and replacing it with language about meeting “the state’s work-force needs.”  [Christine Evans, New York Times, Feb 16] Business wants lower taxes and state-trained employees, without apparent regard as to whether dumbing down universities helps or hurts the state and nation.

The U.S. DOE announced the launch of the Office of Technology Transitions (OTT) to serve as a DOE-wide functional unit that coordinates the commercial development of DOE’s research outputs and administer the Energy Technology Commercialization Fund – a nearly $20 million fund that will leverage the R&D funding in the applied energy programs to pursue high-impact commercialization activities. OTT will focus its efforts on coordinating technology transfer activities carried out at all 17 DOE national laboratories, as well as other DOE research and production facilities, to actively support private sector commercialization activities. [SSTI, Feb 11, 15]  First, the government funds R&D that the private sector finds economically unrewarding; then the government funds efforts to change the private sector's attitude toward such uncompetitive technologies.Result, a lot of temporary jobs funded with tax money.  A better course is to fund Phase II SBIR only in firms that show a future economic demand for the R&D product, not just something that makes the government smarter. One convincing showing is third party validation by simultaneous investment in the firm's idea.

The SBA rolled out yet another new program, a new online tool called LINC that's designed to match small businesses with lenders. The House SB Committee objected by insisting that SBA: Stop creating new programs that haven't been approved by Congress and start implementing the things we've asked you to do. That includes better policing of small business contracting programs and hiring a chief information officer to improve the agency's information technology, which has long been a weakness. ... Finally, it opposes funding two new venture capital initiatives by the SBA: the Impact Fund, which is designed to help economically distressed regions; and the Early Stage Fund, which is designed to help startups. Neither of these programs was approved by Congress, it noted, and there's no guarantee they will accomplish the SBA's goals.   [Kent Hoover, San Francisco Business Times, Feb 12]   Republicans simply do not believe that government can outperform private sources for new tech innovation. SBA has a natural tendency to invent things to do.

the [Texas] House baseline budget capped both the Texas Enterprise Fund and the Emerging Technology Fund. Based on the recommendations of an interim committee on economic incentives, the budget pushed funding toward THECB's existing Texas Research Incentive Program.  [Kimberly Reeves, Austin Business Journal, Jan 29]  Tech company subsidies, that were politically controlled by the governor, will shift to institutional research, which is more an act of faith than an ROI investment. Tech companies can shift their subsidy groping to federal programs like SBIR. Politics will shift from the governor to the legislature.

A state nanotechnology-based economic development entity  [called the Fort Schuyler Management Corp] paid about $9.3 million to acquire some building space tied to Albany Molecular Research plans to open a drug development operation in Buffalo, New York.  [David Robinson, Albany Business Review, Feb 3, 15]

Different guns advance.  Lasers that shoot down drones with precision and electromagnetic cannons that fire more than 100 miles are part of the future of naval warfare, promising to be cheaper to use than conventional weapons, [said] Chief of Naval Operations [who] sets the navy's future strategy, said during a lecture at the Australian National University that the experimental guns were an important departure from gunpowder and inexpensive to fire.   The laser gun, known as a Laser Weapon System, or LaWS, is being tested aboard a warship in the Persian Gulf, he said.  [ROD McGUIRK, AP, Feb 10]  The logisticians will tell the CNO that every new system requires an add-on to the problem of keeping the forces supplied with the stuff that makes the weapons work, including especially the fuel for the power sources of lasers and EM guns. They need a lot of energy.

The DoD's SBIR/STTR web  aka the "DoD SBIR Resource Center" is back on line! Revised Closing date for Receipt of Proposals is February 25, 2015, 6AM EST. New phone for SBIR/STTR Help Desk M-F 8am - 5pm [1-800-348-0787] or Help Desk email: [].  Thanks to many of you who involved your congressionals (both House and Senate), because once that kicked in, things got done  [Rick Shindell, SBIR Insider]

DOD released an opportunity to establish the newest Institute for Manufacturing Innovation (IMI) focused on flexible hybrid electronics manufacturing, the seventh IMI to be established under the Obama administration.  DOD will host two Proposer’s Days on: February 19 in Arlington, VA; and, February 26 in Monterey, CA. Applications due May 29. Read the announcement (BAA-RQKM-2015-0014)  at  [SSTI, Feb 4]

The Department of Energy will combine three existing programs (Incubator, SolarMat, and SUNPATH) into the Sunshot Technology to Market Program – a new funding program to support startups and other for-profit organizations as they bring disruptive solar innovations to the market place.  Will focus on disruptive solar technologies at all stages of development and offer six tiers based on the type of product (hardware or non-hardware) and product maturity. Concept papers are due Feb 24; applications are due Apr 22. For more information, read the announcement (DE-FOA-0001225) at
[SSTI, Feb 4]

Government handouts make parasites.  Politicians and lawyers pretend that they are important people doing important work. But often they're important because they are parasites. They feed off others, while creating no wealth of their own.  ... Those people who take instead of producing things make up "the parasite economy," says Cato Institute Vice President David Boaz. It's my favorite chapter in his new book, The Libertarian Mind. The parasite economy, says Boaz, thrives wherever "you use the law to get something you couldn't get voluntarily in the marketplace."  [John Stossel, reason,com "free minds and free markets", Feb 4] If the total wealth of the US were the only criteria for happiness, the free market purists would perhaps have a valid argument. Of course, without politicians and lawyers we would not have a stable system that balances economic with societal values.  But our free speech rules invite the economic interests to hire mouthpieces for more freedom for business to do whatever it pleases.  For a view of what such a world would look like, visit 19th century America before 1880. Be careful what you wish for. 

[new] Gov.Abbott's action toward abolishing the Emerging Technology Fund would bolster the state's efforts to create additional nationally competitive research universities in Texas, state business leaders say.  Under a proposal by Abbott, the Emerging Technology Fund would be scuttled, its portfolio transferred to the Comptroller's Office and its $136 million in unexpended balances equally split between faculty recruitment efforts at the Texas Higher Education Coordinating Board and the remaining Texas Enterprise Fund. ...  The Emerging Technology Fund, which distributed $485 million over eight years, has backed at least 143 startups — about 17 of which have failed. More than $204 million of ETF money has gone to such companies and critics have blasted the fund's managers for a lack of transparency and accountability as they question whether public money should go toward startup investing. [Kimberly Reeves, Austin Business Journal, Jan 29, 15] New gov, new approach to revving the tech engine.   Today's problem was yesterday's solution.

Among Gov. Scott Walker’s economic objectives in his state budget proposals is a performance-based funding formula for Wisconsin’s system of two-year technical colleges, which could lead to funding reductions at under-performing campuses. [Milwaukee Journal Sentinel, Feb 4]  Which would probably favor the schools in more prosperous urban centers where more qualified teachers would be looking for better employment opportunities. The rural politicians will have to defend their constituencies from such raids on education opportunities.

DOD SBIR subnission system down for lack of an operator. At the time of this writing, no SBIR/STTR proposals can be submitted, no questions answered, and I'd be very suspicious of any already submitted proposals getting to their destination. ...   there is no set date to turn the lights back on   [Rick Shindell, SBIR Insider,, Feb 2, 2015]  while the DOD contracting machine activates a new contractor operator.

Last summer, [DARPA] launched a $45 million program called Big Mechanism, aimed at developing computer systems that will read research papers on cancer driven by mutations in the Ras gene family, integrate the information into a computer model of the cancer pathways, and frame new hypotheses for scientists to test—all by the end of 2017. The 12 participating teams met in Washington, D.C., last week to take stock of progress on the challenge. [Jia You, AAAS, Jan 31]

The new Senate Budget Chairman Mike Enzi (R-WY) said during a conference call with reporters that his goal is to reach a balanced budget in 10 years, though he did not provide a plan for achieving that goal. [AAAS, Jan 29] In ten years no one will remember any such vague political promises.

Washington Theater News.  The Senate passed legislation approving the Keystone XL pipeline, moving the GOP-controlled Congress one step closer to a showdown with President Obama. Great pubicity over votes to pass economically meaningless legislation that the President has already promised to veto. Amusement for observers and jobs for lobbyists.

DOE Advanced Research Projects Agency-Energy (ARPA-E) announced that it will commit up to $125 million for its 2015 OPEN competition to Support R&D projects on potentially disruptive new energy technologies. Via the 2015 OPEN program, DOE intends to make up to 50 awards across the full spectrum of energy applications. Concept papers are due February 27, 2015. [SSTI]  Fix that ugly second law of thermodynamics.

Hitting the ground running, Congressman Mike Honda (D-Silicon Valley) today introduced four bills that are designed to help start-up and small businesses as they work to further expand Silicon Valley’s innovation economy.      [Honda's webpage]  The four specific acts give small tax deductions appropriate for ssmall-bore innovations like apps other software, and biz processes.  Serious innovations will have to continue to rely on serious risk-loving VCs while the lawmakers troll for votes. 

Want more start-ups? Import more starters. The immigrant share of the self-employed has more than doubled since 1980, and immigrants have higher representation among business owners than in the general labor force. The business creation rate is also higher for immigrants.  ...   Businesses started by immigrants follow the “up or out” pattern that economist John Haltiwanger has found characterizes young firms in general—they fail more often, but when they survive, tend to grow faster.  [Dane Stangler, Kauffman Foundation, Forbes, Jan 22]  How is SBIR doing on startups that grow into adult biz? No one knows because the beneficiaries of the handouts do not want Congress to ask. One only need look at the companies getting the handouts from the big agencies with most of the SBIR money to find a collection of life-style companies looking for the next government cotract.

Wannabes.  Some of the 535 Sectaries of State on Capitol Hill are making noises. Senators in both parties squared off with the Obama administration about whether the threat of new sanctions would scuttle nuclear talks with Iran as House Speaker John Boehner, without consulting the White House, invited Israeli Prime Minister Benjamin Netanyahu to address Congress. [DEB RIECHMANN, AP, Jan 21]  The Constitution working as intended to limit power by competition.

Air Force Secretary Deborah Lee James outlined a three-pronged program last week aimed at cutting costs and speeding the purchase of new technology  ...  set up a $2 million competition for new-technology innovation and organize industry events where government officials can fast-track contracts to companies that “wow” them, James said    [Amrita Jayakumar, Washington Post, Jan 19]   What a great idea!  Unfortunately, $2M is chump change for what they want, and they have had a program for thirty years that could have done the deed, but was mishandled. SBIR, that was captured by the bureaucrats to do what they were already doing with their R&D - servicing the present. And when the politicians carved an even bigger piece for the handout program, more bureaucrats wanted their money back. And got it.  As a result the SECAF stands up in public an announces a "new" idea.  She needs a new speech-writing team.

Cut our taxes and give us subsidies.  Rep. Steve Chabot’s must-do list for small businesses.  The Ohio Republican, who became chairman of the House Small Business Committee when Congress took office last week, plans to continue the committee’s focus on how the government burdens small companies.  “If there’s one thing government can do for small business it’s to get the heck off their backs,” Chabot says. “We do over-regulate them. We do overtax them.”   [Joyce Rosenberg, AP,  Jan 18]  What's a politician good for if not to hand out favors while pretending there's no cost?   A typical question that never gets asked: has thirty years of SBIR done more good than leaving the federal agencies to make their own choices for suppliers of R&D?

Cut our taxes while we invent a reason.  consider the Kansas experiment. Back in 2012 Sam Brownback, the state’s right-wing governor, went all in on supply-side economics: He drastically cut taxes, assuring everyone that the resulting boom would make up for the initial loss in revenues. Unfortunately for his constituents, his experiment has been a resounding failure. The economy of Kansas, far from booming, has lagged the economies of neighboring states, and Kansas is now in fiscal crisis.   So will we see conservatives scaling back their claims about the magical efficacy of tax cuts as a form of economic stimulus? Of course not. If evidence mattered, supply-side economics would have faded into obscurity decades ago. Instead, it has only strengthened its grip on the Republican Party.  [Paul Krugman, New York Times, Jan 19]  The goal justifies overlooking inconvenient facts.

Republicans for liberty  ...  to fantasize on financial products. The newly bulked-up Republican majority in the House is aiming to soften the bite of legislation that grew out of the 2008 financial crisis and put banks and Wall Street under the most sweeping rules since the Great Depression.  ...  would give U.S. banks another two years — until 2019 — to ensure that their holdings of certain complex and risky securities don't put them afoul of a new banking rule.    [Marcy Gordon, AP, Jan 12]  The power of big money to keep Washington green.  

Fraud penalty.  Ansun Biopharma (formerly known as NexBio, San Diego, CA; $9M SBIR including one for $6M)  biotech company developing a flu treatment has agreed to pay the federal government $2 million in settlements because its executives doctored timesheets on grant and contract work for the National Institutes of Health, the U.S. Attorney’s Office said.  ...  has received at least $73 million in grants and contracts from the federal agency since its start in 2003, according to agency records and a 2009 report from the San Diego industry group Biocom. That includes a $50-million contract in 2006 to develop Fludase, a powdered inhaler treatment designed to block a receptor that all flu virus strains use to enter cells in the airways. [Kristina Davis,, Jan 8, 14]

Other countries, most notably Chile, have already begun to take advantage of Washington’s flawed immigration policy. In 2010, Chile began paying foreign entrepreneurs to visit the country for six months and interact with locals. The program, dubbed Start-Up Chile, offered foreigners $40,000, plus free office space, Internet access, and mentorship, and asked only that they consider moving to Chile permanently. As of June 2014, the program had attracted more than 12,000 applicants from 112 countries and admitted 810 from 65 countries. Thus far, 132 of the resulting companies have opted to stay in Chile and have already brought in around $26 million in capital; global investors have begun to refer—only half-jokingly—to “Chilecon Valley.” Other countries, particularly the United States, should take note.
    [Robert Litan Foreign Affairs, J/F2015]

Why politicians love economics. They’re claiming credit. Never mind the fact that all of the good data refer to a period before the midterm elections. Mitch McConnell, the new Senate majority leader, says that he did it, that growth reflected “the expectation of a new Republican Congress.”  [Paul Krugman, New York Times, Jan 8] Economics has a rich source of incomprehensible data that could support any convenient dream theory, especially the politicians' rooster claim for the latest sunrise. The reality is that the American economy chugs along on private enterprise with stability help from government in fraud suppression, stable currency, law and order, national defense, and counterweight demand in business down cycles.

Innovation enemies.  For much of the last century, the United States led the world in technological innovation—a position it owed in part to well-designed procurement programs at the Defense Department and NASA. During the 1940s, for example, the Pentagon funded the construction of the first general-purpose computer, designed initially to calculate artillery-firing tables for the U.S. Army. Two decades later, it developed the data communications network known as the ARPANET, a precursor to the Internet. Yet not since the 1980s have government contracts helped generate any major new technologies, despite large increases in funding for defense-related R & D. One major culprit was a shift to procurement efforts that benefit traditional defense contractors while shutting out start-ups.
 [James Bessen, Foreign Affairs, J/F2015]  One counter-factor was the rise of the venture capitalist to invent companies that would storm the ramparts of innovation with names like Noyce, Moore, Gates, and Jobs.

Scientists have discovered a powerful new antibiotic they say can kill an array of germs without the bugs easily becoming resistant to it, a potential weapon against a range of diseases.  ... the new class of antibiotic, called teixobactin, was reported Wednesday in the journal Nature. It was uncovered by screening 10,000 bacterial strains from soil. Teixobactin will be investigated further in animals before being tested in people.   If all goes well, “we’ll be in clinical trials two years from now,” said Kim Lewis, a professor at Northeastern University in Boston and lead author of the study.   [Gautam Naik, Wall Street Journal, Jan 9, 15] 

Fewer voices for science.  The dearth [of scientists in Congress] has caused increasing alarm among scientific associations, which are concerned about maintaining research funding and flexibility in how National Science Foundation grants are used. Moreover, such groups contend that many of the issues Congress faces—climate change, technology regulation, medical research—should have voices who can speak for the underlying science.  “What we are sorely missing in the Congress today are those who are science-minded,” said Mary Woolley, president of Research! America, a nonprofit that advocates for increased medical and health research funding. “We are skating on thin ice.”   [Heather Haddon, Wall Street Journal, Jan 5, 15]  After all, who needs facts when you have ideology.