The Government's Role In Technological (and Economic) Development

Mike Shellenberger and Ted Norhaus have an article in the San Francisco Chronicle about government support for basic research. Here's a short summary with a link to the story.  They explain how basic government research led, years after the work was done, to substantial economic growth.  Here's a taste:

Heretical as it may sound, market competition has not been the primary driver of world-changing innovations. There was no market for microchips when the Air Force and later NASA in the 1950s and 1960s contracted with companies to make microchips -- and loaned them money to build factories. It would take until the 1980s for personal computers to take off, and until 1990 for their increases in labor productivity to translate into economic growth (accounting for much of the post-1990s economic boom).

Same story for the Internet. In the 1960s, there was no commercial interest to link computer networks. But the DoD wanted to make it easy for its researchers to communicate, and in 1968 contracted with BBN (now part of Raytheon) to create the protocols for computers networks to efficiently route information in packets. It took 25 years for the Internet to become commercially viable, and until the early 2000s for the Internet to add 0.25 to 0.5 percent to annual U.S. economic growth.