What Fruits Will Reduced R&D Bear For The U.S.? 621
lucabrasi999 writes "Here's an interesting
commentary from Mike Tarsala at CBS.Marketwatch.com regarding R&D spending by U.S. companies as it compares to overseas firms. It compares today's US tech firms to the Big Three Automakers of the 70's, while saying the overseas tech firms are similar to the Toyotas and Hondas of the 70's. In other words, US Tech firms are about to be taught a lesson in global capitalism. I think Mike is 100% correct. What do you think?"
Yep (Score:5, Insightful)
If the economy was similar to what it was a few years ago, then sure, R&D dollars would be up a lot.
Am I the only one that sees this correlation?
Re:Yep (Score:5, Interesting)
Re:Yep (Score:5, Interesting)
Re:Yep (Score:3, Insightful)
If the economy was similar to what it was a few years ago, then sure, R&D dollars would be up a lot.
The issue is whether the lack of spending on R&D will prolong the recession because there is less innovation.
Will the lack of new products prolong the stagnation of economic growth, which tends to rocket when there is new products or new ways of doing business (because of technological advancements such as railways, steamships, airliners, telephones, television, Internet)?
Re:Yep (Score:3, Insightful)
Smart companies will be the ones capitalizing on open-source and repackaging OSS as solutions.
Re:Yep (Score:2, Interesting)
I always say American IT people are the best in the world, but there are definitely other people trying to catch up. And just like Rocky, its always the person that is hungrier that will overcome and eventually become the new champion.
I think the problem isnt an unwillingness to spend money. The not spending money is a symptom of having non-technical people making technical decisions. Its a reliance on MBAs and CNAs as company decision-makers.
Oh well. Fortune passes everywhere.
The Big Picture (Score:5, Insightful)
The return on investment for sound R&D has been well established. Of course, there is a world of interpretation in that little qualifier "sound" but the fact remains that R&D investment is critical to continued, sustainable growth - particularly in the tech world. Unfortunately, the narrow-minded focus on the quarters earnings doesn't permit this kind of rationality that could speed economic recovery. It makes about as much sense as refusing to change the oil in your car because you're short on cash, but hey, that's business.
Re:The Big Picture (Score:5, Interesting)
As market dynamics force a greater focus on shareholder value over solid profit models, and on the short term over the long term, industry is pushed more and more towards a strategy that focuses on the short term bottom line.
This is very true, but there is a trend, starting among academic economists but moving into the mainstream, away from this kind of short-term thinking. 80 years ago it was well understood that the value of a stock was precisely the value of its assets plus the net present value of its future dividend stream, and that way of looking at market valuations gives investors a reason to value companies that make good strategic choices, even if it's at the expense of short-term profits. Over the last 40 years or so, the idea of "growth" stocks became widespread -- the idea that the value of a company is determined not by anything so mundane as its future earnings, but, essentially, by what investors think other investors will be willing to pay for it. This approach is epitomized by Microsoft, a company that never intended to pay any dividends (yes, I know they're paying a dividend now).
The result is investors that jump in and out of positions, which in turn forces companies to focus on short-term goals in order to keep their stock price up -- particularly since the wealth of most executives is tied directly to their employer's stock price.
However, not only is the "growth" stock theory proving to create a market that is volatile and irrational, but the fundamental assumption underlying the idea has taken a real pounding of late. The assumption is: "Executives are better at managing investors' money than the investors themselves are."
If the company takes its profits and pays out dividends, investors are then free to reinvest those dividends however they see fit. On the other hand, if investors allow a company to retain profits, they're betting that the company's executives can do a better job of managing the investors' money than the investors can. In a nutshell: investors are trusting the executives with all of their money, without any real way of evaluating the results.
The recent spate of scandals has really rocked the "trustworthy executives" theorists on their heels. As investors realize that no amount of board oversight can really keep the executives honest, they'll come to the conclusion that the best thing to do is to take the profits out of the companies and force the executives to run a tight ship and to publicly raise money when they need it.
Re:The Big Picture (Score:3, Interesting)
It is true, that in the absence of dividends, which was almost the definition of "growth stock" during the bubble, it is hard to see why holding a stock is worth anything. There is, however, a floor on the value of the stock, which is that some other company could buy 51% of the stock and collect the profits as if they were dividends. Also, at some future time, the growth will slow down, and the company will start to pay dividends as their sector has matured. In the meantime, they ought to be investing their cash in expansion, or get left behind.
The thing that leads to irrationality is when the future revenue growth rates are overestimated, either for the particular company, the overall market segment, or both. Being overly optimistic on the future cash flow in an exponentially growing way greatly increases the present value. A classic cause of this is ten companies, all of which project gaining 50% market share in their fast-growing segment (e.g. long-distance network traffic). Any one company can get enough true believers to value their stock on that basis.
As with any rational formula, Garbage In-->Garbage Out.
Re:Yep (Score:5, Informative)
It seems that American companies are trashing their R&D divsions and trying to cover up for it by making themselves "more efficient." With "efficiency" meaning layoffs, cutbacks and product reductions.
"Times are tough" doesn't seem like much of an argument for allowing a company to atrophy. But it's the argument all these C*Os are making. Why are we still paying these idiots to ignore broad economic trends and basic numbers? Is it because they look sharp in those $10,000 designer suits?
Re:Yep (Score:5, Insightful)
I learned a long time ago in eco 101 that the reason Japanese companies often did so well during recessions is that when times got tough, they sunk more money into R&D and borrowed from the bank when they needed to. They would take a loss, knowing that it would be more than compensated for in the future.
The Japanese may not be the best example of fiscal responsibility: their economy has been in the crapper for a decade, due in no small part to their banks' refusal to default the bad loans they made in the 80's. A lot of their prosperity was manufactured by banks giving out loans to people who had no business getting them. Sound familiar?
Re:Yep (Score:3, Informative)
Actually, most of it has been poured into capital-works types of projects - lots of infrastructure improvements, that kind of thing. The fact that their economy is still in the crapper is just more empirical evidence that that sort of Keynesian pump-priming simply doesn't work in the real world.
Now, if Slashdot really is populated by bankers (and economists) these days, that last sentence ought to be good for picking a fight ;)
Re:Yep (Score:5, Interesting)
What if the economy is in the crapper because US corporations are more enthused about keeping the status quo than of pushing new and innovative technologies. Even bloody Intel is saying [slashdot.org] "bah... 64 bit processing is too much trouble than it's worth to really push the technology"
The RIAA is going crazy over MP3 sharers instead of understanding that digital encoding and mp3s are the wave of the future, not to mention the internet is a highly more effective distribution center than anything else out there.
Microsoft still refuses to believe in any uses towards Open-source programming, when what you're doing is combining the needs of regular every day power-users... even now Linux amongst other projects is looking towards the desktop and slowly rendering Microsoft a $150 waste of time.
Even our good friend Dubya would rather spend a crapload of money on fighting in the Middle East over oil than push technologies that would render necessity for Middle-Eastern Oil completely useless.
There's a lot of evidence to suggest that lack of Technological push is what's going to bring down the American Economy... so a correlation doesn't necessarily imply that America's low technological push is simply a state of the environment.
Re:Yep (Score:4, Insightful)
However, there's also evidence that the dotcom bust took a lot of money out of the economy. I heard that if investments were calculated into inflation during the late 90's (using value and not earnings models), then we were experiencing triple digit inflation.
Since most of the dotcoms were doomed from the beginning (see "Innovation and Entrepreneurship" [barnesandnoble.com] by Peter Drucker chapter on technology entrepreneurs), and dotcom investing was more popular than Jesus; it's not surprising that the massive shift in wealth (most went to the already wealthy) will take some time to sort out.
Some [aol.com] think we're headed to a depression again because of the massive shift in wealth to the wealthy. I guess it's our doom to see if it's true. If so, then in the midst of the rubble there may be a chance for America(ns) to take back some ground in the tech field... unless they're being pushed down by the powers that be.
Profits killed the radio star (Score:5, Insightful)
Why do you suppose they are fighting the internet as a distribution method? Because it is more efficient than current methods. They don't want better efficiency, because profit is made in the friction of distribution.
Think about the areas of greatest profitability in the market today, and tell me where they are made. Meanwhile, let me say where I think it lies: with distribution. The Wal*Marts, the Amazons, the Sam Goodies of the world make a lot of money through distribution.
Microsoft still refuses to believe in any uses towards Open-source programming . .
The problem with Free/Open Source software is that it removes the friction of distribution. Microsoft has dominated the market by controlling the distribution chain from day one. At every point where another competitor has threatened to enter the distribution chain (say, DR-DOS), they have choked the distribution points (in the case of DR-DOS, by making per-processor licensing deals with each distributor).
The more friction you can create and maintain, the more money you can make. The advantage of a monopoly is that you are the only controller of the distribution chain.
For all information, the internet approaches frictionless distribution. This is what scares the MPAA, and Microsoft, and the broadcast television companies: in the future, they will be unable to extract Ceasar's share from the distribution chain. That is why they are fighting so hard to introduce friction in the form of legislation.
This is also why capitalism is butt-useless for information, as artificial friction must be introduced into the system (in the form of copyright and patent law). These laws worked when capitalism was based more on physical objects (books, records, films), but now that the information has become more important than the distribution method, capitalism in its current form fails miserably.
The technological push you mention as necessary for the American economy is much deeper than simply increasing innovation or R&D. We must embrace the social aspects of this technology as well, and not introduce unnecessary friction into the system resisting the technology.
I don't mean we must accept all new technology as good. But "Hurts Profits" != "Bad."
For an interesting take (and a surprising relevence) check out "The Third Wave," by Alvin Toffler. It's an older book, but his predictions have been frustratingly accurate.
Re:Profits killed the radio star (Score:3, Interesting)
I think this coincides with what I'm saying. It's moreso the overeager capatalist ventures in mind. It's moreso that there's a lot of execs who are more interested in keeping things under their control than branching out and being more interactive about it. It's interesting, because there's this general belief that Communism doesn't work because everybody's too greedy to make it work. I think the same is true under capitalism. Capitalism can drive towards new ventures and the like because... get this... THAT'S WHAT PEOPLE WANT! The entire idea behind capitalism is that you supply what is demanded at a reasonable price. The problem with this being that it's not what's happening. People don't want to shell out $20 for a CD anymore. However, now the corporations are more interested in quarterly returns and the like, so they're just gonna go for short-term effects that placate everybody within the company. So they not only undercut general development but the capitalist system itself.
Apologies for the left-wing rant there. I suppose there's not too much we can do about it, but I'm just offering possibilities. I'm neither a Business Major nor do I understand much about business management beyond a couple of classes. But it's my opinion... your mileage may vary.
Re:Profits killed the radio star (Score:3, Insightful)
Re:$1.2 Billion to fuel cell research (Score:5, Insightful)
Yo! Bright boy. It isn't even close to what he wants to pay to oust Sadam, let alone the military budget. Remember he wants Congress to allocate $68B for his little Iraqian adventure, and still needs $32B to bribe Turkey, after that. $1.2B may sound like a lot to you, but compared with most Federal expendatures, it's lost in the noise. So, trust me, Bush is (yet again) no hero in this area.
Re:$1.2 Billion to fuel cell research (Score:3, Informative)
Re:Anyone catch what McCain said last night? (Score:3, Informative)
Re:Yep (Score:3, Interesting)
Regarding research, I think Dubya wants to sink a billion or so into hydrogen powered cars. The military is spending a lot on military r&d so it's not like all r&d is drying up. If I were in charge I'd grant a large tax deduction for "green" cars such as hybrids, to make them more competitive. The market works pretty well but an anti-tax here and there can't hurt.
For that matter, an anti-tax on corporate r&d would be advisable. Every dollar a company spends developing new products, processes, techniques, etc. should come out of its tax burden, not out of its bottom line. The benefits are (1) more R&D (even allowing for the inevitable fraud), (2) more researchers are employed, and (3) companies are more likely to survive long term.
Re:Oil seems to be the missing ingredient (Score:3, Interesting)
Oil companies won't be footing the bill for the invasion of Iraq; American taxpayers will. The cost benefit ratio is actually quite good when you realize that.
I don't think anyone's that the war would be of any benefit to the *United States* itself. It'll be of huge benefit to oil companies who will take very good care of Bush et al when they're no longer in office. They get all the benefit of the invasion and none of the costs.
this started much earlier (Score:3, Interesting)
The root cause of all this is simply that the politicians are succeeding at what they promise: squeezing inefficiencies out of the market. R&D spending is an inefficiency. For practical purposes, it's still easier to copy your competitor than to do your own. Patents and copyrights are supposed to be the answer to that, but they seem to be doing more harm than good in practice, since they seem to reward litigious behavior more than true innovation.
Only monopolies with money to burn have traditionally been able to have long-running private R&D efforts going. In the past, that meant the phone company (Bell), the television company (RCA), the copier company (Xerox), and the computer company (IBM), and maybe a few others. Today, it means essentially just Microsoft and maybe a few defense contractors (where money just disappears into a black hole, as do research results); everybody else is slowly winding down their research labs.
So, basically, the decline of R&D started really with the monopoly busting of companies like IBM and Bell Telephone in the 1960's and 1970's, and it has been going on ever since. Solutions? Presumably nobody wants to go back to a few big, expensive (near-) monopolies. Either, we could change our tax structure to strongly favor long term investments (very high taxes on short and medium term capital gains), but pigs will fly first. The only other choice I see is for the government to start spending much more lavishly on research again.
Path of least resistance (Score:2, Insightful)
Re:Path of least resistance (Score:5, Funny)
And even if we don't get off our ass, it's still a Good Thing.
The Martians in 2200 may be genetically-enhanced for low-pressure atmosphere, cold climate, and lowered panic threshold for CO2 concentration, and they'll speak Mandarin.
That still beats the hell out of waiting until 22,000,000 and having them speak Cockroach.
Re:Path of least resistance (Score:3, Interesting)
I question whether the 'suits upstairs' at US firms are smoking crack when they make the decisions to send their app development and engineering work overseas. Wholesale.
There is a wide range of language issues, the lack of face time between users and developers, and obvious security issues.
Do US firms(or anyone) really want their critical data, business knowledge, and intellectual property in such an unstable place as a nuclear power with a nuclear enabled neighbor?
"Hey dude, pass me the pipe, I need to read these numbers again"
Of course there is an alternative (Score:4, Informative)
This will happen naturally as their education standards are rising, their job quality follows, and their standard of living follows that. As their SoL rises, they will lose their competitve edge and things will even out. All this is very similar to the situation of the car manufacturers. The jobs are exported to the location with the lowest labor cost. There are other factors like form of government, taxation levels, energy, infrastructure, and transportation costs, of course, but this is the basic principle.
Follow the education, follow the jobs and watch the SoL follow right behind it. The progression is pretty clear.
Europe->USA->Japan->Korea/Brazil->China/India/R
As it stands, Europe, USA, and Japan are all pretty much even on SoL and jobs are pretty much evenly distributed among them. Korea is not far behind and India, Russia, and China(Russia and China were crippled by their governments in the past) are catching up fast.
The key to future riches is to discover what will be the next field to develop. Heavy industry and manufacturing were first. Information tech came after that. What is next?
Re:Path of least resistance (Score:3, Interesting)
take US cars (Score:2, Insightful)
GM only has the cadillac.. and you shouldn't have to go top end to get an innovative machine.
Re:take US cars (Score:3, Offtopic)
I got me where i wanted to go and never left me stranded. came pretty close a couple times nothing like pop starting your car by rolling it backwards on the interstate service road
Point is if you take care of them,*any* car will usually last but it depends on the car. Also, american car parts are usually cheaper.
Saying the japanese do it better is just a faulty argument.
Re:take US cars (Score:4, Informative)
Actually, anecdotal evidence with a sample size of one is a faulty argument. Check a Consumer Reports. The Japanese (and soon, the South Koreans) do do it better.
Engine taxes (Score:3, Insightful)
We'll probably definitely suffer in areas of.... (Score:4, Interesting)
Our puritanical (read: Conservative) stance not shared by other countries like India and the UK will definitely put us behind in this area.
Re:We'll probably definitely suffer in areas of... (Score:5, Insightful)
Of course they will..
Re:There is a limit (Score:5, Interesting)
You may already have stood in such a line without knowing it. Many medical texts still use illustrations and diagrams from Pernkopf's Atlas [ama-assn.org] (Atlas of Topographical and Applied Human Anatomy) to this day.
The Atlas is based on things learned during the commission of atrocities. Its author was a supporter of the regime responsible for those atrocities.
And yet, its contents have been used to save lives for 60 years, perhaps even including yours.
> For me the question is not *what* but who we're doing research on, and in the case of stem cell research, we've stepped over the line.
Do we throw out anatomy because it has benefited from what virtually the entire population of the planet agrees were war crimes performed on adult sentient beings?
If not, why should we throw out a technology that could lead to cure for Parkinson's, as well as the growth of replacement organs (possibly without an attached host body!) on the objections of a few religious fundamentalists ("life begins at conception / glob of undifferentiated cell has a soul" stage) or somewhat less-fundamental fundamentalists ("life begins when it looks cute / fetus" stage)?
It's not as easy a call as you might think, is it? :)
For the record (no point in bitching about bioethics unless you have the balls to make a stand - and while I disagree with your stand, I congratulate you on having one) I believe what Pernkopf did was grossly unethical, but I have no reservation and feel no guilt about being treated by doctors who learned from his work. I have no reservations about stem cell or fetal research. I see no contradiction between these two positions.
50 years from now, today's bioengineers may be looked upon as ignorant barbarians committing mass murder, or as the saviors of the human race. My position on bioengineering is the result of a moral choice, and I'm willing to accept any guilt on my conscience should I facts cause me to revisit it in the intervening half-century.
Whoops! (Score:4, Funny)
Re:There is a limit (Score:3, Insightful)
Re:There is a limit (Score:4, Insightful)
As to the "humanness" of 8-year-olds, I think we're all in agreement. However, I do question your "humanness", when you suggest that some of the said 8-year-olds should be made to suffer from debilitating diseases because the research that could provide a cure has been outlawed, due the moral discomfort of an overzealous minority of people. The only immorality I see is that living, breathing, sentient human beings are made to suffer for the non-existent rights of a collection of cells.
This is not to say I believe a child in the womb does not deserve protection. But we are not talking about a child or even a fetus. We're talking about a collection of cells. Perhaps, if the "people" you are talking about had names, or thoughts, or hell, even heartbeats, I would be more receptive to the question of who and not what we're doing research on. Until then, the only arguments against stem cell research are theological, stemming from the notion that cells supposedly have a soul.
It is my belief that our future generations will look upon our refusal to wield the benefits of stem cell research with the same disdain we hold for our ancestors who believed the way to rid the body of disease was to bleed the evil "spirits" out.
Re:There is a limit (Score:3, Insightful)
Except that the Bush administration is well on its way to banning ALL stem cell research. Including the research on stem cells drawn (or manufactured) from adults. Consenting adults. Consenting, rational adults. Consenting, rational adults unharmed by the procedure. Why? Because their knee-jerk puritanical reaction is biotech == bad.
Re:We'll probably definitely suffer in areas of... (Score:3, Funny)
If you want to talk about stem cells, cloning etc.. look at Italy. They'll do anything to give a granny another child
Re:We'll probably definitely suffer in areas of... (Score:5, Insightful)
I believe murder is wrong because I deem "human rights" to be something inherent in "human beings". I'm not going to go into cogito ergo sum and all that; I'm going to assert that sentience is the defining property of a human; it's what differentiates us greatly from the cow, and somewhat less-greatly from the octopus, whale, or chimpanzee.
Adult humans are clearly sentient. Infant humans are probably sentient, or have a very high probability of attaining sentience within a year or two. The (clinically, as opposed to the sense of having an MBA) brain-dead human is not sentient. Agglomerations of developing human cells are not sentient, and only have any potential for sentience with a large investment on the part of the host organism. Spammers are neither human nor sentient.
All cultures have strong taboos governing murder, and most cultures have equally strong taboos governing infanticide. The taboo against "pulling the plug" on the comatose is not universal, nor is the taboo against abortion. (In fact, both of those "taboos" are so non-universal that they are better considered social conventions.) And most of us would be ineligible to serve on a jury in the homicide trial of a man charged with the slaughter of a spammer; how could any user of email bring back a guilty verdict when no crime had been committed?
I think... (Score:3, Funny)
It breaks down to the dollar.... (Score:2)
If companies can spend less for a comparable or better product from overseas, they will.
That's what has led to the increase in outsourcing
Standard US pattern (Score:5, Insightful)
Private companies then exploit this and make money.
Also, due to the efficiency of the US capital market and the enormous US home market new technology is rapidly developed in the US but perfected elsewhere. But the same speed to start things also drives an outlook that is only quarterly at most US firms which kills quality after a while.
The perfect example is the car industry. The US just got big and for a long time the only US car innovations are the cupholder and the SUV. ABS, fuel injection, constant 4WD multiple valves and other improvements do not come from Detroit. Another is large jets.
Why should computing be any different ?
Re:Standard US pattern (Score:5, Insightful)
So in closing, the cupholder is the ONLY domestic auto innovation (and even that is questionable).
Re:Standard US pattern (Score:3, Interesting)
Unless I'm not getting what you're saying, I would venture to guess that a very small % of US r&d goes towards DoD activities.
The perfect example is the car industry. The US just got big and for a long time the only US car innovations are the cupholder and the SUV.
Enough with the auto industry comparo's. How many large computer manufacturers are out there that are NOT US based. How many coming on the horizon are not US based. Anyone with some marginal skill can put a PC together that has similar (if not exactly the same) specs and build quality (if not better) than any pc manuf. can sell. The same is not true for auto's. The two markets are radically different. Yes, foreign companies rule in certain aspects of computing (motherboards, optical media, etc) but the nature of the industry is so different than the auto industry, I don't see how anything other than very gross generalzations can be made.
Re:Standard US pattern (Score:4, Insightful)
- How many large computer manufacturers are out there that are NOT US based.
For a long time, TV's were made almost exclusively in the US. Then, as we stopped putting money into manufacturing R&D, Japan (and later China, et al) used its manufacturing industry - recently swelled by US policing action and government investment - to take over most of the manufacturing costs. Same for many (most?) big appliances. We didn't even give ourselves a chance to move VCRs overseas - we never started serious production of them here; only invention.Give it time, we'll move the compuer jobs and profits overseas. We have an excellent track record on it.
Re:Standard US pattern (Score:5, Interesting)
Look at TV. The NTSC standard: invented in USA. Perfected in Europe as the PAL standard. PAL gives a better quality picture, and has much better error-handling (in the analog sense): a small signal error on NTSC gives chrominance errors (read: green looks red, etc.) while on PAL, I'm not exactly sure, but apparently it only gives luminance errors (meaning, it's a little too dark or light) - somebody with more knowledge could probably clear that up.
The cell phone. Analog cell phones first took off in USA, today USA is struggling to implement 3G while its relatively common in Europe / Asia (this also has somewhat to do with geography and population density, yes...)
Does this mean that the same thing is going to happen with the PC? The PC was basically invented in USA (or at least popularized here) - and what's expected to come next... that's right, Unification. I think the biggest thing to come out of the East or Europe is going to be unified devices. It's already started - Sony equipment all 'talks' to each other through their 'S-link' implementation of IEEE 1394 (aka Firewire). Even though LG (an American company, I believe) is pushing their Internet-aware devices, they're not selling well. I have a feeling that companies not in USA with less likelyhood of sticking to the legacy standards are going to come out with a unified home control system that will knock our socks off. Remember: you heard it here first :D .
Hmmm...... (Score:5, Insightful)
He may be right though, but would that be so bad? I am an American, and I love America, but I would like to see a world where there there is a little more balance of economic power. Would that be so bad for the average American?
I disagree (Score:4, Funny)
Bound to happen... (Score:5, Insightful)
Another thing we talk about though, is the fact that as other countries 'catch up' technologically to us, there will be less and less reason for companies not to outsource all their tech needs. This already happens to a great extent in the manfacturing industry and China. For tech, we see a lot of farming out to India, especially since they're are lot of competent English speakers there.
How can U.S. firms compete with this? I don't think they can and ultimately, another industry will move more and more off shore. This doesn't mean, however, that the U.S. will not find other markets.
I think that if there are more and more highly skilled people in other countries around the world that can do the same tech work our skilled workers do here, then the next place is space. Unfortunately, we're not jumping on that and now we have a European agency headed to the moon and China talking about mining it. Welcome to the future of the transnats. Like hi-tech, the U.S. has the opportunity to drive this one for a while. The question is will they?
leapfrog technology (Score:2, Insightful)
The money is still being spent on R&D (Score:2)
not much faith... (Score:2)
R2! We're doomed! This is all your fault! Help, I think I'm melting!
He's got some good points, except (Score:2, Troll)
"Instead of sending future tech wealth abroad, we need to open our doors to more top foreign scientists. We're sending H-1B visa holders home with pink slips and a basket of skills they learned from U.S. companies. We should be giving the brightest of them research fellowships working for the Department Homeland Security."
Gimme a break - there are plenty of highly qualified American citizens. Why exactly should we entrust national security to people who are not part of the shared American destiny? An H1-B is BY DEFINITION temporary. Personally, I think part of the solution here is to reduce the number of H1-B holders, not put them in charge of the candy store...
The Sun Could Set on the US Empire (Score:4, Insightful)
What get's me is US greed is handing them the spot too.
Population (Score:3, Insightful)
The country with the larger population will have the biggest market and thus the strongest economy.
The Population Myth (Score:5, Informative)
That's a far too simplistic analysis.
Myth 1) Population rules all, which is why China (#1 population) and India (#2 population) should have the most powerful economies in the world.
Reality) China's GDP ranks 7th, behind that of the US, Japan, Germany, UK, France, and Italy. India's is 12th.
Myth 2) The United States, because of all of those damned immigrants and teenage mothers, is increasing its population at a staggering rate.
Reality) The predicted population ranking in 2015 will still be in order of size: China, India, the United States. The annual population growth rates of these nations between 1995 and 2000 are .90%, 1.69%, and 1.05% respectively. Accurate predictions for, say 2040, are hamstrung by the repeated failures of earlier population forecasts, as this paper [anu.edu.au] delineates.
Larger population does not equal strongest economy. Japan has the 9th largest population and 2nd largest economy. Enormous Russia has the 6th largest population and 15th largest economy.
Population densities, education, economic infrastructure, and a variety of other factors are far more imporant than simple comparisons of size.
Re:The Population Myth (Score:3, Interesting)
I agree with you that the previous analysis was too simplistic. Alas, so is yours. :-) And so will be mine.
First off, there's GDP, which is one thing, and GDP per capita which is quite another. In that race, China and India are nowhere to be seen among the leaders, while the US (in 2000) had a spectacular lead over almost all nations (yeah, there's Bermuda and Luxemborg, but those have caveats attached, too). But that's not quite the real story, either, since the distribution of income among individuals is a big deal, too. Denmark has a per capita GDP that is smaller than the US, but a rather more even distribution among households, to the point where may US residents would be thrilled to switch places.
On the other hand, even GDP per capita misses something absolutely huge here, namely the growth rate of GDP (per capita or not). In that race, you find that the US is not especially close to first place. China is growing on the order of twice as quickly as the US, and that kind of advantage catches up with you pretty quickly.
A point to make here is that the US numbers include a big contribution from immigration while China and India have essentially negligible rates of immigration (but noticeable rates of emmigration). To the extent that they (and Mexico) can grow rapidly relative to the US, we might see either increased immigration to these countries (repatriation at least), or reduced immigration from them to the US. Economic growth also still has room to reduce fertility rates in India and China (and many other places) as well. Forecasting population growth, as you mention, is an utter crapshoot in even the medium run.
In my more optimistic moments, I see a future where growth outside of the US is sufficient to raise standards of living for most, which will tend to increase the chances for peace and stability. When I'm pessimistic, I just look to differences in ideology, and imagine what will happen when some countries are wealthy enough to have armies that can really do damage...
America growing up. (Score:2, Insightful)
As a sort-of new nation - lets say 'teen-ager', America is full of innovations and also full of free-market idealism - the American worker has a big say about thier working environment.
The individual can have some kind of say.
When compared to the east, with cultures that have been around for thousands of years, there's a very different work ethic where the individual is unimportant. So much so that bosses will take lunch with the lowest staff.
The free-maket idealism coupled with the individuals say costs american companies more.
The eastern work ethic coupled with the unimportance of the individual creates a very efficient working environment.
H1-B pink slips? (Score:5, Insightful)
But the improved R&D money thing is fine. Sure. But what has gotten the HPs and IBMs? Answer: undercut by Dell. If that is not a "lesson in global capitalism" I don't know what is. And as far as I know the Big Companies that DO have the money to do R&D... *gasp* do it.
What this author doesn't seem to realize is that many US firms are coming to grips with cost undercutting. Maybe proprietary HW meant something back in 1990 but not any more. So companies cut those groups and buy the same whitebox stock from Taiwan. The author seems to think that this is just some Anti-R&D attitude, when all it is is the proper reaction to a market reality
The fruits are simple... (Score:5, Interesting)
Someone will then patent a "patent trial" and then put an end to it all. (And not a good thing either - it'll be the end of innovation in America)
Re:The fruits are simple... (Score:5, Funny)
No way. There's too much prior art.
The man makes some good points (Score:5, Insightful)
This same line of discussion has come up here many times before. One comment I have seen frequently runs along the lines of: "Well, buddy, don't be a pussy. It's all competition, and if you're good enough you'll still have a job".
Well, guess what, guys? Unless you're a genius - and I suspect most of us aren't (in fact, I'd suspect most of us are slightly above average to being very good at what we do, but we're not mostly very good) - we're going to lose our jobs. Because a decent Indian programmer making $5K a year looks a hell of a lot better than a great American programmer making $50K a year.
We have a window of less than ten years, I think, in which to react to the possible destruction of American IT. Because humans elsewhere are just as smart. Only thing is, they get paid like shit.
You think you can compete because you're better? Dream away, my son.
Re:The man makes some good points (Score:2)
I feel for any "great" programmer making only $50K a year. They need to take a break from programming and either learn some economics or people/sales skills.
Re:The man makes some good points (Score:2, Insightful)
My point is, not everything can be outsourced to india. And the DOD is still the largest employer of programmers out there, and much of that cannot leave the country.
Times change. Change with them, or become obsolete.
Focused Spending (Score:4, Interesting)
With that as an example, I think that it's a little shortsighted to look at dollars to dollars and say that the US is coming up short. Maybe it is, but the article doesn't provide the evidence. A better measure of the balance of R&D budgeting is more qualitative than quantitative. What is coming out of R&D? Are we developing products and ideas that have any kind of a chance at hitting the market and actually making a profit? Don't jeer at the search for profitability...where do you think the R&D bucks come from?
I can only speak from my experience at the high tech company where I work, but R&D expenditures are a significant amount of total revenues. Perhaps other companies have different views, but for us, even in a tough time, R&D is the lifeblood of what we do. It's just that when money is as tight as it is now, the spending becomes much more focused.
Using Huawei Technologies as an example of the threat to American tech dominance is certainly a red herring. If Tarsala counts blatent copying of product and documentation as a positive result of R&D spending, then his perception of R&D is simply wrong. Honda didn't copy the CVCC from Ford or General Motors...they created it on their own.
-h-
Re:Focused Spending (Score:3, Insightful)
Focussed Spending (tm) didn't invent the transistor at Bell Labs. Bell spent on fundamental research and crazy ideas, and ended up inventing a huge fraction of the world we live in today.
But now, it's become Lucent Technologies, with a publicly stated goal of "incremental" rather than "fundamental" research. No more Transistor-level revolutions from them - Lucent just makes sure next year's cell phone is a little smaller, cuter, and cheaper.
The space program "wasted" truckloads of money on, admittedly, a glopbal-scale pissing contest with the USSR.
In the process, it invented more technologies than you can name. These improvements in materials, power, communications, etc. are the bread and butter of hundreds of profitable corporations in the US. The cost of the space race was returned to the us economy 100-fold the last thirty years.
Fundamental research is being carefully scoured from US companies. Mostly because it doesn't pay off fast enough... in the new, faster, lower-margin economic reality that has grown in the past 15 years in the US, spending money on something that will pay off in 10 years will get your company KILLED DEAD in the market.
Cutting the competitive edge closer in business is a cultural shift the US has seen in the last 10 years. It results in employees working 80-hour weeks, wrecking their marriages, kids raised without parents around
So it's up to the universities and national labs. But, inspired by the improvements in efficiency in business in the 1990's, our research institiutions are starting to think the same way. Schools are run more like businesses now, and are forming more and more partnerships with businesses to fund and help direct research.
Fundamental research is not dead in the US, but it IS dying slowly. And true fundamental discoveries in the US are what have pulled most countries ahead. An assortment of technologies, social insights, and/or mathematics alternately made China, Egypt, Greece, and Rome powers in their day. The renaissance pulled the standard of living up in Europe and made western civilization dominant. The industrial revolution made England the #1 world power for quite a while. Electronics, nuclear power, and all the spinoffs of space technology were discovered in the US, making it the dominant world power for the last 60 years.
Fundamental R&D in the 21st century is expensive. We'll see fewer discoveries in the garage (like the laser). Now, it takes the will and money of an entire nation to really make it happen. And the US, while certainly ahead in research for the moment, is systematically pulling back from it. Europe is slowly headed into the lead in high-energy physics research, China in some areas of biotech. India and China
are systematically increasing their mindshare resources by sending students to US academic institutions and wooing them back home with large salaries and shiny new labs.
If the United States as a nation does not recover from it's increasingly myopic focus on Captialism-as-a-priori-virtue and short term profit returns as a primary goal, IMHO it is unlikely to still be the dominant world power in 2060. It's time to start "wasting" piles of money on research, high-energy physics, and the space program again. Make sure environmental research, medical/biotech, neuroscience, and materials science are well-funded, too.
I'm not under any illusion that science research in the US is gone. I'm a science grad student in California, I see the cool shit that happens here every day. But I don't think the trends bode well for the long term. Other countries could pull ahead, 20+ years from now. 20 years after that, the US has a big problem.
Lots of Focus (tm) is great for next week. But it'll murder the next generation.
Weren't patents supposed to encourage R & D? (Score:5, Insightful)
So which is it? Is real innovation down because of a screwed up patent system? Or because of a lack of money? Or just hubris on the part of US companies that think they know the one true way for everything?
Personally I do believe innovation is suffering right now. And I don't think the patent system is helping. Instead companies are pumping out patents on everything old under the sun while few are spending money on something truly new.
Why? The reality of innovation is that new things are almost always built on old foundations. When those foundations might have 2,000 different patents the incentive to try new combinations of things is reduced because you don't want the hassle of infringement. Or at least it seems that way to me. Your mileage may vary...
Re:Weren't patents supposed to encourage R & D (Score:3, Insightful)
What Fruits Will Reduced R&D Bear For The U.S. (Score:5, Funny)
Nope. Not without research dollars. Just plain old boring apples and oranges and crap.
I told Bush not to lower the "Research" Slider (Score:5, Funny)
What a newb.
Education Today (Score:5, Insightful)
Even scarier, he is making a C in math and science and he is one of only 4 kids in those classes that is passing. Our education system is very broken in this country and will only get worse if Bush has his way. My son goes to Houston Independent School District home of the finest education system hence why we kicked Rod Paige up to Secretary of Education. After all HISD students pass the state test or conviently transfer to another school or not drop out code even if the principals have to lie.
Re:Education Today (Score:3, Interesting)
You said you were in a special school, and advanced math, while your son is not. You say it is one of the finest education systems, but that reputation could be misformulated.
Different public school systems in the same state can have drastically different programs that proceed at really different paces. Look at Freshman at any college (where a lot of people from really different systems have to pick up wherever they can). When I was a college freshman just 5 years ago, I didn't need to take Calculus I, II, or III, and I came from a public school. Meanwhile, a few still needed precalculus, and some even algebra. Some school systems are complete crap, some are quite capable, it truly is a pot luck sort of thing. Also, in the case of the C in Math, that is one class, one teacher. When you start talking about individual teachers, you get a *lot* of difference. Even the best schools occasionally have a really bad teacher or a good teacher goes off the deep end for a year.
I started off in a really rural school district. It was decent, not great, but pretty good with traditional education. Now computers start entering into the system big time as the school system can finally afford them. The faculty lacks experience and thus many of the students knew more about electronics and computers than they did. Teachers with little experience beyond typewriters and basic word processors had to deal with computers that weren't the friendlist things to start with. By the time I left that system, I had been punished a lot for correcting mistakes made by them, including poorly configured printers that printed at about 3 minutes per page, when 5 ppm was possible. They thought I broke it because 'printers don't work that fast, they'll burn up', and reset it to the old mode. A system BSODed and I rebooted it to get research done. They banned me from computers in the school. I left the system and went elsewhere. I became an administrator of a network at another public school, and they encouraged students to become accustomed to the technology, not to be afraid of it.
I think what will cause it is the same thing that caused manufacturing to go oversees. As long as the majority of the US can maintain their standard of living, the lost jobs are 'somebody else's problems'. The money required to live caters to the majority, and thus cheap labor in the US just won't work. Maybe if this tips the scales so that a majority of the US suddenly are faced with these problems, then we will see some correction.
semi r&d up (Score:2)
Mike misses one point: Intel-like competitors require billions of dollars of infrastructure to compete.
Granted, some brainiac students might figure out how to make a chip faster than a P4 using
However, I don't know if the bandgap energy required to jump into the seimiconductor market is comparable to the auto industry. In my opinion, they can't be compared.
I'm fine with it (Score:4, Interesting)
Re:I'm fine with it (ROFL) (Score:3, Insightful)
But I didn't, so you don't. Instead, you made my point for me.
>>"If you are strapped for cash, you'll go with not only what is cheaper but what gets you the most bang for your buck."
Already effected.... (Score:2)
Of course, there's no budget for it this year. So you'll just have to figure out how to do it without any hardware to run it on.
Sent my resume out the same day. Already had 3 interviews.
What fruits? How about these? (Score:2)
Save the superior H-1B! (Score:2, Funny)
The good old USA just doesn't have bright scientists available in this downturn to award research fellowships in the Department of Homeland Security. So, let's bring in H-1B scientists, that will be employed at taxpayer expense. Americans can eat cake.
American firms are rocketing to the past. (Score:4, Interesting)
Research has been getting the axe for the last thirty years anyway. Look at Lucent, the sad remnant of Ma Bell's labs. They have some 3,000 employees who must strugle to support 250,000 pensioned retirees. Tell me what kind of "research" the local Bells have to take it's place, please. IBM? Shuting down, at least in the US. It's pathetic. It's like these companies think they can just fund a few graduate level slaves or wait for hobbiests to come up with ideas to steal.
Management (Score:2)
I used to work for Motorola, whose Semiconductor Products Sector (SPS) is currently dying a slow death. I saw a large number of talented engineers getting fed up and leaving in my relatively short tenure. They felt that they couldn't do their jobs any more because management had instituted enormous amounts of beauracray and general B.S. that tied their hands behind their backs.
I'm sure most engineers and scientsts in industry can relate, but the problem seems to be getting worse lately. Remember all those frat boys getting business degrees? They're managing our tech companies now. Scary.
oversimplified world view (Score:2)
other countries are reducing R&D, too (Score:3, Interesting)
Now, while I don't have a large compendium of current statistical data at my disposal, I do have quite a bit of anecdotal evidence gleaned from my position as a manager of international sales, where I spend a lot of time visiting foreign companies talking to their executives. As far as I can tell R&D budgets worldwide are being cut in the last couple of years, especially in Asia where the economy has been hit harder than most other places. Let's face it: in tough times every company looks to increase their short-term profitability, and usually that comes at the expense of programs that don't have an immediate bottom line (say, over the next year) written in black. R&D programs are high on that list. While R&D might spark a product line or reduction in cost, companies won't usually start seeing profits from most successful R&D programs for several years.
Even in my small, agile company an investment in R&D dollars usually won't pay off for at least 1.5-2 years, and that's only because we already have a baseline product to structure our development and marketing around. When we were starting from scratch, it took about 3-4 years of development before we started breaking even on those R&D dollars we put in initially.
Loss of culture (Score:4, Interesting)
That, of course, really pissed me off. Not because he was wrong - he certainly wasn't. But the reason foriegn automotive engineers were better was his fault! For 20 years US auto makers did very little to push the envelope of auto engineering. They may not of needed to because of the market, but the real damage was that they lost a culture of skilled engineers.
Skilled engineering is not something you can just create on the turn of the dime. Experience means a lot in engineering. (And I don't simply mean the experience of individual people. I mean the experience of a group where there's always some continuity). If the US auto makers kept trying to innovate in the 60's and 70's, they would of had plenty of skilled engineers who would know how to make better cars, (even if the innovations weren't marketable). Instead, they had no engineers available and had to turn to foriegn companies for help.
Whether the same could happen in the IT industry, I don't know. At the moment the industry is still very competitive innovation-wise. So, it's not a matter of US industries sitting on their asses, like they did with cars. It's more a matter of them farming out to the lowest foriegn bidder. The net result could be same, though.
Silly, Alarmist Article (Score:3, Interesting)
If you're in IT, think about it. What new technologies are going to be "really hot" over the next 24-48 months? Wireless? Databases? Operating Systems? Other than Security and maybe P2P, I can't think of any. And while Microsoft has sucked with their security offerings, I'd bet that the moment Groove or Ikimbo or whomever picks up steam there'll be a competing (albeit sucky) technology built into Windows.
None of the top index tech companies are going to be threatened by small or large overseas companies any time soon. I think it was Gerstner who said that "If someone else (like Microsoft) appears in the marketplace and threatens us, we'll simply buy them."
To that extent his automaker analogy is self-defeating
1.) Honda, Toyota, et. al, were all rumored to be on the ropes and acquisition targets by US automakers before the recent slump. While that's not likely to happen in the current economy, those Japanese companies aren't exactly shining examples of market longevity.
2.) US automakers bought a startling number of European companies when privatized. To compete in market spaces where they had poor market penetration, Jaguar, Volvo, Saab, Rover, and Lamborghini (I'm sure I'm missing someone) are for the most part more competitive than they were, and in many cases, helping their parent companies better compete in the luxury space.
To me, this just smacks of silly alarmist thinking - like someone needed a topic for the day.
Sadly R&D in USA isn't about innovation (Score:5, Insightful)
Unfortunately, R&D in the USA isn't about innovation, but more about getting patents on all the up and comming technologies before they happen. That way you can lock out competitors and squeeze a ton of royalities out of industries that will require all the up and comming technologies. However there are some times where good things happened - IBM wrongly assumed that they would be able to controll all the interfaces on the IBM compatable PC. When they were wrong, it created an economic explosion of companies that creating plug-in cards and periphials.
Because of patnets, researchers working for companies are often forced to be greedy and secretive about things they discover. There is little in depth sharing of knowledge and collaberation until the lawyers and bean counters give the ok. One big side effect of this is that a large amount of innovation in US society has been shifted to the University sector, which has made it extremely important in US society. Unfortunately, now even many Universities are getting greedy with patent controlls killing the goose that laid the golden egg.
However, the really good news is free (as in freedom) software. Never in the history of human existence has there been such a sharing of knowledge, spread of basic tallent, application of standardized orgin, economic colaberation, and the likes. It is having a strong effect of shifting R&D from the university sector back to the private sector. If we lift the monopoly on patents, I think the same thing will happen in other technology areas.
take it a little further... (Score:3, Interesting)
Of course,
- now the Big Three, Toyota, Honda and the rest all own each other
- a sizeable portion of the Hondas made in the world are assembled here
- the economy that spawned all those Toyotas and Hondas has been in the crapper for 15 years
- the economies that tried to 'out-Toyota Toyota' (Korea and the other little tigers) have been in the crapper for 5 years
Maybe their prospects aren't so great after all...
R&D does not benefit companies (Score:3, Interesting)
Spending money to make a better product only works as long as your competition is not also doing the same. Said another way, R&D provodes no clear competitive advantage for companies unless the competition cannot afford to finance R&D spending.
Successful companies(like Microsoft) can afford R&D spending because they have no significant competition in thier dominated market(OS). Concurrently, most of thier R&D money is spent trying to take over other markets.
Programmers, engineers and scientists are (mostly) mercenaries who sell themselves to the highest bidder. This puts the best and brightest into the hands of the monopolists. The capitalistic basis of "fair competition" is becoming more and more scarce as a result.
The increasing efficiency of these organizations is also reducing the pool of independant competing companies. There are very real examples of how individual programs have replaced the function of entire companies. As our economy becomes dominated by fewer, and more powerful companies the competetive gap between companies within the same market segment will become so prohibitive, as to render "free market capitalism" a thing of the past.
The current rash of IP and patent sweeps being declared by established companies will only exacerbate the problem further, ensuring an almost dynastic future for key blue-chip american businesses.
Bottom line, R&D expenditure is a luxury like never before. Only the top companies can afford to make R&D expenditures, and the number of such companies is getting fewer and fewer. Programmers, engineers and scientists trying to sell the merits of research are going to be largely ignored.
Increased spending is not always a Good Thing (Score:4, Interesting)
Software patents will make this far worse (Score:5, Insightful)
Look at the rumors surrounding SCO and the BSD-derived code in Windows, Mac OS X and GNU/Linux that SCO thinks it "owns." A court ordered licensing fee would set back the free and open source software movements, even if replacement code is eventually written. Developing nations do not have these restrictions, and will benefit enormously. Without a change the U.S. will be come less relevant.
Re:Software patents will make this far worse (Score:3, Insightful)
Why? So we can have one-click style insanity over the entire planet? Or even better, RAMBUS style submarines lurking in everyone's economy. I would hope at least some the world is intelligent enough not to smoke THAT particular crack. Why don't we fix our IP systems before imposing them on the entire planet 'kay?
US Now = UK before (Score:5, Insightful)
Consider..
The UK was once the world's economic and military powerhouse.
Its dominance was challenged in the late 19th century by Germany. The practical arts of manufacture and commerce were not valued in British society at the time - not the case in Germany. German advances in chemical engineering and aircraft made it a formidable adversary in WWI.
Growing military importance of aircraft dimished the importance of the British fleet in maintaining world domination - a technical advance passed by this great empire and removed its monopoly on military power.
Despite this, in 1950 UK was still a major exporter of durable goods, a surprising portion of autos and consumer goods were still made there. This soon vanished.
By the 1960's, the premier UK businesses were service oriented - advertising, finance, etc. They had lost all real edge in "goods" manufacture.
Sometime in the 1980's the former world power found its GDP surpassed by former defeated WWII opponent Italy.
Control over an empire may have masked deficiencies in how the UK innovated and marketed innovations. Once the empire dissolved in the 1950's a serious decline began.
Any lessons here?
Re:US Now = UK before (Score:3, Informative)
Interestingly enough, it was the British who came up with the "Made in..." label. Here's [man.ac.uk] a quick reference I found:
Buy American?This doesn't have to be this way. (Score:3, Interesting)
Big companies overlooking innovation is not a new thing. Before M$ there was IBM. Before Ford there was Diamler-Benz. The promise of America is the Wright Brothers. Infact the nation of America is a proof of success that resulted from "country doesn't have to be this way (monarchy, imperialist etc)".
So the question is not R&D budget though education certaily is. But - whether there is a healthy environment for backyard inventors to explore the "this doesn't have to be this way" opportunities. My faith is beginning to shake. Patents are suffocating, monopolies lobbying the congress to maintain status quo is quite discouraging, smart kids are being sent to jail instead of being mentored.
Asia is already a device/mobility haven. It is sad that I hear/read about these marvels as the British used to narrate their experiences of exotic lands. Unfortunately for America, there is no central point where cash an be infused to jumpstart "it". The hope is that USA will find a new frontier while IT/tech sector is commoditized.
Intellectual Property Laws (Score:4, Interesting)
What happens when most of the R&D in tech is taking place overseas (and it might be argued that most of the R&D going on right now is taking place outside of the USA) and they have these very strict IP laws in place? The IP laws were put in place to protect American interests (presumably) but what happens when they become a serious stumbling block to the US economy (well, in a more obvious way than it already is). Imagine if BT had been able to enforce their hyperlinking patent and had begun demanding licensing fees of every company in the US?
I think this is an ideal situation to slap congress around to the fact that IP laws need to be changed to a more reasonable framework. Reward the inventor, yes, but granting monopolies isn't going to help society or the economy in the long run.
American schizophrenia (Score:4, Insightful)
I think it's a great myth that American corporations pay a lot for R&D. Most of it is subsidized by the government. And if you think of cases where private corporations did a lot of fantastic R&D work like Bell Labs - well, there was a company that was a government-granted monopoly, so once again, the R&D comes back to the government. If one looks close enough, they see that most R&D is subsidized, one way or another, by the government. That corporations do a great deal of R&D that benefits people I think is more something their PR departments try to convince the public of then being a reality.
It's worse than that (Score:4, Interesting)
I'm a medical device consultant. My American clients want me to help them commercialize technology they have licensed. Most of it is from Europe and Australia.
My clients in China and India want to beat the EU and USA companies with better tech done cheaper. And they aren't counting on labor costs to get the cost reduction, they are counting on superior smarts.
And now I've got a company based in South Africa that wants to take a technology from Egypt and one from Cuba and develop a new surgical treatment that combines the two. Manufacturing will be in Vietnam. And I'm the only American on the team.
You don't need to read theoretical articles. Next time you download a printer driver, check out where the programming was done. American domination of the globe is a temporary abberation, soon to be remedied in the traditional manner.
Re:Economic fallacies (Score:3, Insightful)
The government can, however, stimulate consumption. To do this, it can take money that would otherwise be used for non-consumption purposes and give it to people whose existing cash flows don't meet their needs for food, clothing, shelter, medicine, and other basic necessities.
Since consumption drives the economy, there are times when doing the above makes great sense. Yes, that means the government uses the threat of force to take a fraction of the money onwed by one group and gives it to another group. Libertarians hate that.
But, in the end, it is a better system than the old one, where the middle and lower classes joined together and killed the upper class and redistributed its money when things got really bad. This way, everyone gets to live and, by and large, the wealthy even get to stay wealthy.
Re:I think you are a bit naive. (Score:3, Informative)
Wrong. In the US 70% of R&D funding is done by corporations.
http://www.nsf.gov/sbe/srs/databrf/sdb99357.htm