Government As Venture Capitalist: The Amazing True History

Photo Credit: chailey

How government investment created the technologies that have made us so rich

March 21, 2012

In the early days of the Solyndra debacle, as the reality dawned on the White House that its half-billion-dollar investment was about to go belly-up, former Obama economic adviser Larry Summers famously observed that, "Government is a lousy venture capitalist."

The quip, discovered after House Republicans subpoenaed White House e-mails about Solyndra, fairly well characterizes good Washington opinion these days in the wake of the Solyndra bankruptcy. But before we conclude that government ought to get out of the business of betting on new technologies, we'd do well to try imagining our modern economy without computers, the Internet and jet travel, all of which were heavily subsidized by the federal government.

Critics of government investment in technology cherry-pick high-profile failures such as Solyndra, the 1970s "synfuels" program to make gasoline out of coal, and corn ethanol. But these relatively marginal failures pale in comparison to the long history of successful government investments that have transformed our economy and contributed mightily to our affluence over the last century.  READ MORE