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A Christmas SBIR with gifts for all. Congress finally re-authorized SBIR, for six years, with more money, bigger award limits, openings for VCs to own some awardees, and money for the agency management. Total tax rate goes to 3.2%, award guidelines grow to $150K and $1 cool million but with a super-limits on highest awards to 50% more than the guideline. Agencies can request relief from that limit, one topic at a time, by promising to lower other awards enough to keep the average award within the guidelines. But an agency can award a second Phase II which would raise the effective limit to $3M for the project. Not to worry, an agency can get around that limit by issuing allegedly independent awards to the company for "related" technology since the agency is still the ultimate arbiter of who wins what. Health, Defense, and Education get a pass to go directly to Phase II as a pilot program. NIH can award up to 25% of its money to firms with substantial ownership by VCs, hedge funds, and private equity firms, and the other agencies can do 15%. In a bow to the idea that more needs to be done to get downstream benefits from SBIR, several small programs will be tried. The bottom line: it's mostly all politics. The SBIR junkies get bigger awards, future companies that don't vote today get fewer chances for entry, agencies can do what they want and skim a little of the money for administration, and none of the provisions can claim any economic justification. As the size of SBIR grows, it also moves SBIR toward a standard social procurement program for the federal agencies. To bring more tech-related companies and jobs to Wyoming, Gov. Matt Mead's budget request for the new biennium adds $15 million to broaden an existing fund established last year for the recruitment of mega data centers. If approved by the legislature, the state would make available $30 million for both large-scale recruitment and to attract smaller technology companies. [SSTI, Dec 15] First question for data center candidates, what's the electricity cost? With all that coal heading east in endless trains, and a west wind to blow the smoke to Illinois? The tech companies ask, where do I get a smart worker when I need one? Ah well, the guv has to look engaged. Less for more. Squeezed by rising living costs, a record number of Americans - nearly 1 in 2 - have fallen into poverty or are scraping by on earnings that classify them as low income. The latest census data depict a middle class that's shrinking as unemployment stays high and the government's safety net frays. The new numbers follow years of stagnating wages for the middle class that have hurt millions of workers and families. [Hope Yen, AP, Dec 16] And as any Republican will tell you, the answer to any economic dilemma is to cut taxes, especially on higher incomes and corporations. On Dec. 8 the White House announced the launch of the Early Stage Innovation Fund, which will provide $1 billion in matching capital to Small Business Investment Companies (SBIC), targeting early-stage small businesses. The fund is part of the administration's Startup America initiative and is included in proposed rule changes from the Small Business Administration that allow private investment in SBIC participants. The proposals are open for comment until Feb. 7, 2012. The fund will be fully implemented in 2012. [AAAS, Dec 14] The good news is that the companies and ideas need third party validation with real money, not just an OK from a federal agency which would benefit from the spending. New York State will invest some $50 million in the biosciences through the Regional Economic Development Council Initiative with projects in nearly every region, according to an analysis by the New York Biotechnology Association (NYBA). The awards were announced on Thursday in Albany. The funds will include support for projects as diverse as a bioscience incubator in Westchester County to a biomass electric plant in the Mohawk Valley. [Business Wire, Dec 12] NSF unveiled an initiative (www.nsf.gov/pubs/2012/nsf12011/nsf12011.jsp) that aims to roll the dice on a relative handful of researchers with unorthodox ideas about how to tackle complex problems. At $24 million, the Creative Research Awards for Transformative Interdisciplinary Ventures (CREATIV) will take up only a tiny portion of NSF's $5.5 billion research portfolio. But NSF hopes it will send a big signal to the U.S. research community. “It's a new way of doing business for NSF,” says Richard Behnke, who co-chaired an internal NSF committee that designed the new program. [Science, Nov 18] A little money for a flood of proposals (almost every scientist/technologist can claim a new idea when there's money on the table) and soon Congress will hear of the great ideas refused. But since Congress isn't capable of judgng merit in such proposals, it will add more money while reducing NSF's total for deficit reduction. It'll be SBIR all over again- throwing money at early ideas and then abandoning them in the valley of death because development is not NSF's mission. and the other agencies will show a stern Not Invented Here attitude during the deficit reduction struggle. Frustration all round. I genuinely admire innovators like Henry Ford, Gordon Moore, Herb Boyer (co-founder, Genentech), Judy Estrin and Larry Page. If they really needed tax cuts to get out of bed, give it to them. It’s the long line of sycophants that follow in their wake that I object to. You know the type: attorneys, investment bankers, McKinsey consultants, marketing experts. People like me. Silicon Valley can be divided into two groups: creative, driven entrepreneurs and guys they knew at Stanford. It’s an inescapable fact of life: most of us are along for the ride. [Michael Kanellos, Forbes, Dec 13] SBIR Insider Rick Shindell reports that House and Senate have finally reached a deal to re-authourize SBIR for six years that will appear in the DOD authorization law. It opens the door to VC ownership of the company for 25% for NIH, DOE and NSF, and up to 15% for the others. The SBIR money goes up to 3.2 percent gradually and STYTR to 0.45 percent with 3% of the money going to the agency for administration. It includes some language about guidelines for company success. The weeping and pleading of the beneficiaries finally re-opened the door as 950 companies signed a letter, only a few of which I'll wager don't already have their ladle in the soup. As Oliver Twist said, holding up his gruel bowl, Please, sir, I want some more. Great tech, questionable side effects. [EPA] has linked hydraulic fracturing with groundwater contamination - a first-of-its-kind conclusion by the agency that could trigger new scrutiny of the technology fueling a surge in oil and natural gas production. [Jennifer Doughy, Houston Chronicle, Dec 8] The industry and its political allies immediately jump to the attack of an out-of-control government in a classic burden-of-proof case. Should new technology be allowed to be used unless and until the government proves beyond a reasonable doubt that it causes great irreparable harm? Right ideas, wrong temperament. Of all the major Republicans, the one who comes closest to my worldview is Newt Gingrich [who] talks about using government in energetic but limited ways to increase growth, dynamism and social mobility. But Most people just want somebody who can articulate their hatreds, and Gingrich is demagogically happy to play the role. [David Brooks, New York Times, Dec 9] The things politicians do to attract votes says a lot about the voters. For the current orthodoxy among Republicans is that we mustn’t even criticize the wealthy, let alone demand that they pay higher taxes, because they’re “job creators.” Yet the fact is that quite a few of today’s wealthy got that way by destroying jobs rather than creating them. [Paul Krugman, New York Times, Dec 9] Entrepreneurs developing technology for productivity should realize that productivity is about reducing labor costs. And all the political bloviating about jobs pretty much ignores the economics of where the American jobs have gone. But then, economics has always been a convenient and elastic playground for politicians' self-serving efforts to get and stay elected by an electorate looking for cheap simple answers to complex problems. There's a long held view that no one ever lost many votes by insulting the intelligence of the electorate. With Congress committed to reducing the $1.5 trillion federal deficit, research agency budgets will likely be flat or declining for the foreseeable future, meaning the loss of thousands of jobs and grants and the delay or cancellation of numerous high-profile projects. [AAAS, Dec 6] We've hear this story before. Congress is only committed to talking about defict reduction until the constituents and contributors start to scream about speical circumstances. More subsidies for the solar industry in
Arizona are crucial to avoid being left behind by
other states and China, a Phoenix business leader
said today at a solar-power conference. Tax incentives
and loan guarantees “make a lot of sense” right now in
Arizona, which is already a leader in the industry, said
Barry Broome, president and CEO of the Greater Phoenix
Economic Council at the Solarpraxis
convention. [Ray Stern, Phoenix New Times,
Nov 30] Every beneficiary can the huge public
benefit of a subsidy. Just listen to the SBIR advocates
bleat. A legislative subcommittee in Georgia recently proposed a $180 million public-private venture capital fund financed through a combination of tax credits and private funds to attract high-growth jobs and retain existing companies.[SSTI, Dec 2] SBIR Insider Rick Shindell reports that the Senate unanimously OK'd a eight-year re-authorization of SBIR as an amendment to the DOD authorization with a lovely bunch of new ideas. ... increases the SBIR allocation by one percent, from 2.5 to 3.5 percent, over ten years, and doubles the STTR program over six years, makes firms majority owned and controlled by multiple VC firms eligible for five years for up to 25 percent of the SBIR funds at NIH, NSF and DoE and up to 15 percent of the funds at the other eight agencies, lets agencies take 3 percent of the SBIR allocation for administering (if there is an allocation increase), increases the award guidelines from $100,000 to $150,000 for Phase I and from $750,000 to $1 million for Phase II, allowing for one sequential Phase II. Still, that's only half the battle since the House doesn't like such terms. It's another political year for pandering to small biz as the magical American growth machine. Close your eyes, open your wallet, and buy a bridge. Sen Scott Brown says it’s up to Senate leadership to listen to America’s communities of investors and entrepreneurs. With the willpower to push forward and a few votes, Congress can equip the best and brightest in America with a powerful tool and transform the age of apps and startups into something even more revolutionary. In other words, while many wonder who will be the next Steve Jobs, crowdfunding legislation wouldn’t leave us waiting for one person, but thousands. [Mass High Tech, Dec 1] Vote for the Scammers Relief Act of 2012. If the Masters of the Financial Universe couldn't figure out that CDS and MBS were scams, how will the middle class Massachusetts "investor" figure out whether an investment proposition is a Steve Jobs or a con job? The crowdfunding goal is noble but the evils are too tempting and obvious. Can't compete? Get a subsidy. Congress wants to hand out subsidies to the politically astute but economically uncompetitive. analysts say the risk is rising that taxpayers in many cases will not see a return on their money soon, if ever. Instead, they warn that some federally subsidized companies could be forced to shut down in coming months. Solar, nuclear, electric cars, ethanol, biofuels, you name it. [Carol Leonnig, Washington Post, Dec 8] The trouble comes when government gets into reducing business risk beyond reducing terchnical uncertainty. of really new ideas. If the business potential is big enough, then political contributions are worth the investment. That's almost never true with technically uncertain ideas, like fusion energy. TJ Rodgers, storied CEO of Cypress Semiconductor and long-time scourge of government subsidy, updates the Law of Unintended Consequences with the corollary Law of Misguided Subsidies: Whenever Washington disrupts a market by dumping subsidies into it, Wall Street will find a way to pocket a majority of the money while the intended subsidy beneficiaries are harmed by the resulting market turmoil. ... Washington gives tax breaks to Wall Street to fund LLCs that buy solar panels from the Chinese to "help" the American solar industry, while the ITC threatens to levy a tariff on those solar panels, which would raise the price of solar energy to U.S. homeowners. In short, Wall Street pockets the money and consumers get higher solar-energy prices. He cites the final scene of the film Margin Call where the Chariman of the Lehman Bros like firm says "There's going to be a lot of money made coming out of this mess." [Wall Street Journal, Dec 8] for all our political dysfunction, the U.S. has enduring advantages that the Chinese are some of the first to enumerate: many of the world’s top universities; a fertility rate that exceeds deaths (in contrast to Japan and Europe), which will help America outgrow its debt, and the capacity for innovation that remains unsurpassed. For now. [Evan Osnos, New Yorker, Dec 2] Startup Texas an
initiative aimed at helping jump-start the creation and
growth of startups statewide will launch today in
Austin, seeking to connect entrepreneurs with the
resources needed to build their businesses. ...
part of the Startup America Partnership, which the White
House announced in January and brings together
universities, incubators, services firms, investors and
advisers to provide young, fast-growing companies with
assistance and mentorship. [Lori Hawkins,
Austin American Statesman, Niov 29] The helping hand
of a government that Texas would like to shrink as Texas
takes whatever it can get. How did America get to be
the world's leading entrepreneurial nation before the
helping hand of government was proffered? How will
anyone evaluate the program's spending effectiveness? Congress is considering exemptions to decades-old securities regulations as a way to throw open the doors to entrepreneurs who want to legally sell equity stakes in their start-ups over the Internet. ... Because the proposals call for an overhaul of federal securities laws, and pre-emption of state laws as well, some critics believe they may increase the chance that unsophisticated investors will get scammed by people who aren't really starting new businesses.[Angus Loten, Wall Street Journal, Nov 23] Where profit calls, fraudsters will come. Deficit supercommittee comes to naught. Congress put its favorite programs in a guillotine with a timer on the trigger and bet that a committee of twelve could agree on how to stop the clock. No go; the committee split into two stubborn factions unwilling to compromise. Thecore trouble is an excess of democracy where the elected politician is afraid to disappoint any constituent group. Seeking startups. Mayor Charles Meeker and
N.C. State University leaders will hold a news
conference today to announce an initiative to brand
Raleigh as an "innovation city." A summit in January
will give entrepreneurs a forum to share ideas on how to
structure the effort - and what types of startup
industries to pursue. The timing coincides with
plans for an innovation and entrepreneurial center, a
space where startups could hold recruiting and
networking events, make pitches to potential investors
and brainstorm ways to expand. [Matt
Garfield, Raleigh News & Observer, Nov 20] Texas Emerging Technology Fund has invested $197 million in 133 companies, but it is too soon to know the investment outcome for most of them, fund Director Jonathan Taylor [Laylan Copelin, Austin American Statesman, Nov 18] Like SBIR, such funds are mostly political shows that give an appearance of serious economic investment, with nobody accountable for actual ROI. Governments love input measures because output takes too long and defies easy measure. A few years later, the politician scna declare victory by stopping the effort as a giant step in cutting spending. Snake-Oil revival. Congress is considering exemptions to decades-old securities regulations as a way to throw open the doors to entrepreneurs who want to legally sell equity stakes in their start-ups over the Internet. ... Because the proposals call for an overhaul of federal securities laws, and pre-emption of state laws as well, some critics believe they may increase the chance that unsophisticated investors will get scammed by people who aren't really starting new businesses. Some also point out that the impersonal nature of the Internet should call for more investor protections, rather than less. [Angus loken, Wall Street Journal, Nov 17] the worshippers of this economic religion, built entirely on the altar of innovation, delude themselves if they think that high-tech manufacturing is of little value today. After all, we still live in a world of things -- from cars and cutlery to computers and cell phones -- and somebody still has to make them. If the U.S. doesn’t, then obviously it buys them from countries that do.That explains why the $30 billion trade surplus in high- tech products that the U.S. enjoyed 10 years ago has become a $56 billion deficit.The consequences of America’s offshoring craze run far deeper than trade deficits. The wholesale transfer of production offshore has also weakened the nation’s engine of employment, crippled its ability to bounce back from the recession and seriously eroded not only middle-class prosperity, but also our capacity to invent the products, and make the medical advances, of tomorrow. [Henry Nothhaft, Bloomberg, Nov 15] Nothhaft goes on to recommend a antional manufacturing get-well program with a multitude of federal tax handouts to manufacturers, especially start-ups. Which would match similar handouts by our foreign competitors to their manufacturers. A bonus would be its boon to tax lawyers and accountants as another zilliuon pagers are addded to the tax codes for the politicians to rail against in campaigns. Who's winning? The government support — which includes loan guarantees, cash grants and contracts that require electric customers to pay higher rates — largely eliminated the risk to the private investors and almost guaranteed them large profits for years to come. The beneficiaries include financial firms like Goldman Sachs and Morgan Stanley, conglomerates like General Electric, utilities like Exelon and NRG — even Google....the government’s largess was a once-in-a-generation opportunity, and “we intend to do as much of this business as we can get our hands on.” ... “Subsidies and government support have been part of many key industries in U.S. history — railroads, oil, gas and coal, aviation,” said Damien LaVera, an Energy Department spokesman. [Eric Upton and Clfford Krauss, New York Times, Nov 11] The government passes out many subsidies at the pleasure of Congress's satyisficing constituents and contributors. “We’re making very large bets, and the decisions seem to be more grounded in politics and geography than in engineering and science,” said Michael Graetz, a professor at Columbia Law School and the author of “The End of Energy.” [Steven Mufson, Washington Post, Nov 11] as U.S. presidential candidates extol the virtues of small business during this campaign season, some U.S. analysts have begun wondering whether that dependence on family-owned businesses is good for Italy. "With the advent of modern communications and information technologies, arguably the return to 'small family firms' has fallen," the economist Tyler Cowen writes. Matthew Yglesias at ThinkProgress observes that Italy has "lots of barriers to competition so that poorly managed firms stay in business." If "small firms were so fantastic," he argues, "Italy and Greece would be the economic superstars of the western world." The Guardian adds that Italy's industrial centers have been battered by China's manufacturing of cheap consumer goods. Oh, and many of these small businesses also [Uri Friedman, Foreign Policy, Nov 8]Argentine scientists are happy to take taxpayers’ money but according to Luis Dambra, a professor at the IAE business school in Buenos Aires, they look down their noses at the idea of actually getting their hands dirty by going into industry. Mr Dambra, though, says industry is equally to blame. In 2009 (the latest year for which data are available), only 21% of Argentine R&D was paid for by the private sector, compared with 44% of Brazil’s. Firms that might recruit academic scientists often do not see the point. Even those that do may struggle to accommodate people with a non-commercial background into the business world. [The Economist, Oct 28] Mutual comtempt of science and industry. Navies have typically led technological developments for the wider economy ... naval technical progress raised the importance of engineers and constructors relative to their line-officer counterparts in the modernizing fleet. The transition was a major one. It required thinking of warships as amalgamations of machines which struck many in the United States as incompatible with the warrior-ethos and aristocracy dear to naval traditionalists. Indeed developments in steam propulsion, metallurgy, and naval ordnance were transforming the very nature of naval professional life. [DJ Glaser and AS Rahman, Journal of Econ History, Sep 11] public resources currently aimed at small firms in general, such as those deployed by America’s Small Business Administration, should be concentrated on the gazelles. [The Economist, Oct 8] Gazelles do not consume $20M SBIR and beg for more. That's for boomerang children. NSF uses two criteria to judge the 55,000 grant proposals it receives each year. One is straightforward enough: intellectual merit. But the other, known as “broader impacts,” is so confusing that a cottage industry has sprung up to help scientists figure it out. [Science, Oct 14] Scientists competing for government money know their science, but few, anywhere, can predict the spillover with any accuracy, including the evaluators at government agencies. Connecticut will go
after jobs in states that don't believe in science and
"make them pay for it," he said. After the talk,
Bergstrom, when asked which states Connecticut will
venture into to get science jobs, he said he preferred
not to preempt the marketing strategy. Bergstrom offered
an example: the University of Wisconsin has great stem
cell research, but it is in a state that has flirted
with legislation banning such research.
[Matthew Sturdivant, Hartford Courant, Oct 27, 11]
Are Republicans really ready to sacrifice their
state economies on an altar of religious beliefs? We
must be back in Kansas, Toto! Grow and Graduate. A growing number of the businesses that provide professional services to the U.S. government say they struggle to compete against much bigger rivals once they successfully become mid-sized firms.The businesses are caught in a Catch-22: After winning government contracts designated for small firms, most will expand and many become so big that they no longer qualify for the small-business contracts that enabled them to grow in the first place.[Emily Maltby Wall Street Journal, Nov 3] The new Portland Seed Fund graduated its first class Wednesday, gathering eight startups to present their business plans to industry experts and prospective investors. ... The seed fund is an experiment in using public money, doled out in small slices, to wake up Portland's historically sleepy startup scene. It's raised $2.5 million, two-thirds of that in public funds, ... From 125 applications, fund managers chose eight startups judged to be especially well positioned for quick results. [ Mike Rogoway, The Oregonian, Nov 2]The House is expected to vote Friday on legislation that would allow privately held businesses to raise money from nonaccredited investors in exchange for equity stakes. [Wall Street Journal, Nov 3] Republican free-marketeers .love such opportunities for snake-oil fraud. Republican lawmakers and others who have criticized the loan program say it was a mistake to give federal help to specific companies. While they haven't focused on Beacon Power and Nevada Geothermal, they say Washington shouldn't be putting any taxpayer money at risk for projects with unpredictable returns. [Yuliva Chernova, Wall Street Journal, Oct 27] What they want is a brand new idea that has been thoroughly tested. Or perhaps just some failure as grist for the political mill. Florida's Institute for Commercialization of Public Research has launched a new loan program for early stage and life science companies developing technologies out of the state's universities and research institutions. The Seed Capital Accelerator Program will match private investment in university spinouts through loans of $50,000 to $300,000. [SSTI, Oct 26] Weeping and gnashing. The lobbying arm of military contractors, which represents local heavyweights United Technologies Corp., Barnes Group, Kaman, Goodrich, GE Aviation, Colt Defense and General Dynamics, is promoting a new study that says cuts that could come to the Pentagon if the "super committee" deadlocks would devastate aerospace manufacturers, and the country as a whole. [Mara Lee, Hartford Courant, Oct 25] Of course, deficit reducation and austerity only sound good in the abstract or in their third person, never in detail or the first person. The same story would beheard from the supply-side abiout tax increases, The bad news for the supply siders is that they also want strong defense in a continuation of the fat times ever since the Korean War. Strong defense for whch someone else pays! Defenders of industrial policy also have a new answer to the long-standing critique that it hampers competition. By focusing subsidies and tax breaks on a set of industries or companies, argue opponents, governments open themselves up to being captured by these firms. Firms expend energy, time and talent not on innovating and creating better products, but on securing government help, often to ensure that potential rivals are kept at bay.... he thinks that what matters is not whether governments can pick winners—they cannot—but whether they have the good sense to let losers fall by the wayside. The problem, of course, is that this rarely happens. In effect, Mr Rodrik and others are arguing that industrial policy requires disinterested, benevolent policymakers who can do it well. Unfortunately, they do not yet have a recipe for how such policymakers can be created. Policy is made by real people with political and personal motivations. What they come up with is unlikely to be as well designed as the ones in the models. [The Economist, Oct 1] Politicians want projects they can brag about during an election campaign, whether or not the projects make business sense. Politicians demand that projects be located in their districts or states, even when such locations create problems like higher costs. And of course, politicians expect that those who receive government funding will help their re-election campaigns. No surprise that many businesses have chief executives best known for their ability to find a place at the public trough, rather than boosting sales in free markets. [Jim Powell, Forbes, Oct 24] Hey, unfair; they're subsidizing. [Chinese solar] industry is backed by government subsidies that U.S. business groups say help Chinese firms undercut their American competition. [John Bussey, Wall Street Journal, Oct 21] The excuse offered for our subsidized companies' failing is similar subsidies for the foreign competition. After 19 years in operation, TechMaine, the Pine Tree State’s technology trade group, is being dissolved, a source close to the organization has confirmed. [Mass High Tech, Oct 19] Piled onto all this evident financial market pessimism is the ever-present vulnerability of our economy to more policy misdirection inflicted by our bloviating political class (e.g., the current proposed Senate bill imposing tariffs on Chinese imports). The self-serving maneuvering in Washington these past few months has done little to reassure the average voter (investor) that the country’s best interests, first and foremost, are driving the political process. [TFC investment Letter, Oct 7] Does SBIR advocacy qualify as self-serving maneuvering? Once a subsidy starts, ... Lawmakers’ reluctance to simply eliminate a subsidy without adding another in its place demonstrates how difficult it is for Washington to trim the federal largess that flows to any powerful interest group. Indeed, the $5 billion program that lawmakers are willing to throw under the tractor, known as the direct payment program, was created in 1996 as a way to wean farmers off all such supports — and instead was made permanent a few years later. William Neuman, [New York Times, Oct 18] “We’re sitting on a treasure trove of energy in this country,” Perry said on CNBC. “There’s 300 years worth of reserves underneath the land of America and that’s how we’re gonna get America working again.” [Sarah Kunin, ABC News, Oct 14] Not surprising that a Texas governor would see a commodity economy as the road to riches. The prospect of Washington lurching into the private sector is terrifying, as illustrated by the debacle of Solyndr .... While countries like China have put large resources behind industries they want to nurture, we should resist the temptation to plunge deeply into industrial policy. Particularly in its current dysfunctional condition, Washington is ill-equipped to pick winners and should concentrate its capital on infrastructure and other public investments that the private sector won’t make. [Steven Rattner, New York Times, Oct 16] But the potential beneficiaries of subsidies and handouts will still clamor for more. Did [super free-market Republican] Darrell Issa seek U.S. clean-energy aid for a company in his district? ... Bloomberg suggested some hypocrisy now that Issa’s House Oversight and Government Reform Committee is reviewing $535 million of green energy aid from the Obama administration for Fremont-based Solyndra LLC. [Ricky Yung, signonsandiego.com, Oct 12, 11] It ain't pork if it brings money to my constituents. Investing in ... a governor. The[Texas Emerging Tech] fund has made grants to companies operated by several prominent Perry donors, and at least one company receiving grant money went bankrupt — an uncanny similarity to the Solyndra scandal. In 2007 Perry’s office approved a $1.5 million award to ThromboVision (no SBIR), a biomedical diagnostics company. When it declared bankruptcy in September 2010, ThromboVision revealed that businessmen Charles W. Tate and Charles Millerowne had hundreds of thousands of preferred shares in the company.Tate was involved in the initial vetting process for the company’s Texas Emerging Technology Fund grant, a step before the request was evaluated by a statewide board and then approved by the governor, lieutenant governor and House speaker. The Dallas Morning News reported that Tate made two investments in the company between the April 2007 grant approval and the October 2007 public announcement of the grant. Tate donated roughly $424,000 to Perry’s campaigns between 2000 and 2010, while Miller donated $125,000 during that time. [Steven Nelson, AP, Oct 13] The problem is that there are no apolitical subsidies. The economics of political venture capital are bad, but the politics are worse. For Republicans in particular, the green subsidy road leads only to scandals, job-number embarrassments, poor excuses, and a missed opportunity to draw distinctions with big-government liberals. [Kimbetrly Strassel, Wall Street Journal, Oct 14] But the temptation is too great for politicians to resist: [Wisconsin] would create a perpetual fund for investment in biotech companies and would invest with angel networks and venture capital funds in high-growth Wisconsin companies under the latest version of proposed venture capital legislation. [Kathleen Gallagher and Mark Johnson, Milwaukee Jurnal Sentinel, Oct 13] the [Texas] A&M system had entered into an agreement to develop vaccines with a therapeutics manufacturing firm called Introgen; this put the firm in a position to benefit from the new center. Introgen’s founder, David Nance, is a close friend of [Gov] Perry’s. He contributed $100,000 to Perry over the decade, he had previously served on the advisory committee of the tech fund awarding the $50 million, and Perry’s son, Griffin, owned Introgen stock between 2001 and 2004. Introgen had its main drug rejected by the FDA and declared bankruptcy shortly before the $50 million award [Alec McGillis, The New Republic, Xep 28] Buy American. The White House is considering a plan aimed at attracting at least $1 trillion of new investment from abroad over the next five years ... A target of $1 trillion over five years would represent a 15% increase over the $174 billion average of the past decade, ... The U.S. economy used to be the largest single magnet for foreign investment, attracting 40% of the world's total a decade ago. But that share has dropped to 17% today, according to estimates by Matthew Slaughter, an economist at Dartmouth College [Sudeep Reddy, Wall Street Journal, Oct 10] The North Carolina Innovation Fund has announced plans to support a new accelerator that would promote life science technology transfer from the state's universities. ... The objective of this allocation is to target attractive investment returns through promoting technology transfer from entities such as North Carolina universities, research institutions and private enterprises in order to enhance and foster the development of biopharmaceutical therapeutics, diagnostics and medical devices. The Accelerator program would provide capital to specialist funds that will capitalize on the opportunity to invest in products that have commercial potential and are positioned for rapid development. [SSTI, Oct 6] [Josh] Lerner
["Boulevard of Broken Dreams"] details case after case
where public
investments produced little or nothing. But he
also makes an important distinction between government
efforts to set the table for entrepreneurial activity
and government efforts to create jobs directly. Setting
the table means building an underlying context for
innovation: funding academic research, establishing
clear laws, improving immigration policies, building
infrastructure and keeping capital gains tax rates low.
Lerner notes that one of the most important government
initiatives to encourage innovation was the Bayh-Dole
Act of 1980, which gave universities automatic title to
research paid by the federal government. These
table-setting efforts work. The problem is the results
are indirect, the jobs take a long time to emerge and
the market may end up favoring old-energy sources
instead of shiny new ones. So politicians invariably go
for the instant rush. They try to use taxpayer money to
create private jobs now. But they end up wasting
billions.
[David Brooks, New York Times, Oct 7] So it is with
SBIR as the advocates claim great future econmic benefit
from jobs created by small biz. But the evidence
says that the money pays from jobs only as long as the
money lasts. More welfare than investment. Government spending fails to stimulate economic growth because, quite simply, we do not see that it depends on resources taken from elsewhere in the economy. ... Consider the recent case of its $2 million grant to Visalia, Calif. The EDA claimed the project would create 250 jobs and attract $10 million in private investment. When VWR, a medical supplies manufacturer, decided to build a 500,000-square-foot warehouse in Visalia’s newly expanded industrial zone, the EDA claimed the spending was a success. ... But the agency ignores the unseen cost. In this case, VWR closed a warehouse 200 miles away, in Brisbane, in the San Francisco Bay Area, to take advantage of the subsidies offered in Visalia. According to the University of California at Berkeley, the closing will result in the loss of 331 jobs and millions of dollars in economic activity in Brisbane. [Iain Murry and David Bier, Washington Times, Sep 29] The company got a new warehouse and cut 80 jobs - good deal. Still betting on cheap
sunshine. The
Energy Department on Friday approved four more solar
energy loan guarantees worth nearly $5 billion, hours
before a controversial loan program was set to
expire.Energy Secretary Steven Chu said the department
completed deals on four separate projects, including two
that were sold late this week by Arizona-based First
Solar, a major solar manufacturer that had been seeking
three federal loan guarantees for projects in
California. The sales were announced Friday along with
the loan guarantees. [Matthew Daly, AP,
Sep 30] Small Biz Job Myths. The idea of small businesses as indispensable to the national welfare dates to Thomas Jefferson’s veneration of the yeoman farmer. In the popular imagination, small firms are more nimble, more innovative, and more virtuous than blue-chip companies that employ thousands. Yet the notion that small business is the force behind prosperity is not true. ... among small companies in their second year of business, more jobs were lost to bankruptcy than were added by those still operating. The same was true in years three, four, and five. .... The trouble is that government programs aimed at helping small businesses usually help the wrong kind. Many of these outfits were never meant to generate employment for anyone but their founders. ... If you’re looking for a lot of good-paying, stable jobs, you’d better hope there are some big companies around that want to hire. [Charles Kenny, Bloomberg Business Week, Sep 28] SBIR Insider Rick Shindell notes that the Continuing Resolution is keeping SBIR as alive as the rest of the government. government loan guarantees go only to those companies who the free market has chosen NOT to fund. If the free market was willing to toss another half billion into Solyndra, its owners would not have been burning a path back and forth to Washington. So by definition, every single government loan guarantee in this program is to a company or a technology that the free market, knowledgeable investors, and industry insiders have rejected as a bad investment. For the program to work, one has to believe that Obama, Chu, and some career energy department bureaucrats have a better understanding of commercializing technologies than do private investors (who are investing with their own money) and industry experts. [Warren Meyer, coyoteblog, Sep 25] America Invents Act, including two new programs to assist biomedical entrepreneurs at the National Institutes of Health (NIH). The administration also will develop a national plan focused on reforms to speed commercialization and open new markets. A blueprint outlining those efforts is due in January. [SSTI, Sep 23] With a re-election contest looming, the administration wants to look as small biz positive as possible. SBIR maybe to continue. SBIR Insider Rick Shindell reports that the SBIR re-authorization has at least temporarily disappeared in the battle to fund the government for the coming fiscal year. It may or may not get a ride on a Continuing Resolution through Nov 18. All the politicians who think they have a political solution to the national economic problem want to apply their pet theories, but the pet theories cannot co-exist and no one really knows what will work. The lielihood seems that we are not going back by any of the theories to ourprevious comfortable where everybody gets wishes granted by a generous government. [Federal] indictments point to the connections between Dong’s biotechnology company, GenPhar (Mount Pleasant, SC; $900K SBIR), and [US Senator Lindsey] Graham, who championed nearly $20 million in federal earmarks for the firm’s vaccine research. ... From 2004 to 2010, GenPhar received $19.6 million in federal grants from NIH and the military secured with help from Graham, according to the senator’s office. The money was focused on attempting to develop vaccines for use against the Ebola, Marburg and dengue viruses. In one example, Graham requested a $5 million earmark for GenPhar for a program to develop a vaccine against dengue fever. [Dan Eggen Washington Post, Sep 21, 11] When lawmakers talk about small businesses as the engine of growth, they bring to mind entrepreneurs building start-ups from their garages. But when officials talk about protecting the “job creators” from tax hikes, they are mostly protecting a bunch of doctors, lawyers, freelancers, contractors and the like. .... Like the overwhelming majority of small businesses, I am a one-man operation. And, like most small businesses, I would not hire anybody even if the government dropped my tax rate to zero. [Dana Milbank, Washington Post, Sep 21] The [Solyandra] problem is that even if a company with a cutting-edge technology manages to build a factory on time and at the anticipated cost, the market price of its product can collapse before its rollout, they said. ... Another analytical firm, Bloomberg New Energy Finance, reached a similar conclusion last week, saying that the manufacturing capacity for specialized lithium-ion batteries will greatly exceed the need “unless demand by automakers increases significantly in the short term.” ... Nissan North America has a loan guarantee of up to $1.448 billion for retooling a factory in Smyrna, Tenn., and building the Nissan Leaf, including the battery. [Matthew Wald, New York Times, Sep 16] The business risk of market competition. The Small Business Administration (SBA) also released a report that summarizes ideas expressed by participants during the eight "Startup America: Reducing Barriers" roundtable events and from an online suggestion portal. After hearing from "over 1,000 entrepreneurs, investors, and other participants across the entrepreneurial ecosystem in eight communities," five key theme areas emerged: People—identifying, hiring, retaining and developing a strong entrepreneurial workforce in America; Money—fostering an environment in which promising U.S. startups and high-growth firms can access the kinds of capital they need; Ideas—transforming more of America's discoveries and breakthroughs into commercial success; Customers—ensuring that America's small firms can compete for customers, including U.S. Government contracts and export business; and, "Lean" Government — making the U.S. Government itself more customer-centric and nimble in serving our own entrepreneurs and high-growth firm. [SSTI, Sep 15] SBIR's mission is the capital with the hope that commercial success will follow. The federal agencies, however, are not interested in providing capital; they want their R&D work done with the money that was diverted to the social handout program. And since Congress gave tham unilateral authority to pick the winners, guess what happened. Startup visas got a hearing on Capitol Hill today, but that’s as far as the idea may go this Congress. Proposed legislation would provide visas to foreign entrepreneurs who have secured venture capital backing to start businesses in the U.S. [Kent Hoover, portfolio.com, Sep 15] The new fiscal year will almost certainly start with a stopgap CRA despite all the rantings by the Republicans for responsible federal finance. The House trial balloon CRA would cut 1.25% from everything. SBA Should Work with Agencies to Improve the Data Available for Program Evaluation, says GAO's latest SBIR report. we recommend that the Administrator of the Small Business Administration work with participating SBIR agencies to take the following two actions: collect data on the number of applications submitted by small businesses owned by disadvantaged individuals and women, and identify best practices for verifying the accuracy of data related to progress in increasing commercialization. The basic problem is that most commercialization data are held by private companies thta have no incentive to report confidential business data to the leaky government. The only useful data would come from aggressive program managers who care about the economic objectives and who will force proposers to justify subsequent awards. Until now, though, no agency has done such action since SDIO/BMDO did it in the 1990s. the U.S. military is trying to develop pilotless planes to operate in future wars where airspace may be contested. The drones will have to be able to fly with near autonomy and elude enemy radar by using stealth technology. ...currently developing the X-47B, designed to operate from an aircraft carrier and refuel in midair [a considerable technological feat]. [Nathan Hodge and Julian Barnes, Wall Street Journal, Sep 15] The federal government says it gave Provident Bancorp Inc. of Amesbury $17 million as part of controversial national program to boost small business lending by injecting money in community banks. ... has awarded $2.4 billion so far to nearly 200 banks [nationwide] [Todd Wallack, Boston Globe, Sep 15] But no requirement that the banks actually lend money to small biz. Free market critics naturally object to such handouts. The banks still have the option of using the money to bulk up their capital and wait for a better day to invest. If consumers won't or can't buy stuff, the small biz isn't expected to do well anyway. Do something? Almost nobody seems to hope the government will leave the economy alone to recover on its own. ... There was a stock market crash in October 1929 and unemployment shot up to 9% — for one month. Then unemployment started drifting back down until it was 6.3% in June 1930, when the first major federal intervention took place. That was the Smoot-Hawley tariff bill, which more than a thousand economists across the country pleaded with Congress and President Hoover not to enact. But then, as now, politicians decided they had to "do something." [Thomas Sowell, Sep 15] Of course, politiciams don't win any votes for doing nothing. The unending urge to do something got us into the national debt mess and getting out of it will require a lot more of doing nothing. a chart detailing the collapse of federal support for research and development is especially disturbing. [David Frum reviewing Friedman and Mandelbaum That Used to be Us, New York Times, Sep 11] As Madison girds for debate over a stalled venture capital proposal, two Republican legislators say they are planning a separate bill that would provide venture capital and other types of funding to the state's bioscience companies. [Kathleen Gallagher, Milwaukee Journal Sentinel, Sep 7] Hope springs eternal that government can wisely invest public money in technical innovation. Even Wisconsin Republicans go for it. They should pay close attention to Texas's experience with politically controlled "investment." Since the sun rose every day in Utah, Massachusetts, and Texas, guess who's claiming credit? The self-proclaimed job-creating governors one-upping each other on how many jobs the private economic forces hired. Stand by for another fourteen months of cherry-picked statistics on the complex US economy. No sunrise ever gets past those roosters. Ah well, if the electorate doesn't understand basic economics and cause-and-effect statistics, politicians can invent any story they like. FBI agents executed a surprise search Thursday of [Solyandra] that collapsed last week, in an investigation that appeared to center on half a billion dollars in federal loan guarantees granted to the company by the Obama administration. ... Solyndra officials had recently pronounced the company financially healthy. But at the end of 2010 they had privately confided to Energy Department officials that the company was rapidly going broke and on the verge of shutting down, according to newly released records and interviews. [Washington Post, Sep 9] Imagine that: a government program said it wanted to hear good things from a potential beneficiary so it justify handing out money. Just like SBIR commercialization fantasies. the decisions are being made by, at most, a few hundred government workers. There is no possible way these workers can ever gather the knowledge and information posessed by millions of private actors making similar investment decisions. Like monkeys throwing darts, some of the investments will work out, but on average their success rate has to be far lower than the network of individuals in the broader economy. Second, and probably more important, government decisions-makers have terrible incentives when making these investments. Seldom, if ever, are government re-allocations of capital made with an expectation of earning a return. In fact, many of these programs promote themselves explicitly as shifting capital to investments no rational private investor would touch. [Warren Meyer, Coyote blog, Sep 2] Meyer has a good argument for projects that are business risks. But for technical risks, tooo uncertain to make an ROI calculation, somethjing else is needed, either crazy VCs or government if ended to the point where an ROI can be estimated with some confidence. As Madison girds for debate over a stalled venture capital proposal, two Republican legislators say they are planning a separate bill that would provide venture capital and other types of funding to the state's bioscience companies. [Kathleen Gallagher, Milwaukee Journal Sentinel, Sep 7] Hope springs eternal that government can wisely invest public money in technical innovation. Even Wisconsin Republicans go for it. They should pay close attention to Texas's experience with politically controlled "investment." Since the sun rose every day in Utah, Massachusetts, and Texas, guess who's claiming credit? The self-proclaimed job-creating governors one-upping each other on how many jobs the private economic forces hired. Stand by for another fourteen months of cherry-picked statistics on the complex US economy. No sunrise ever gets past those roosters. Ah well, if the electorate doesn't understand basic economics and cause-and-effect statistics, politicians can invent any story they like. As the U.S. deficit continues to climb, times are clearly tough for government funding. But should the nation’s debt crisis be “solved” by gutting R&D? To the contrary, science is essential to the future of our nation and the world. .... Last month, we sent a letter to Congress, signed by more than 150 scientific societies, urging members to refrain from defunding specific grants or entire scientific disciplines. [AAAS, Sep 6] Of course, our subsidy is worth every debt dollar we get. It's Story 101 that Congress hears from every beneficiary of subsidy or tax break. SBIR is no different, except that its story relies even more on conventional myths. Bad news: Congress's letter box is already full of similar pleas. Lerner details case after case where public investments produced little or nothing. But he also makes an important distinction between government efforts to set the table for entrepreneurial activity and government efforts to create jobs directly. Setting the table means building an underlying context for innovation: funding academic research, establishing clear laws, improving immigration policies, building infrastructure and keeping capital gains tax rates low. ... These table-setting efforts work. The problem is the results are indirect, the jobs take a long time to emerge and the market may end up favoring old-energy sources instead of shiny new ones. So politicians invariably go for the instant rush. They try to use taxpayer money to create private jobs now. But they end up wasting billions. [David Brooks, New York Times, Sep 6] But the programs get created because the program beneficiaries exploit the politicians' need for action. And a divided Congress looks only for partisan advantage and campaign contributions. The Texas Emerging Technology Fund, also controlled by the governor, has invested $200 million in 133 start-up companies since 2008, according to Mr. Perry's office, and has the right to take equity stakes in the mostly privately owned companies. At least one backed by the fund, CardioSpectra, produced a profit for the fund when it was sold in 2007, a Perry spokeswoman said. The fund also has awarded about $175 million to university-linked research programs, and has about $140 million available to spend over the next two years. In an April report, the state comptroller's office found it "difficult to assess the success of the program." The legislature told the fund this spring to start tracking jobs created by its grants. [Leslie Eaton, Wall Street Journal, Sep 2] Imagine that: a government handout "investment" fund that cannot show its economic return. Over the last few days, John Huntsman has called for an American industrial policy to rebuild manufacturing; Maxine Waters has slammed bailed-out banks for not writing enough new mortgages; and Solyndra, a company that recieved $535 million of taxpayer loan guarantees to manufacture solar panels, went bankrupt. What do all these stories have in common? At their core, they reflect the near-obsessive desire by politicians to redirect the flow of private capital to reflect their own personal preferences. In a free economy, private capital tends to migrate towards where it can be employed most productively. Individuals investing the capital have incentives that cause them to want to maximize their returns measured against the risks they perceive...... In what has been a progressive technocratic fantasy for over a century, politicians believe, or worse, try to convince the public, that it is possible for a few smart people at the top to better optimize the economy by redirecting private capital flows. This was a fundamental core assumption in Mussolini’s corporate state, in FDR’s National Industrial Recovery Act, in Japan’s MITI, and in Obama’s Green Jobs initiative. [Warren Meyer, Forbes, Sep 1] Government wants votes and spends money where it will bring the most votes. Call it democracy or call it corruption, it is a fact of life that dooms almost every government program that pretends some economic return will result from the spending. SBIR Insider Rick Shindell gloomily notes that SBIR is in peril and is likely to lapse, be eliminated, or become a misshapen Wall street program at the expense of main street small business ... House Small Business Committee leaders, continue [since 2004] to be major supporters of their Wall Street benefactors to open SBIR funding to majority ownership of Wall Street giants. House and Senate, says Shindell, are nowhere near agreement on a revised SBIR, or even on another short extension after Sep 30. The main problem is representation of competing vested interests and the need for Congress to deliver a large budget pain to the country. For SBIR and many other special handout programs, a new day is dawning with heavy clouds. SBIR is just not convincing Members that it has a large economic payoff in jobs and economic activity (beyond the temporary jobs provided directly by the handout). SBIR advocates repeat the tired litany of small biz virtue and are suffering thee consequencs of their two decades of fighting economic evaluation of a program that is basically just serving federal agency short term interests. In Congress's mind, a dollar for jobs hires the same number of people in either large or small entities with no compelling evidence that SBIR has any better downstreeam payoff than any other program. Shindell again implores SBIR activists to shower Congress with the usual pleas. Budget Bites. R&D investment thus far has received mixed support in the House, with themes similar to last year. Basic research has generally been supported, while applied research programs have seen deep cuts in their budgets -- in some cases more than 30 percent. [AAAS, Aug 11] It's still way too early to predict how all that austerity speechmaking will translate to real programs with real handout beneficiaries. The US Treasury said yesterday that it is pumping $18 million into four small Massachusetts banks and taking shares in the financial companies as part of a controversial program to increase small business lending across the country. The Obama administration says the Small Business Lending Fund will help boost the sluggish economy by providing relatively cheap capital to community banks to lend to small businesses to expand and hire. ... The program is controversial because many of the banks are using the money to repay the federal aid they received under TARP, with better terms. ... More than 900 banks have applied for more than $11 billion under the program, none of which have been rejected yet, according to the US Treasury. [Todd Wallack, Boston Globe, Aug 18] eight California financial institutions so far receiving the same federal funds [signonsandiego. com] You can lead the horse to water, ... Crony Capitalism. All told, the Dallas Morning News has found that some $16 million from the tech fund [Texas Emerging Technology Fund] has gone to firms in which major Perry contributors were either investors or officers, and $27 million from the fund has gone to companies founded or advised by six advisory board members. The tangle of interests surrounding the fund has raised eyebrows throughout the state, especially among conservatives who think the fund is a misplaced use of taxpayer dollars to start with. It is fundamentally immoral and arrogant," says state representative David Simpson, a tea party-backed freshman from Longview [Charles Sameron, Wall Street Journal, Aug 13] The Michigan Economic Development Corporation (MEDC) recently announced the recipients of $25 million in awards from the Michigan Strategic Fund (MSF). Each of the eight organizations receiving the awards will use the funding to support Michigan entrepreneurs and technology commercialization. The largest single allotment, $10.8 million, will benefit Ann Arbor SPARK, which plans to replenish its Michigan Pre-Seed Capital Fund with the award. [SSTI, Aug 10] Who will buy? The U.S. government used to be the ultimate customer for some American companies—consistent, deep-pocketed and faithful to its contracts. Now its deep pockets have holes.Among investors and executives alike, the recent debt-ceiling deal is regarded as the first step in a spending pullback that will reverberate across many industries, including health care, defense, technology and education.[Jonathan Rockoff, Wall Street Journal, Aug 9] Unhealthily dependent. Today, both the stock market and the economy have become dependent on government support, and the current crisis grows from a fear that governments are losing control of the situation. [Wall Street Journal, Aug 5] The N.C. Biotechnology Center has given a grant worth as much as $2.5 million for a new center designed to foster commercial development and jobs based on the state's ocean life. The four-year grant will help get the Marine Biotechnology Center of Innovation off the ground. [Raleigh News & Observer, Aug 3] Almost all discretionary federal spending will face some cuts over the next 10 years, with defense spending taking a comparatively heavy hit. ... "If we have learned anything from this crisis, it's not to depend on the government for anything," said Bedda D'Angelo, president of Fiduciary Solutions, a Durham, North Carolina, financial -planning firm. [Reuters, Aug 2] And that's just from the preliminary round of federal belt-tightening. If and when the federal budget comes into reasonable balance, a lot more pain will be felt to both beneficiaries and to taxpayers. The national family will have to reduce its credit card financing to its income level, which is unlikely to bloom profusely in world competition. Re-building the national income stream will also involve a lot of pain. NSF Launches Project to Link Research and Innovation . The National Science Foundation, in collaboration with the Deshpande Foundation and the Kauffman Foundation, launched a new public-private partnership entitled Innovation Corps (I-Corps). The program will make awards to teams composed of a principal investigator, a mentor and an entrepreneurial lead, to advance the development of commercial products based on NSF-funded research. The program intends to support up to 100 projects per year, at $50,000 a project. [AAAS, Aug 3] The deal to raise the debt ceiling and reduce budget deficits would likely cause a mild drag on U.S. economic growth in the coming year, coming at a time when the recovery remains fragile. ... Some economists expect a more severe impact, which could be particularly damaging when growth is weak. [Sara Murray, Wall Street Journal, Aug 2] Taking away the credit card does not improve a family's life style. And Americans cut back on their spending in June for the first time in nearly two years and their incomes grew by the smallest amount in nine months, a troubling sign for an economy that is barely growing. [Martin Crutsinger, AP, Aug 2] The Pentagon has encouraged foreign companies to pursue work with the U.S. military in hopes of creating more competition for sales of goods and services. “Globalization of our market is not an option. It is a reality,” Ashton Carter, the Defense Department’s top acquisition official, said in a February speech [Washington Post, Aug 1] Not to worry too much; the politicians will soon be trumpeting "jobs for Americans" as unemployment hangs on. [Michigan’s angel investor tax credit] would-be three-year, $27 million program designed to stimulate early stage funding of startups, will end at the end of this year, the victim of Gov. Rick Snyder’s tax reforms and budget wrangling. The program began this past February. [Thomas Lee, xconomy.com, Jul 22] A federal judge threw out a lawsuit by scientists challenging U.S. government funding of embryonic stem-cell research, a victory for Obama administration efforts to expand this area of study. ... Judge Lamberth suggested it was up to the president to decide whether to put federal money toward such research. "That policy question is not answered by any congressional law, and it has fallen on three presidential administrations to provide an answer," he said. [MJ Randall and MH Anderson, Wall Street Journal, Jul 28] Ultimately, the issue is the unsustainable fiscal trajectory of the U.S. government and the inability of the political system to change course.The credit rating isn't the problem.The problem is the problem. [David Wesel,Wall Street Journal, Jul 28] The problem, of course, is our unwillingness to tax ourselves enough to pay for what we want our government to buy for us. And SBIR is just on example of the free lunch syndrome. "The bookshelves of policy analysts in Washington are loaded with statements of principle on tax reform that all sound good. And then they all die when you try to specify the details." -- William Gale, an adviser to President George H. W. Bush's Council of Economic Advisers and now co-director of the Tax Policy Center. [Stephen Ohlemacher, AP, Jul 20] The federal government -- our nation's largest employer -- is about to suffer a serious brain drain. ... About 35% of the employees at the Department of the Treasury will be eligible to retire by 2012. So will 40% of workers at the Department of Energy and 46% of people working for the Department of Transportation. The good news is that many of these departments will have to slim down anyway, and this retirement cliff could offer an opportunity for agencies to become more efficient. [Shelley DuBois, Fortune, Jul 22] The Tea Party will be glad to hear that government could shrink by itself, although the retirees will still have to be paid their pensions and health benefits. Roughly two-thirds the pay and all the health benefits with no federal work done. “The government is aggressively removing work from some small businesses,’’ said Robert Burton, a partner at the law firm Venable in Washington, who represented SAC and other small vendors in insourcing cases. ... Federal procurement officials said the impact on small business from insourcing has been minimal, though they had little data on the number of businesses affected. ... The Defense Department estimated that it has created nearly 17,000 civilian positions in fiscal 2010 as a result of insourcing [Leah Nylen, Washngton Post, Jul 24] ...fiscal nonsense is rampant in government today. They seem to think it is their job, at all levels, to intrude in areas they have no business intruding and pick winners according to an agenda with little understanding, apparently, as to what it actually takes to succeed in doing so. You know, like there has to be a market, the firm has to be adequately financed (for more than a couple of months) and it has to have a long-term and viable business plan that actually passes a sanity check. [Bruce McQuain, quando.net, July 20] First, re-organize and change the name. an overhaul of Iowa's economic development efforts, giving private businesses a greater role in shaping programs, which was one of his top priorities in the last campaign. ... changes the name of the main state agency that does economic development, to the Iowa Partnership for Economic Progress. [AP, Jul 19] Old standby deja-vu. The Republicans are pushing a balanced budget amendment as self-identified conservatives rush another attempt to change the Constitution to achieve their policy objectives. Even if they gotr such an amendment, their first moves would be to avoid its discipline by pretending the existence of whatever escape mechanism is necessarily included. Budgets, after all, are only plans and estimates, not binding documents. Single Best Argument Against Technocratic Paternalism. The progressive argument for a larger state has, for over a hundred years, rested in part on the premise that smart people at the top in government can better optimize the allocation of resources and make better investment choices. This premise always has been ludicrous. Government officials have neither the information nor incentives to perform this function, and lacking such, decisions always get made based on political rather than economic or other objective functions.Ethanol is such a great example, it will almost be a shame when its mandates and subsidies are repealed. As a reminder, corn-based ethanol production get the trifecta of state sponsorship — mandates for its use, subsidies for its protections, and stiff tariffs to prevent lower-cost imports.The result is a classic government fail. The economic subsidies benefit only a small number of the politically connected, while hurting the great mass of humanity, even outside the US, through higher food and fuel prices. Because ethanol takes as much fuel to produce as it provides, it does nothing to change the amount of fossil fuels we use. And as a result, it does nothing to affect CO2 production and in fact has a number of environmentally negative effects, particularly in land and water use. [Warren Meyer, coyoteblog.com, Jul 13] opposition party, is withholding support for an internationally agreed austerity and privatisation plan on the ground that it can and should be renegotiated, with more emphasis on tax cuts. Few people outside Greece see much scope for that. But some of the government’s critics, especially on the left, gleefully observed that Greece’s international partners seemed to soften their stance slightly around June 15th, when street protests came to a head and the country looked ungovernable. [The Economist, Jun 25] Regardless of the scope of an impending disaster, one political religion holds that that the solution is tax cuts. Naturally, they are always the people who want their taxes cut. Economics alway runs a distant second to personal vested interests.Start-ups that receive money through Minnesota’s angel tax credit program are eager to see the state government shutdown end soon. The program gives qualified individuals a 25 percent tax credit on their investments of $10,000 or more into Minnesota start-ups. During the state shutdown, investors are unable to sign up for the program. [Wendy Lee, Minneapolis Star Tribune, Jul 5] The Methodist Hospital Research Institute (TMHRI) in Houston, Texas. With help from a $3 billion state cancer research fund, the institute came up with a 5-year, $29 million package that includes the two scientists' salaries, research costs, and ample space in a new research building for their hundreds of mice. “Texas is the only place right now to get that kind of money,” Copeland says. ... when a shift toward industrial research in their adopted Singapore persuaded mouse geneticists Neal Copeland and Nancy Jenkins to return to the United States .witn money from the plan to sell $3 billion in bonds over 10 years for CPRIT 4 years ago, inspired by California's $3 billion stem cell research fund. [Jocelyn Kaiser, Science, May 27] Thanks to the religiously inspired political decision by ex Texas governor George Bush to deny federal funding for such science, two pretend rich states with all kinds of budget shortfalls are competing to throw money at such science for presumably purely economic reasons. Lawmakers last week passed a measure establishing the Innovate NY Fund to invest $25 million of federal funds in technology development organizations, research universities, and seed-stage investment funds. The Empire State Development Corporation will administer the fund and establish a competitive process for evaluating applicants. Investment priority is given to companies involved in commercialization of R&D or high-tech manufacturing. [SSTI, Jun 30] How do you estimate the odds that this enterprise will achieve its goal? What do you think the overall return on investment to the state will come from such handouts? Do you think there will ever be an honest assessment of the project? Last week, the House of Representatives passed the largest overhaul of U.S. patent law in 60 years. Under the new legislation, patent decisions would favor inventors who file for patents first, rather the the current "first-to-invent" system. The change would bring U.S. patent law more in line with the patent systems of Europe and Japan. A similar bill was passed by the Senate in March, which will be reconciled with the House bill in the near future. Read the full text of H.R. 1249 [SSTI, Jun 30] Robo-copter down. NATO has confirmed media reports that a Navy unmanned aerial vehicle [Fire Scout] that was developed by Northrop Grumman in Rancho Bernardo crashed in Libya. Officials haven't disclosed why the remotely-controlled MQ-8B robotic helicopter, which can operate from a warship, went down. [Cary Robbins, signonsandiego.com, Jun 22] Convergen LifeSciences (no SBIR) said it, the University of Texas System and the federal government had jointly won a patent for a drug to fight lung cancer. The company said it plans phase II clinical trials for the drug, called CNVN202, which is designed to suppress tumors in lung cancer patients. Convergen is at the center of a controversy over how it won a $4.5 million Texas Emerging Technology Fund grant and the secrecy that surrounded Gov. Rick Perry's award of the money. The American-Statesman recently reported that Convergen's founders had invested only $1,000 at the time that they had applied for the grant. Convergen LifeSciences Inc. said it, the University of Texas System and the federal government had jointly won a patent for a drug to fight lung cancer. [Austin American Statesman, Jun 28] Big talk, little money. Minnesota Science and Technology Authority is asking the entrepreneurial community for input on issues it should tackle first.... The authority had originally asked the state legislature for $10 million each year to support its operations and initiatives. That amount was later reduced to a total of $607,000 across two bills. It is uncertain whether the authority will receive that funding. [Wendy Lee, Minneapolis Star Tribune, Jun 27] At the end of the [Texas] legislative session in 2009, partisan bickering killed a host of unrelated bills, including solar legislation. This year, solar bills couldn't even clear a committee in a session marked by a no-tolerance attitude to new taxes or fees, or higher electric bills, for that matter. Texas is the nation's largest energy market, but it ranked 10th last year in the amount of solar photovoltaic generation installed. ... Price is the hurdle for solar. Despite falling prices for solar panels, solar power is projected to be more than three times as expensive as natural gas and double the price for wind between now and 2035, according to the U.S. Energy Information Administration. [Laylan Copelin, Austin Amertican Statesman, Jun 26] President Barack Obama will launch an initiative to develop new manufacturing jobs by teaming government up with companies and universities to invest more than $500 million in advanced technologies.... Advanced Manufacturing Partnership, which aims to speed development of a new generation of American-made high-technology products. ... will leverage existing federal funds and future federal departmental budgets to invest with industry some $300 million to jump-start domestic manufacturing capabilities seen as critical to U.S. national security. Initial public-private investment areas include batteries, composites, metal fabrication, biotechnology and alternative energy. [Reuters, Jun 24] The administration is betting it can goose the trends by expanding partnerships between firms and community colleges for training, improving coordination between universities and advanced manufacturers, liberalizing export rules and pressing for more federal spending on sectors such as green manufacturing. [Wall Street Journal, Jun 24] Been there, done that, against basic Republican free-market theories, with MEP. This time in an environment of cutting government spending. It's mostly politics because any re-growth in manufacturing will be generated by a reversal of the economic forces that drove it off-shore in the first place: lower labor costs, relative value of the dollar, corporate tax rates on profits, etc. It's not R&D a shortage of R&D that dominates amnufacturing, and government supported R&D is almost certain to subsidize the wrong industries and companies. Ah well, the pres needs electoral votes in the classic manufacturing states of the Midwest. Nobel laureate economist Michael Spence has a essay in today's Wall Street Journal on the broader program needed to get us into a better world competitive position. there also are tax breaks for green-energy companies. But most of those handouts are temporary -- including low-interest loans from the 2009 stimulus -- with renewables receiving only around 5% of some $20 billion worth of federal energy tax breaks (excluding subsidy-rich ethanol, which is a separate but equal tax tragedy). Some of these subsidies are very important to individual companies, but the renewable-energy industry's best long-term play is to support the elimination of all federal energy handouts. [Dan Primack, Fortune, Jun 13] Subsidies are loved by the beneficiaries but hard to justify as a net benefit to the nation. SBIR advocates make the same fair-share pitch for corporate subsidies and have the same negligible provable economic gain to show for it. But politics being what it is, SBIR is likely to continue as a fair-share handout. soaring fuel bills and a dangerous reliance on vulnerable fuel convoys. The [Pentagon’s new energy] strategy, which will be fleshed out this summer with a more detailed implementation plan, constitutes the Pentagon's promise to develop more energy-efficient weapons, embrace non-oil energy sources and demand more energy-conscious behavior from the troops. SBIR Insider Rick Shindell notes that SBIR will expire tonight unless the House today passes the Senate version if a new extension bill. Nobody knows how much damage a legal expiration would cause. If the Congress really wants SBIR it will make any needed adjustments when it gets around to it after it finishes toying with the nation's finances for political purposes. The agencies will still have the option of continuing the SBIR march in their mainline procurement. Whether they do would be a measure of their agreement with the small biz advocates of the value of the SBIR innovation to their missions. I have watched many of them for 25 years try to find ways to avoid SBIR. Fear and loathing of dangerous
technology. Germany's coalition government
agreed early Monday to shut down all the
country's nuclear power plants by 2022, the
environment minister said, making it the first
major industrialized power to go nuclear-free
since the Japanese disaster.
[Juergen Baetz, AP, May 30] Technology's
dangers were also flashed by the AF447 first
report that a modern airplane fell from the sky
because the coordination between pilots and the
flight control system broke down in a way yet to
be understood. National tool, national threat. Iran is taking steps toward an aggressive new form of censorship: a so-called national Internet that could, in effect, disconnect Iranian cyberspace from the rest of the world. The leadership in Iran sees the project as a way to end the fight for control of the Internet, according to observers of Iranian policy inside and outside the country. Iran, already among the most sophisticated nations in online censoring, also promotes its national Internet as a cost-saving measure for consumers and as a way to uphold Islamic moral codes.... also intends its own computer operating system to replace Microsoft Windows [C Rhoads and F Fassihi, Wall Street Journal, May 28] Bad news for the mullahs: tech suppression doesn't work. SBIR Insider Rick Shindell reports that the Senate passed (by unanimous consent) a continuing resolution [the 12th since 2008] that would keep the SBIR, STTR and CPP programs going "as is" for 12 months. The House is in recess until next week. Re-organize ... again. Lawmakers concurred with the governor's recommendation to eliminate the Kansas Technology Enterprise Corporation (KTEC) and transfer some of its programs to the Department of Commerce ... [Nebraska] Lawmakers also approved an angel tax credit for investments in high-tech companies and a measure to create an internship program matching college students with businesses as part of the governor's Talent and Innovation Agenda (see the Jan. 19, 2011 issue of the Digest). The 2011-13 biennial budget signed by the governor also includes $25 million for a university-based innovation campus. [SSTI, May 19] Do state politicians really understand how to build an economy that will attract profitable business? Or is such change just another way to get news attention? Despite the fact that up to 50 percent of U.S. economic growth since World War II has been driven by science and technology*, and despite continued positive returns on investment for academic scientific research, the outlook for federal R&D funding remains uncertain at best ... The 2011 budget compromise, which represents the largest collection of spending cuts in U.S. history, did spare R&D programs and agencies from the worst of the cuts, with basic research faring the best. [AAAS, May 19] For beneficiaries of government funding, there is never enough. Despite all evidence to the contrary, we still maintain an immigration policy that views immigrants as security threats, rather than as the hard-working entrepreneurs many of them are. It’s no coincidence that many of our top companies today – Google, Intel, Yahoo! – were started by immigrants. Instead of ensuring that tomorrow’s top companies are American companies, we kick out these entrepreneurial immigrants after giving them the world’s best education. It’s the very definition of economic suicide. [Gary Shapiro, Forbes, May 11] But the urge is so great to pull up the lifeboat ladder. Lord Watson of Richmond (England) noted the other night that we focus all our intelligence gathering on the threats and none on the opportunities. So with seeing immigrants as a threat. The Fortress America gaggle forbids
even talk. A Congressional critic of the
Chinese government, Rep. Frank Wolf (R-VA),
wrote language into the FY 2011 spending bill
that would prohibit the White House Office of
Science and Technology Policy (OSTP) or NASA
from engaging in joint scientific activities
with China. ... Rep. John
Culberson (R-TX) warned that OSTP or NASA
funding might be jeopardized by efforts to
collaborate or coordinate in any way with
China. [AAAS, may 11] The presumed basis:
the Chinese might learn something and we already
know everything. That gaggle will
have to learn, as did Newt and the 1995
Republicans, that they cannot run the government
from the House. And there's a chance that
Obama is as wily as Clinton. Some 30% of all fuel trucked into Afghanistan—at great risk—goes to power those generators, Hoping to lure one of the world's leading agricultural biotechnology companies, the Durham County commissioners unanimously approved up to $225,000 in incentives Monday night to improve the county's chances of landing a $71 million expansion. Syngenta Global (Switzerland) , employs more than 26,000 people in 90 countries. Syngenta Biotechnology, the research biotech division of the company based in Research Triangle Park, uses technology as it seeks to raise crop yields in drought conditions while lowering herbicide and fertilizer use. The RTP division employs 400 people [Raleigh News & Observer, May 10, 11]“I don’t need a roomful of analysts; I need a good enough, fast enough and big enough data system that can be used by someone in the field,” the official says. “We have had 10 years of learning how to do things better in wars at a time when technology is moving so fast, with an incredible advance in processing speed.” [says a] US defence official ... [for] an increasingly sophisticated form of warfare – one that fuses the intelligence services and highly sophisticated military specialists. It is being conducted in large part through spies, special forces and drone strikes in battlegrounds such as Pakistan and Yemen. [Financial Times, May 10] The good news and the bad news is that the tech advances let command centers in CONUS micromanage field engagements. No
new SBIR law. The Senate
so-called SBIR bill S293 became just a
carrier for every pet rock and
politically controversial policy in the
struggle for power and deficit
control. With 120 unrelated
amendments it was tabled again.
SBIR is simply not a signature program
for either party despite all the
bloviating by its proponents. Hoping to capitalize on
Tennessee's "entrepreneurial spirit,"
Gov. Bill Haslam today announced a $50
million innovation strategy as part of
his regional jobs plan outlined last
month. The initiative centers on four
components: providing co-investment
funds, targeting funds and resources
toward technology commercialization,
supporting entrepreneurship by creating
a statewide incubator network, and
mapping a strategic economic development
plan for each of the state's nine
regions [SSTI, May 5] Will the
scientists come to support such a
structure and help nurture
innovation? Does the state support
teaching of science or religion in its
so-called science classes with "critical
thinking" trying to be imposed by law (on
hold for now) for biological
evolution, the chemical origins of life,
global warming, and human cloning?
Will Tennessee ever outlive the 1925
Scopes trial? A move to kick-start homegrown innovation by streamlining the patent process is being shelved "until further notice" over a lack of funding under the new cost-cutting federal budget, the U.S. Patent and Trademark Office said ... would have created a three-track system to help alleviate a bottle-neck of filers, including expedited, standard and delayed processing options. [Angus Loten, Wall Street Journal, Apr 28] SBIR Insider Rick Shindell reports
that House and Senate are crawling
toward agreement on an SBIR
re-authorization. Now, only money
separates them, something that politics is
well placed to compromise on. Looks like
VCs will win a big nose under the tent,
which is not too surprising when one
considers that VCs make money and get
technology into play while SBIR funding
seems to play conservative and serve the
funding agency almost exclusively. Government policies and actions are hurting us more than anything or anyone else. The legislative risk in the US has never been higher than it is now. Unfortunately, that risk is one of complete and utter uncertainty. That uncertainty makes investing much more unpredictable. The government is in near lockdown while Congress battles over cutting pennies from the biggest budget deficit ever. [Leo Isaak, Minyanville.com, Apr 29] You bet , as Churchill observed, "Americans always do the right thing but not before they have tried everything else." A lengthy report criticized [Texas governor] Perry's management of the [Emerging Technology] fund because its decision-making is closed to the public, the values of companies are not reported, and the governor's staff does not adequately monitor the state's investments. [Laylin Copelin and Kirk Ladendorf, Austin American Statesman, Apr 28, 11] What good is a political office if you can't reward your friends and credit yourself for all the money put into the program? As the line goes from the musical Evita: You can tell you've done well by the happy grateful looks. Kunal Bahl headed off to the University of Pennsylvania. He graduated with a dual degree in business and engineering, started an Internet company and now he's living the American dream -- in India. ... But Bahl is not a U.S. citizen, and the barriers to a foreigner starting a business here made the idea of launching in Silicon Valley all but impossible. ... McClure and others are pushing a Senate bill that would create a visa to make it easier for immigrants to start businesses in the United States. [Mike Cassidy, San Jose Mercury News, Apr 25] Let's see, the SBIR advocates and their political friends claim great success for startup companies, while a lot of business creation types with money to invest say we need to import foreigners to start companies. Who's got the story of American enterprise straight? Where are the astounding business success stories emerging from $2B a year going into high tech small business? Has the government even got just its money back in total profits taxes from the SBIR businesses? If not, why not?Start Up America looks like a website designed by the government, with at least half an eye on convincing journalists and sceptical members of the public that the president and his administration are trying to do something about the problems facing the economy. [The Economist, Apr 2] The incubator, called NYC ACRE (Accelerator for a Clean & Renewable Economy), is housed within New York University’s better-known technology incubator on Varick Street. ... cleantech is one part of New York’s infrastructure that the city has pegged as vital for its economic growth ... the New York City Economic Development Corporation (NYCEDC) has signed on as a partner, and Mayor Michael Bloomberg has publicly declared his support [Arlene Weintraub, Xconomy NewYork, Apr 20] Subsidies promise no loyalty. Rhode Island is welcoming a Connecticut-based high-tech battery maker Yardney Technical Products (Stonington, CT; $20M SBIR) ... Gov. Lincoln Chafee will join executives in East Greenwich to mark the company's relocation. ... brings 165 jobs to Rhode Island. The Rhode Island Economic Development Corp. offered Yardney more than $500,000 in tax exemptions and guaranteed $5 million in bonds. ... manufactures batteries for the military and the aerospace industry and developed the batteries in the Mars rovers. [AP, Apr 18, 11] Two years ago Yardney was negotiating for millions in additional financial assistance from the state. [Eric Gershon, Hartford Courant, Jul 3, 09] Meet your numbers or give back our money. State and local governments collectively give more than $70 billion a year of incentives to lure business and jobs, primarily through tax breaks, says [poli-sci professor] Kenneth Thomas, ... The issue has started to attract limited-government activists, who decry the perks as waste and government overreach. ... In some cases, public officials have grabbed ownership stakes in companies that lagged in producing jobs. [Jennifer Levitz, Wall Street Journal, Apr 22] Wouldn't it be something if the federal government took back SBIR funding from companies that didn't meet their commercialization fantasies? Unfazed after being the nation's laughing stock with the 1925 Scopes trial, the anti-evolutionists persist, this time with another anti-evolution law in the Tennessee House 70-22 passing a bill that would require state and local education authorities to assist teachers in helping students "analyze" and "critique" the "scientific strengths and scientific weaknesses" of theories it labels as controversial, including evolution and global warming. [AAAS, Apr 13] Which makes one wonder why entrepreneurial innovators would move to Tennessee to operate in an anti-science and anti-curiosity world. With Georgia next door trying to eject immigrants from its cozy world, entrepreneurs will be staying on safer territory than Dixie until the voters there show a lot more respect for people who differ in any way from the Dixie model. If wishes were horses, [Two Congresscritters announced]that they have each introduced bills to require the development of a national manufacturing strategy in order to boost traditional and high-tech manufacturing, spur American job growth and strengthen the middle class. America has lost 5.5 million manufacturing jobs, or one-third of the total, over the last decade. ... would require the Commerce Secretary to conduct a comprehensive analysis of the nation’s manufacturing sector and submit to Congress a National Manufacturing Strategy. [Industry Week, Apr 7] To compete on the world stage we have to compete on cost for commodity products or on capability for high-tech stuff. Left alone, the private sector will do whatever serves profit, as is its mission. Getting government into it is likely to produce little more than political theater and some subsidy scheme for the politically connected. And the politics would lean to import protectionism because it makes better stump speeches. SBIR advocates would get their micro-megaphones tuned up to claim some magic from even more subsidy for themselves. Nativists v. Innovators. Joseph Donovan, lobbyist with Nelson Mullins Riley & Scarborough: It is promising to see a bill offered by U.S. Senator John Kerry that provides immigrant entrepreneurs with a two-year visa if they agree to invest in and create a business in the U.S. The bill is a simple and direct way to create jobs, especially in places like Massachusetts that historically have attracted immigrants. ... immigrants in Massachusetts have been founders for more than 25 percent of biotechnology firms in the state. [Mass High Tech, Apr 12] Since nativists are driven by cultural ideology, they would forego economic gain from immigration of any source. Competitive bribing benefits companies. Though some say [offering companies big subsidies to move in] strengthen communities with new jobs and tax revenue, a growing chorus of leaders on both sides are wondering about the point of it all, warning that the efforts serve only to help private companies at taxpayer expense. ... Though they may say their development efforts are designed to help them compete with the two coasts for companies, they often end up fighting over companies already in the region. ... [The skirmish between the two Kansas Citys] has a long history of ugly border skirmishes dating back to the Civil War. [New York Times, Apr 8] Federal securities regulators are moving toward easing decades-old constraints on share issues by private companies, in a sweeping review that could remake the way American start-ups raise capital. ... The steps under consideration would help such privately held companies raise more money without incurring the increased reporting and other requirements of becoming a public company. [Jean Eaglesham, Wall Street Journal, Apr 8] Bring on the suckers to the wild-eyed promises. The Minnesota Partnership for Biotechnology and Medical Genomics said it launched five projects researching diabetes, cancer, heart disease and reversing neurological damage from diseases such as Alzheimer’s. The partnership said it will use more than $3.5 million in state-funded grants for the projects. The partnership is a collaboration between the state, University of Minnesota and Mayo Clinic. [Wendy Lee, Minneapolis Star Tribune, Apr 6] two of San Francisco's hottest technology startups, Twitter and Zynga, are threatening to move unless they get a break from a city payroll tax that could, given the estimated multibillion-dollar valuations of the two companies, amount to tens of millions of dollars.Local officials, fearing the loss of thousands of jobs and prestige as a tech center, are scrambling to placate the businesses. But the city also is struggling with a budget deficit that may require firing hundreds of employees to bring it under control. [Verne Kopitoff, New York Times, Apr 5] Not content with getting elected to shrink government, Florida Gov. Rick Scott wants to create a new Department of Commerce and establish a position of commissioner to report to him directly. [with] restructuring is estimated to save more than $8 million Alert: Never believe political estimates of savings. ... In Nevada, a bill establishing a cabinet-level agency to direct and oversee three regional economic authorities [with] a regional organization for economic development for each of the northern, southern and rural regions, which would be eligible to receive grants from a proposed Catalyst Fund [SSTI, Mar 31] the UK's Chancellor of the Exchequer, announced the country's 2011 budget including the "Plan of Growth" — a package of measures intended to support private sector investment, enterprise and innovation. Among the initiatives, a new "Technology and Innovation Centre" project focused on high-value manufacturing. According to Manufacturer.com, the center is likely to be the first of six manufacturing and engineering centers supported by a £200 million (approximately $321.2 million) four-year initiative. British Prime Minister David Cameron also announced the StartUp Britain — a program that delivers a benefits package of over £1,500 (approximately $2,400) for every startup company in Britain. [SSTI, Mar 31] Hope springs political. Do you suppose that the Chancellor has examined the track record of both UK and US efforts to improve innovation with government programs? Not the promises, the performance! Corporate welfare illegal. The World Trade Organization has ruled that Boeing Co. has received at least $5.3 billion in illegal U.S. subsidies and must either withdraw them or make up for the harm caused. The EU had alleged that Boeing received almost $24 billion in illegal subsidies, such as research grants and free use of technology, from NASA, the Department of Defense, and the states of Illinois, Kansas and Washington. [Brent Hunsberger, The Oregonian, Mar 30] Note than SBIR may also be such a subsidy, but ignored because the business are insignificant. activists in Oregon wanted to create a state-owned bank that would manage the money in state bank accounts and invest it in local businesses. ... The concept has morphed into a proposal to create a new agency that would try to coordinate all of the state's millions of dollars of investments in small businesses and farms. [AP, Mar 30] Another market-failure excuse for political intervention. The Senator for Medtronic. Sen. Amy Klobuchar, D-Minn., joined with Sen. Scott Brown, R-Mass., to form the Senate medical technology caucus to help focus legislative attention on the industry, according to MedCity News. Rep.Erik Paulsen (R-Minn) earlier formed a similar caucus in the House. Its 50-some members include four other representatives from Minnesota. [Ed Stych, Minneapolis/St Paul Business Journal, Mar 31] Get real! Government support for technology is first and foremost political. Market failure is just a convenient cover story. Here’s the [Republican staff at the Congressional Joint Economic Committee “Spend Less, Owe Less, Grow the Economy,”] report’s explanation of how layoffs would create jobs: “A smaller government work force increases the available supply of educated, skilled workers for private firms, thus lowering labor costs.” Dropping the euphemisms, what this says is that by increasing unemployment, particularly of “educated, skilled workers” — in case you’re wondering, that mainly means schoolteachers — we can drive down wages, which would encourage hiring. There is, if you think about it, an immediate logical problem here: Republicans are saying that job destruction leads to lower wages, which leads to job creation. But won’t this job creation lead to higher wages, which leads to job destruction, which leads to ...? [Paul Krugman, New York Times, Apr 1] Don't expect economic consistency from politics. [Energy Secretary] Chu debuted a DOE program, “America’s Next Top Energy Innovator,” intended to spark clean energy startup activity. The program essentially opens the doors of U.S. national laboratories to entrepreneurs interested in moving federal research into the marketplace. From May 2 through December 15, startups may license a maximum of three patents, of the 15,000 patents held by national laboratories, for $1,000 each. Outside of this time frame, the patents would cost between $10,000 and $50,000 for entrepreneurs. Chu said the patents could range from energy efficiency software to solar power conversion techniques. [Mass High Tech, Mar 30] [Companies] that rely on government
contracts for large portions of their
business are dialing back expectations or developing
contingency plans should some funding fall
through. The country is no doubt more innovative, more competitive in the global economy and has generated more and better jobs as a result of the SBIR.... . Slightly less than half of the SBIR funded projects actually resulted in an innovation in the form of a new product or service that was introduced in the market. ... Studies consistently find that firms receiving SBIR grants exhibit higher growth rates than do control groups control of matched-pair companies. SBIR Awards Remain Geographically Concentrated in Just a Handful of Regions. [David Audretsch, Testimony in House, Mar 16] Since 1953 government “pump priming” by spending on R&D for innovations has declined by 50%!!! No longer is even 1% of Gross Domestic Product spent on R&D.... When the spending and incentives, as well as the selected leaders, have as their #1 interest preserving the past – largely in areas where American productivity lags – why would anyone expect new job creation? [Adam Hartung, Forbes.com, Mar 25] The SBIR/STTR Programs are a “Perfect Solution” to the “Perfect Storm” of Financial Challenges Facing SBIR and STTR Companies – and The U.S. Economy [Michael Squillante, Testimony in House, Mar 16] Squillante heads a company that has hauled in something like $200M SBIR and chairs the SBTC as an advocate for even more of the same. If that happens, as long as the federal agencies keep their complete autonomy with no incentive for economic return, such companies will get even more SBIR. Anyway, government subsidy as a spur to economic growth is way oversold by politicians and potential beneficiaries. Freshman members of Congress, like Representative Bobby Schilling of Illinois, are already under pressure from all sides, Democrat and Republican. [New York Times, Mar 28] Of course, all beneficiaries love their handouts, waste is handouts to somebody else. SBIR beneficiaries so love theirs that they shamelessly clamor for more. Just another political platform. the SBIR/STTR bill became a vehicle for other Senators to attach a host of amendments that addressed a range of interests including de-funding the healthcare reform bill; barring EPA's authority to regulate greenhouse gases (see the preceding item); and eliminating funding for the Corporation for Public Broadcasting/National Public Radio. A total of 88 amendments were introduced and considered on the floor, which delayed a final vote on the SBIR/SSTR bill as the Senate turned to voting on a three-week extension of the continuing resolution and then adjourning for a recess. [AAAS, Mar 23] Tennessee's version of the subsidy game: dedicate $10 million for a research consortium that would recruit senior scientists to advance scientific discoveries into commercial applications and spur high-growth companies. [SSTI, Mar 16] If it's research, most scientists don't know the profit potential, only happy words that it must be good. They may also have trouble getting senior scientists to switch to commercialization. House Republicans called an “emergency meeting” last week, suspending the usual procedures to rush an urgent piece of legislation to the floor. ... the lower end of the FM-radio dial. Republicans, in an urgent budget-cutting maneuver, were voting to cut off funding for National Public Radio. All $5 million of it — or one ten-thousandth of 1 percent of the federal budget. ... Five minutes after acting on this budgetary emergency, House Republicans voted to continue the war in Afghanistan — which costs about $10 billion. Per month. They then flew home for a vacation. [Dana Millbank, WaPo, Mar 19] Public money, private secrets. Convergen LifeSciences led by a major campaign donor to Gov. Rick Perry has filed another lawsuit against Attorney General Greg Abbott over rulings that ordered the release of public records. The lawsuit filed Tuesday is the third that Convergen has filed since late January in state District Court in Travis County. The lawsuits involve requests by the Austin American-Statesman and The Dallas Morning News to obtain documents related to a $4.5 million state grant awarded to Convergen, which was created by David Nance. [Austin American Statesman, Mar 8, 11] The Senate voted 95-5 to overhaul the U.S. patent system, raising industry hopes that the biggest changes to patent laws in almost 60 years could soon be enacted. The House plans to take up its own bill in coming weeks. [Wall Street Journal, Mar 9] SBIR Insider Rick Shindell reports a deal in the works for renewing and enlarging SBIR. VCs get a piece of the pie, more set-aside money, higher max on awards and stricter limits on large awards, a triumph of politics over economics. More money for a favored political class and deficit reduction lectures for unfavored political classes (like unions and public radio). Startup America 2011 tour will kick off in Research Triangle Park NC [with] administration officials such as Ronnie Chatterji of the Council of Economic Advisers and Esther Vassar of the Small Business Administration. As part of the initiative announced in January, administration officials plan to visit eight cities to hear from small business owners and entrepreneurs about regulations, lending, hiring and more [Alan Wolf, Raleigh News & Observer, Mar 3] More lemonade. The Senate Small Biz Committee got up a panel of SBIR cheerleaders for a Feb 17 hearing. Even the NRC's Charles Wessner chimed in with a general cheer from his 2008 report without getting into details of anything like ROI. SBIR Insider excerpted some of Wessner's oral cheers: I could put up a list of 10 countries that have copied this program. ... brings in over a third new companies every year ... Almost 50% of the firms that get awards reach the market and those numbers are going up ... if you put more money in this program it will be used effectively ... And I would urge you with all my heart and all our expertise to reauthorize this program. The House is balking of re-authorization for politics of venture capitalist who want their companies to get a piece of the pie. Neither chamber wants to talk about the elephant in the middle of the room - where's the economic return? - because no one in the room has a vested interest. Wessner and the NRC had to negotiate the terms of its study with the stakeholders (who were putting up some of the money) and thus closed the door on an economic evaluation. Cheer for small business, drink the lemonade, and elect, elect, elect. And since the Tea Party can't cut any deficit by cutting this corporate welfare, it too will ignore the elephant. Eventually the Senate will pay off the VCs enough to get a compromise. Shutdown. The adrenalin-charged Tea Party thinks that no government is better than a continuing government and threatens to stop funding altogether until they get their way. If they succeed, SBIR will suffer because the agencies will fund their core business first and social programs like SBIR later. Pain will NOT be equally distributed across all programs. Even the threat of shutdown will cause the agencies to hesitate on committing money to SBIR. So, if you are a big advocate of reforming government, call your Congresscritter to say "except for the program that benefits me!". You'll have lots of company, and those Tea Party heroes haven't yet faced their constituents who got benefits and services cut. Services sounds so easy to cut until you get the additional bill for $5000 that Medicare isn't paying anymore for grandmother's care. Congress should focus on getting USA Inc. growing again. The key to growth, in turn, is higher productivity through investment in technology, infrastructure, and education. Higher labor productivity means more useful output for the same 60 minutes of work. It's the ultimate source of prosperity. [Mary Meeker and Peter Coy, Bloomberg Business Week, Feb 24] What if SBIR awards had to pass some serious smell test on their impact on productivity? How could any federal agency be persuaded to engage in such smell tests and objectives? Yet a history of on-again, off-again economic reform and the rise of forces, including the military, that have resisted liberalization suggests the path to a competitive economy will be difficult. [Bloomberg Business Week, Feb 24] Another gloom piece about US misinvestment and/or SBIR? Egypt's Economy Needs to Change. It Won't. Never enough free lunch. Too hard to understand and too slow, say small businesses about the grand Obama stimulus. Some 83% of small, closely held companies say that publicly traded companies got the bulk of stimulus benefits .... But, says SBA "Tens of thousands of small businesses benefit directly from billions of dollars in Recovery Act loans and federal contracts, as well as from targeted tax breaks," says Karen Mills, head of the SBA. ... At least four stimulus tax provisions targeting small companies have been extended under new laws and one popular lending program was revived five times. Government contracts under the stimulus were issued through the end of September. But many of those projects will roll out in years to come and then spur the need for follow-up projects. [Emily Maltby, Wall Street Journal, Feb 24] You have only to listen to SBIR companies plead higher awards and watch them beg for more and more awards to realize how hooked they are on the free lunch. It sounded great at the time The Massachusetts Life Sciences Center said today that more than half of the 26 companies that received tax incentives from the center in late 2009 failed to create all of the jobs they promised last year. The center, an independent state agency chartered to support the state's life sciences industry, said five companies have already agreed to return their awards and eight more could potentially be forced to do so because they haven't created at least 70 percent of the jobs they pledged. [Todd Wallack, Boston Globe, Feb 22] The politicians loved handing out the money and collecting the promises. “When you start getting into the mode of picking winners and losers like this, it usually ends up being a no-win situation,’’ said David Terkla, an economics professor at the University of Massachusetts Boston. “It’s very unusual to find one firm that’s so key you’ve got to give them this kind of stuff.’’ [Casey Ross, Boston Globe, Feb 22] Politicians have been carping about the more than $2 trillion in cash sitting idle in corporate coffers even as unemployment remains high. But much of that cash isn't in the U.S.; it is abroad. And it isn't likely to come back home unless U.S. tax laws change. [Jason Zweig, Wall Street Journal, Feb 19] And if the cash doesn't come hone, it must be invested abroad. Look for more Microsoft R&D centers in Europe. Cut government, ... except. The Massachusetts biotech industry says an obscure provision in President Obama’s budget could deal it a “fatal blow’’ and cost the state untold numbers of jobs. A Bay State hospital says other proposed cuts would devastate its efforts to train pediatricians. And an array of research institutions fear what is coming next from a Republican budget proposal. [Boston Globe, Feb 19] More pain and screeching to come as the free lunch party closes down. The Prez closed his eyes and tossed a FY12 budget over the fence to the velociraptors in the House. Dreams of funding for anti-free market stuff like doubling science budgets, TIP, and MEP with no proposed means of paying for them. Of course it's DOA and the opening gambit for the hawgrassle of painless deficit control. As Wisconsin policy-makers ponder what it means to ensure the state is truly "open for business," their reading list should include a July 2010 report by the Ewing Marion Kauffman Foundation that highlights the importance of homegrown start-up companies to the American economy. Actually, I'll save them reading the full report with the world's briefest executive summary: Start-ups aren't everything when it comes to job growth. They're the only thing. [Tom Still, Milwaukee Journal Sentinel, Feb 12] Still tstill@wisconsintechnologycouncil.com is president of the Wisconsin Technology Council and the Wisconsin Innovation Network. Still's words make fine talk for political speeches but the devil is in the details of how any government subsidy is run. Government is particularly weak at forecasting winners from seed (or any other) investment and too often imposes (often self-serving) criteria that don't serve the goal of maximizing economic rewards to society. Try estimating the ROI to the economy, for example, of the SBIR disbursed by the DOD which is half of all SBIR. Texas competition. Citing the need to ensure a competitive edge in the weak economic climate, Texas Gov. Rick Perry is asking lawmakers to continue investing in the state's economic development tools by providing an additional $15 million for the Texas Emerging Technology Fund (ETF) and retaining funding for the Texas Enterprise Fund in the coming biennium. The governor also is proposing $50 million for science, technology, engineering and mathematics (STEM) scholarships and $32 million to increase STEM academies. [SSTI, Feb 11] But it has been targeted to be cut by as much as 85 percent in the Texas House’s first official draft of the state budget. [Dallas Business Journal, Jan 21] By mid-October [2010], the fund had distributed $300 million to early-stage companies and university research projects. It has been an economic development tool that made Gov. Rick Perry proud. [Christopher Calnan, ABJ Entrepreneur, Dec 30, 10] Everybody loves an government emerging technology investment fund, until they start looking for a return. Calnan's piece did not mention any evaluation. And state legislators who have to appropriate money from tax receipts can soon lose patience with open-end promises of great things. Plus political intervention as recent reports that [the governor] disregarded the established grant approval process to funnel money to a campaign contributor’s startup [Austin Business Journal, Oct 22, 2010]. If the US Congress had to appropriate SBIR money annually, SBIR might be a memory by now or a blatant pay-to-play scheme. Every program is critical, and locally profitable. The Airborne Laser is the pursuit of a military Holy Grail—a workable ray gun. But there may be only one thing harder than trying to perfect it: Trying to kill it. ... projects that have the backing of politicians, defense contractors and localities that depend on military jobs. ...Boeing's program director, says new possibilities for "directed energy weapons" are beginning to emerge. And he suggests that an Airborne Laser-like aircraft could handle new missions: attacking ground targets, for instance, or shooting down hostile drones. [also] believes this new area of research enjoys more bipartisan support than 10 or 15 years ago. [Nathan Hodge, Wall Street Journal, Feb 11] Democracy loves home cooking. Two small businesses accused of operating as fronts for a large company have been dropped from a $3 billion Department of Homeland Security contracting program. ... EG Solutions and MultimaxArray Firstsource have received almost 900 orders worth more than $270 million through First Source, a program that was intended to boost small technology companies by setting aside federal contracting work .... enforcement efforts follow a Washington Post investigation of Alaska Native Corporations, [Robert O'Harrow Jr, Washington Post, Feb 11] Subsidies distort economics. The story of ethanol in the United States proves that policies undertaken to nurture or protect an industry can just as easily undermine it. ... What we got instead is an industry reviled by economists, environmentalists and consumers for its reliance on the pampering embrace of government protectors, a fact only underscored by the ethanol industry's recent political triumphs in Washington. The spoils of those victories -- carefully erected mandates, tariffs and tax credits -- can actually distort the market for alternative fuels. [Eric Wieffering, Minneapolis Star Tribune, Feb 10] The good news about the SBIR subsidies is that they are too small to make much economic difference, especially when most of the money goes to supporting government agency stuff. Russia's President has hopes for a new tech corridor near Moscow, but can the country overcome corruption, lack of innovation, and a slow-moving state sector? .... The bottom line: Medvedev is on a charm offensive, trying to persuade Western companies to invest in Russia despite its problems with corruption. [Lyubov Pronina, Bloomberg Business Week, Feb 3] And how much should be expected from SBIR funded by DOD and NASA? Oh sure, they all claim to be innovative. But where's the proof of making a noticeable difference in the economy beyond political platitudes? Court Rules Scientist Had Duty. The U.S. Court of Appeals upheld a lower court dismissal of a million-dollar defamation law suit against a former Cornell plant scientist by a post-doc in his lab. ... a paper in Cell in 2003 and was subsequently retracted by all the authors except for the post-doc. The post-doc claimed in the law suit that the retraction and the allegations associated with it had ruined her career. [The court] ruled that since some of the research was funded by the federal government, the Cornell scientist "was required to inform the pertinent agencies of suspicions of scientific misconduct... In making his statements to ... NIH and NSF, [the scientist] was acting in accordance with legal duty." But the court went further, stating that "even had there been no federal reporting regulations, [the scientist] would have had a moral obligation to inform NIH of the possible fabrication of the data...." Although no misconduct has been found in the case, no researcher has been able to reproduce the results reported by the Cornell scientists in their published paper. [AAAS, Feb 9] Programs that fail to make a difference like many of those that train workers for new jobs — endure indefinitely. Often, policy makers don’t even know which work and which don’t, because rigorous evaluation is rare in government. And competition, which punishes laggards in the private sector, is typically absent in the public sector. .... “If we just keep funding social programs the way we have been,” Mr. Baron says, “there’s not a lot of reason to think we’ll have much success.” [David Leonhardt, New York Times, Feb 9] Jon Baron is president of the Coalition for Evidence-Based Policy in Washington, and was the head of DOD's SBIR program in the Clinton administration where he consistently advocated for SBIR commercialization and evaluation. He and Assistant Secretary Paul Kaminski were moving DOD glacially in their direction until they both soon found more receptive green pastures. Unfortunately for Jon's efforts, beneficiaries of politically inspired federal programs like SBIR don't want honest evaluation. Job-killing regulation Presumably, we could generate a lot of jobs by getting rid of all regulations and working for $2 an hour in dangerous and fetid working conditions in cities whose air could hardly be breathed and spewing out products that one in 10 consumers might die from. --- Robert Reich When abstract meets detail. Divisions within the GOP over how much and how quickly to cut spending are roiling the party at a time when House Republican leaders are struggling to keep their agenda on track. [WSJ, Feb 10] nearly all forms of energy development here in the U.S. are subsidized by the federal government, from oil and coal to nuclear, wind, solar and biofuels. These subsidies often go to research and companies that can survive without them..... one of Commerce's main functions is delivering corporate welfare to American firms that can compete without it. My proposal would scale back the Commerce Department's spending by 54% and eliminate corporate welfare..... [Rand Paul, Feb 7] America’s confusing approvals process deters upstart medical-technology firms, since they typically lack the deep pockets and army of experts required to navigate it. And for a device to succeed in America it must be blessed not just by the FDA but also by the bureaucrats who oversee Medicare and Medicaid, the two huge government health-care schemes. Obtaining that blessing can take years. [The Economist, Jan 22] Colorado's Bioscience Discovery Evaluation Grant Program has created 598 jobs in the state, with payroll exceeding $44 million, according to the Colorado BioScience Association and the Colorado Office of Economic Development and International Trade. Appropriated funding to date for the program has totaled $14 million .. [payroll plus follow-on investment totaled] 8.3 times the state's funding, Baumunk said. [Denver Post, Feb 2, 11] The Obama administration launched a consolidated effort to spur new start-up businesses Monday, part of the White House's campaign to emphasize ... propose permanent elimination of capital gains taxes on investments by small business. Congress passed a temporary version of that provision last year. The SBA also will redirect $2 billion in small business assistance and specifically target startup firms in underserved communities. And the Commerce Department will expand a program that helps market clean technologies. .... The office of House Speaker John Boehner was dismissive of the new launch. [Jin Kuhnennen, AP, Jan 31] Political skepticism is probably warranted. [Obama's] overarching case was also nuanced. "Our free-enterprise system is what drives innovation," he said. "But because it's not always profitable for companies to invest in basic research, throughout our history, our government has provided cutting-edge scientists and inventors with the support that they need." In other words, without smart and active government, China will leave us in the dust. This speaks to the paradox of Mr. Innovation operating in a very old tradition. When they want to look modern and moderate, progressive political parties always talk about technology. [EJ Dionne, Washington Post, Jan 27] One trouble is that, except for basic research, the government has at best a mixed story on success of S&T support programs as they sound better than they produce. Government knows how to develop technology it needs for government functions, but has all the wrong incentives for private development. Japan's rapidly aging population and skyrocketing social-security costs have caused its legions of baby boomers, who like in the U.S. have already begun to retire, to become alarmed about the size of their potential pension payouts. The outlook is bleak: Japan's Government Pension Investment Fund, the largest in the world with assets totaling 123 trillion yen, is selling a record four trillion yen of assets by the end of March to free up funds for payouts. By the year 2055, 40% of all Japanese are expected to be over 65 years old. [Mariko Sanchanta and Atsoko Fukasi, Wall Street Journal, Jan 20] Here's a sweet deal. A company can put up a $55 million solar factory in Oregon for just $13 million. Except that you, the taxpayer, get to provide the $42 million difference in tax breaks and loans, while private investors pocket the returns. Critics say SoloPower (San Jose, CA; no SBIR) startup, is getting that deal in Wilsonville as state, county and city governments support a solar plant to the tune of more than $129,000 a job. Oregon outbid other states for the plant, which will employ 170 during its first phase making thin-film solar panels in a leased warehouse. [Richard Reid, The Oregonian, Jan 20, 11] Public investment for private returns as long as the federal solar subsidy continues. But at some point in the deficit-reduction future, the solar subsidy has to disappear. Who will then keep the factory going after the private investors bail? Who cares now? The politicians get their moment in the light and move on to other sound bites. More temporary SBIR extension, SBIR Insider reports that the new House SB Committee chair proposes a continuing resolution to keep SBIR/STTR running until May 31, 2011. NIST SBIR alert from SBIR Insider: NIST
released an amendment to their SBIR solicitation that
states: "Offers must acknowledge receipt of this
amendment prior to the hour and date specified in the
solicitation." NIST offers a few different ways
for you to acknowledge that you have read the amendment.
NIST cautions that without your acknowledgement, your
proposal could be rejected. The changes have to do
with things like "protection of human subjects." You
should download the 5 page PDF from FedBizOpps at: Securities regulators accused a manager at Seattle Genetics of leaking clinical trial results to a relative "who made more than $800,000 in illegal profits" using the insider information. [Kristi Heim, Seattle Times, Jan 22, 11] Government to compete with private developers. The Obama administration has become so concerned about the slowing pace of new drugs coming out of the pharmaceutical industry that officials have decided to start a billion-dollar government drug development center to help create medicines. .... to be called the National Center for Advancing Translational Sciences, is akin to that of a home seller who spruces up properties to attract buyers in a down market. In this case the center will do as much research as it needs to do so that it can attract drug company investment. [Gardiner Harris, New York Times, Jan 23] A regularly recurring Democrat dream and Republican nightmare. Anyway, government's track record in commercial development is poor for a variety of reasons. For one, politics prevents long range thinking. It's also not the time for grandiose plans for new money, Republicans in the House have promised to cut the kind of discretionary domestic spending that supports the health institutes Got enough USG debt. in the business of acquiring foreign companies. I expect that China's acquisitions will at least double in the next five years, and perhaps quadruple by 2020. ... acquiring foreign companies that possess one or more of the following characteristics: rich holdings of natural resources, high-technology or emergent technologies, and financial know-how and close connections with other financial institutions. [Charles Wolf, Wall Street Journal, Jan 24] All those US dollars have to be invested somewhere. But don't worry about getting bought out if your main business is tapping into government subsidies and handouts. SBIR slowdown. The hotshot newly empowered Republican Study Group budget cutters want to slice off a ton of federal workers [over the next decade by firing 15 percent of the federal workforce] as part of government shrinkage. One certain result would be a big slice in people working SBIR - already a low priority program in the agencies. But the ugly truth is that government has to cut a ton of stuff to get down to sensible finance without raising any taxes. But it's still the delicious sound bite time before actual voting beneficiaries start to feel the pain. For now, they all sound like Reagan in 1981. James Q. Wilson, America's preeminent social scientist, has noted that until relatively recently, "politics was about only a few things; today, it is about nearly everything." .... The idea that America's problem of governance is one of inadequate resources misses this lesson of the last half-century: No amount of resources can prevent government from performing poorly when it tries to perform too many tasks, or particular tasks for which it is inherently unsuited. [George Will, Washington Post, Jan 20] Is the government inherently well suited to foster innovation with subsidies to private companies? Just ask the beneficiaries if they would like more free money. Financial turmoil. SBIR Insider notes that our entire country is running on a short term CR that expires March 4, 2011. We also have the debt ceiling vote coming up soon and failure to reach agreement on either of these issues could result in a shutdown of most of the government (including stop work orders to awardees). That means that SBIR will at best get a Continuing Resolution for even its existence and that awardees and selectees have a risk of stoppage. The House Republicans, charged with virtue, will take an axe to money until they discover that they cannot run the government from the House and will have to compromise. several bills as part of the "Back to Work NJ" economic development and jobs plan proposed by Democratic legislative leaders. Among the measures approved is The New Jersey Angel Investor Tax Credit Act (S.2454) providing incentives to taxpayers who invest in emerging technology companies [SSTI, Jan 12] Tax credits spoil the conservative mantra of flatter simpler taxes but hand out money without that evil "deficit spending" and expect the voters to be too dumb to see the dodge. Tax relief is for everybody. Republican lawmakers have nixed GOP Gov. Scott Walker's plan to give tax breaks to small businesses and replaced it with a measure that would cut taxes for businesses of any size that create jobs. [Milwaukee Journal Sentinel, Jan 12] An interesting view that questions small biz myth of job creation machine. Golden Fleece Lives Again. In an online video employing contemporary technology to follow in the footsteps of the late Senator William Proxmire's (D-WI) famous "golden fleece" awards, Rep. Adrian Smith (R-NE) has launched a "You Cut Citizen Review" asking viewers "to identify wasteful spending that should be cut and begin to hold agencies accountable for how they are spending your money." Rep. Smith's first target is [NSF], and he provides a helpful link to NSF's award search page and suggests keywords such as "culture," "media," "games," and "stimulus" that viewers might use to identify and report "wasteful" grants. An article in USA Today compares Smith's exercise with past congressional attempts to ridicule NSF grants on the basis of incomplete information. [SSTI, Dec 8, 10] Out of 535 wannabe presidents, there's always at least one with the bright idea of cutting odd-sounding research authorized and appropriated by Congress. Rep Smith's main complaint might be that Nebraska isn't getting any of the fleece. Spend it, they will come. A $25 million fund providing grants for tech commercialization, matching funds for research, and funding to attract "star" researchers to Virginia's universities is a key component of Gov. Bob McDonnell's $54 million Opportunity at Work agenda presented to lawmakers as part of his amendments to the 2010-12 budget. The governor's budget also includes $5 million for a refundable R&D tax credit [SSTI, Jan 5] That Gov has a lot of other spend (invest, of course) and borrow plans that fly in the face of the shrink-government conservative fad. "Policies that pick winners and losers through mandates, subsidies or penalties can have a perverse effect of actually stifling innovation," said [Exxon CEO] Rex Tillerson. [Austin American Statesman, Jan 7] Forget it, Rex, the politicians cannot resist doing something visible about every problem. They will make whatever assumptions they have to in justifying pandering to constituent interests. States grope for ROI. The State of Wisconsin Investment Board will commit $80 million to top-performing venture capital funds on the East and West coasts, a move that experts believe could bolster the chances for high-growth companies here to raise larger pools of money. It is the first time the $81.9 billion public pension fund has had the opportunity to invest with the top venture capital pools, which are willing to take public funds' money because the weak economy has made it more difficult for the funds to lure private investors. ... The board in 2000 committed $185 million to a "Wisconsin Private Equity" program that invested in venture capital funds either based in Wisconsin or willing to open offices here. SWIB still has $95 million invested in that program, Hearing said. [Kathleen Gallagher, Milwaukee Journal Sentinel, Jan 7] Gov. Scott Walker is proceeding with a campaign promise of passing a tax cut for small businesses but in the process substantially reducing the size of businesses that would be able to claim it. Walker and aides Wednesday released details of the draft legislation for the first time, saying that businesses with gross sales of less than $500,000 a year and an income tax liability could qualify for the proposed tax credit. [Milwaukee Journal Sentinel, Jan 5] A hailstorm of comments note that most companies that small don't usually pay business tax anyway. But a new Republican has to do it to keep faith regardless of the actual economic impact on hiring or deficits. A larger version of the same scheme will be pushed by Wisconsin's delegation in Washington: cut taxes first and worry about the impact after the next election. Another magic solution. [the America Competes Act] overhauls the way the federal government supports private-sector research and development, and one of the main ways the government hopes to support R&D is with prizes. Lots of prizes. ... Open-source innovation helps Washington break down its own research silos. Agencies such as NASA have their own scientists to solve problems; prizes let everyone from academics to hobbyists bring their expertise to bear. ... In 2009, the Congressional Research Service, the research arm of Congress, published a thorough survey of government prizes and their efficacy. [Annie Lowry, Washington Post, Jan 2] Actually, SBIR had the potential for opening agency innovation until at Day One the agencies re-captured the money for their R&D silos. ------------ 2010 ---------------------- Thirty Massachusetts life sciences companies have been awarded a total of $23.9 million in tax incentives by the state in an effort to spur job creation. The awards range from as much as $5.85 million to as little as $55,000. The companies receiving the awards have committed to creating nearly 1,000 new jobs in the Commonwealth over the coming year. ... Last year, the program's first, the state awarded $24.5 million to 26 companies that pledged to create 800 jobs in the state. As of June 30th, those companies had created around 400 jobs, according to the state's Life Sciences Center. [DC Dennison, Boston Globe, Dec 22] That's $24000 per job created IFF the recipients create the 1000 jobs. Last year's cost per actual job was about $70000. What do you think should be the state's limit on amount spent per job created? Or is it all sound-bite politics anyway and that real economics don't matter? And if so, how many federal programs do the same thing, only bigger? SBIR firms taking the money are: BIND Biosciences, Cytonome, Merrimack Pharmaceuticals, Organogenesis, Vertex Pharmaceuticals. Connecticut officials said that legislation passed in May has now spurred $72 million in venture dollars that will be invested in at least 25 small businesses in the state. [James Connolly, Mass High Tech, Dec 30, 10] Good Ol' Texas Politics. Gov. Rick Perry on Thursday announced a $4.5 million investment of taxpayer dollars in a friend's company more than two months after the award became a campaign issue. Perry acknowledged the investment in Convergen LifeSciences (Austin, TX; no SBIR) a company that is led by David Nance, an Austin entrepreneur . Nance has donated money to Perry's campaigns, and the governor has appointed him to state advisory boards. The grant is the second-largest awarded to an individual company from the Texas Emerging Technology Fund, managed by the governor's office. [Laylan Copelin, Austin American Statesman, Dec 30, 10] Facing a $24 billion budget shortfall, the [Texas] Legislature is expected to debate whether to continue economic incentives, such as the technology fund, and whether [Gov]Perry should continue to manage hundreds of millions of dollars in incentives. Critics have accused Perry of using the incentives to reward friends and donors. The Emerging Technology Fund has allocated more than $188.5 million to 128 early-stage companies and almost $170 million to match grants or boost research at Texas universities. [Laylan Copelin, Austin American Statesman, Dec 30, 10] Seen any reports on the ROI from the fund aftewr the handouts made good political moments. The Democrats promised to find nearly $110 billion in waste to fund their pledges. Next year's budget identifies only $3.6 billion in such cuts, bringing total cuts over two years to $12 billion, or less than 1% of annual spending. [Wall Street Journal, Dec 28] No, this is news from Japan that talk about cutting waste is a lot easier than actually doing it. Not in this Congress. The House punted SBIR re-authorization into the next Congress although the Senate passed another of its versions that the House SB Chair doesn't like. SBIR Insider Rick Shindell reports likely activity by the White House especially about the science community's fear of getting hit for the proposed greedy increase from 2.5% to 3.5%. The whole deal sounds like the old adage: if a policy isn't working, try more of it. We shall see how the Tea Party deficit hawks like this subsidy program. Voters are cynical about all of them and want every program cut except the ones they benefit from. [ David Brooks, NYT, Dec 17] The lame-duck Congress ended by punting this fiscal year's federal budget downfield to March 4 for the new Congress to settle. In the interim, generally, the departments will spend at the same rate as last year. But that could affect what the agencies do with their SBIR since they would hate to put one more penny into it than mandated. And with the partisan feud over spending threatening to become an all-out impasse when the Republican majority takes control of the House in January, such temporary spending measures, and the crunch they cause, may continue indefinitely. [David Herzenhorn, New York Times, Dec 21] Stand by for steady political blather about spending cuts until the public realizes how many things they won't be getting any more. NO new SBIR law. Yesterday's posting of a new law was correct only in that HR2965 was passed. But not the real SBIR bill, only a carrier for an unrelated matter. Regrets. The US House of Representatives voted overwhelmingly yesterday to establish a new Rapid Innovation Program within the Defense Department. The mission of the program will be “to accelerate the fielding of technologies developed pursuant to Phase II Small Business Innovation Research Program projects, technologies developed by the defense laboratories, and other innovative technologies (including dual use technologies).” The measure now goes to the Senate which is expected to approve it in the next few days. Alchemist blog, Dec 18] No structure or money yet, and the Tea Party deficit hawks could make funding tough. A $2 million [New York] state-sponsored pilot [Upstate Regional Seed Fund] was approved Thursday by the Empire State Development Corp. to provide investments in high-technology startup and emerging companies. .... created by Linden Oaks-based Excell Partners Inc., which will invest the grant funds. Excell Partners, a non-profit formed in 2005 through an agreement with the University of Rochester Medical Center, has invested $2.4 million in 21 new companies since its inception. [Thomas Adams, Rochester Business Journal, Dec 15] Want a touch of chaos? a Constitutional amendment that would allow a vote of the states to overturn any act of Congress. After half the states' representatives enact a law, two-thirds of the states could band together to repeal it. And the effect on investment from never knowing where any law stands? Ah well, it's conservative action time again to overturn the Constitution whenever they don't get their way on policy. The good news is that they haven't succeeded yet with any of their radical schemes, just attracted campaign contributions. our country's leadership has taken the easy route and has demonstrated still further that there will be no meaningful movement on our burgeoning deficit. The bond vigilantes smell blood, recognize this inertia and are demanding a price to be paid in much higher interest rates. [Doug Kass, thestreet.com, Dec 15]
[Tea Party success will be] a damper on hopes that the next Congress will deliver on a long-promised expansion of federal spending on research and education outlined in a 2005 National Academies' report that has been embraced by both parties. Innovation? The only reference to "innovation" comes as part of a passage in the Pledge on how "excessive federal regulation … hampers innovation and postpones investment in the economy." In other words, get the government off our backs so that the private sector can do its thing. [Science, Nov 26] Get ready to duck the axe. More Minneapolis Snow Job. A group of science and technology boosters plans to ask state lawmakers for $10 million next year to fund start-ups and increase entrepreneurship in Minnesota, according to a draft of its recommendations. The Minnesota Science and Technology Authority formed earlier this year and will make recommendations to the legislature next month on ways to improve the state's climate for science and technology. The group's formation comes at a time when state officials are concerned about early-stage funding for start-ups and support for innovation. ... would include $1.25 million for the authority's operations, $2 million in a Technology Commercialization Fund, $2 million for an Advanced Entrepreneur Program, $4 million to support [SBIR] grants and $750,000 for an internship program. [Wendy Lee, Minneapolis Star Tribune, Dec 15] Hope springs eternal for government intervention in a re-write of Minnesota Project Innovation that was canned some years ago? What are these states using as a metric for the return from such intervention, since they regularly start, stop, and re-invent the same thing? But the political benefits are too much to resist for the announcement of doing something that sounds hopeful, and a ribbon-cutting photo-op. AAAS will sign on to an amicus brief for a case scheduled to be heard by the U.S. Supreme Court next year. The case, Stanford v. Roche, appeals a ruling by a court of appeals that casts doubt on the rights of universities and the federal government alike to inventions arising from hundreds of billions of dollars in federal funding. The decision would allow rights in federally funded patents to be disposed of through private contracts between researchers and third parties (for example, companies), rather than according to the Bayh-Dole Act, which establishes a presumption that ownership is allocated to the university or other nonprofit institution hosting the research. AAAS joins almost two dozen universities, higher education associations, and the U.S. Department of Justice in opposing the appeals court ruling. [AAAS, Dec 8] The old principle that whoever pays for the work owns the right to patent is under attack. One practical problem is that some universities don't see much value in hurrying to patent because they are not (yet) profit-driven creatures. And if the universities lose the fight, why would not SBIR companies lose the same way to individual employees doing federally funded R&D? Sound bite management is back. In an online video employing contemporary technology to follow in the footsteps of the late Senator William Proxmire's (D-WI) famous "golden fleece" awards, Rep. Adrian Smith (R-NE) has launched a "You Cut Citizen Review" asking viewers "to identify wasteful spending that should be cut and begin to hold agencies accountable for how they are spending your money." Rep. Smith's first target is the National Science Foundation, and he provides a helpful link to NSF's award search page and suggests keywords such as "culture," "media," "games," and "stimulus" that viewers might use to identify and report "wasteful" grants. An article in USA Today compares Smith's exercise with past congressional attempts to ridicule NSF grants on the basis of incomplete information. [AAAS, Dec 8] Looking always for programs with weak political sponsors regardless of the merit of the program. Obama chose Forsyth Tech to unveil a theme aides say
he will emphasize in 2011: The United States must take
steps to regain its economic edge in the world
market. Even in difficult budget times, Obama
said, the country needs to invest in education and
innovation. [Rob Christensen, Raleigh News
& Observer, Dec 7] Great warm fuzzy political speech
stuff, but the devil is in the details. In a deficit
and program cutting era, just what is he proposing for
government action? Dribbling more opportunity away in
federal agency self-serving in SBIR? A renewed NIST
handout program that the free-market Republicans hate? When politics comes first. In 1892 William Jennings Bryan, later the Democratic presidential candidate, declared: “The people of Nebraska are for free silver and I am for free silver. I will look up the arguments later.” [The Economist, Nov 27] [Simpson-Bowles] was a formula for changing
government without a philosophy of government. For
years, it was assumed that a rapidly growing economy
could pay for added programs. The result was the
careless use of government for almost anything that made
a good slogan or could support a lobby. The underlying
economic assumptions were overly optimistic. ... If we
keep the expedient morality of perpetual programs - so
that nothing fundamental can ever be abandoned - then
Europe's social unrest could be a prelude to our
own the chairs of the National Commission on Fiscal Responsibility and Reform has released a draft list of proposals to reduce the federal deficit. The proposals include drastic cuts to the federal government's economic development agencies, including the elimination of the Economic Development Administration (EDA) and the Hollings Manufacturing Extension Program (MEP), as well as the merging of the Department of Commerce and the Small Business Administration (SBA). The commission also has proposed funding cuts for research into fossil fuels, defense and private sector space flight. [SSTI, Nov 19] Stand by for weeping and gnashing as sacred cows are offered up and declined. Remember that every program has stout defenders. DoD lacks complete data on the number of technologies commercialized and therefore cannot determine the return on its space-related SBIR investment, finds a report by the GAO. To meet space-related technology needs, DoD invested $5 billion, or approximately 11 percent of its total SBIR budget, on space-related Phase I and Phase II contracts over fiscal years 2005-09. However, the GAO report finds that DoD does not have a complete picture of contract awards and does not know how effectively it is commercializing SBIR technologies. Specifically, DoD is lacking complete data on Phase III and is inconsistent in recording and defining commercialization. Further, the report finds DoD does not require the services and components to track and report the data. The report offers three short- and long-term recommendations to overcome the challenges, including collecting data on all SBIR technologies that transition into DoD acquisitions or commercial-sector products or services. Read the report ... [SSTI, Nov 17] Even though everybody involved has excuses, the real problem is Congress which never told the Executive Branch that it really cared about SBIR beyond getting the specified money to the small businesses. As a result, DOD and the others have no incentive to spend money and people fostering commercialization. collecting data, and measuring performance. So it's not quite fair to send the auditors to discover the obvious and then carp about deficiencies. Anyway, as DOD gets squeezed in the deficit battle (if Congress can ever get beyond talk about deficit), SBIR follow-on and dual-use will sink to even lower priority. "Despite the clear limitations of existing federal innovation programs, they remain important to our national economic competitiveness," according to a new report from the Center for American Progress. In Silos of Small Beer, authors Maryann Feldman and Lauren Lanahan examine the efficacy of federal innovation programs on the regional economic development of the eastern Midwest region that includes Pittsburgh, Cleveland, Akron , and Youngstown. The authors found "an ecosystem of innovation entrepreneurship that is emerging and vibrant, but also fragile, requiring the sustained efforts of local, state and federal agencies." However, a problematic relationship exists between high-performing, local innovation programs and federal programs because of programmatic limits (e.g., mission, funding, capabilities) and the "siloed" nature of these programs. [SSTI, Nov 17] Grab a government lifeline. Given the difficulty of starting a company from scratch, and how economic activity is generated today, you can start to see why, if you were a rational market actor, you would be trying to get a piece of the government action. [Morris Panner, WaPo, Nov 17] The [Deficit] Commission's suggested discretionary cuts include a number of R&D-related programs; for example, reducing the Department of Defense's Research, Development, Test & Evaluation (RDT&E) program budget by 10 percent ($7 billion in FY 2015), canceling the Hollings Manufacturing Extension Partnership, cutting fossil fuel research, eliminating private sector funding for spaceflight, [AAAS Policy Alert, Nov 17] Alerts and alarms going off all over Washington as Tea Party idealists prod for less government. Financial reality still has not yet struck, just the pigs targeted to be pork chops. The program New Mexico started to reclaim its "job growth engine" has $400 million, about $250 million of which is allocated to venture capital funds, said [Brian Birk of Sun Mountain Capital], whose firm manages that and several other state programs. "We've attracted about $1.7 billion of other peoples' money to the state and created over 4,000 jobs that have an average salary of $77,000," Birk said. [Kathleen Gallagher, Milwaukee Journal Sentinel, Nov 11] Beware politicians claims of jobs created; ask how many such jobs last more than five years. Cut? What? If these [Republicans] were all put into a room on penalty of death to come up with how much they could cut, they couldn't come up with $50 billion, when the problem is $1.3 trillion. [David Stockman, Oct 31]... If Republicans were really serious about cutting spending, they had a golden opportunity after 2002, when they controlled all the levers of government in Washington. The result was the most reckless expansion of government spending and debt in two generations. [Fareed Zakaria, , Time, Nov 4] Soon, abstract deficit cutting must become serious bleeding looking for a scapegoat. CT Gov.-elect Dan Malloy (D) developed a roadmap focused on innovation and entrepreneurship. He would develop a fund using close to a billion dollars in unused research & development tax credits to leverage new research and advanced manufacturing space, and encourage the participation of state and municipal pension funds to augment the initial investment. [SSTI, Nov 3] In the interstate competition for high-tech industry, how many understand how profitable technology gets started and nurtured. Any politician running for office claims to know and have the answer. FL Gov.-elect Rick Scott (R), a health care executive and Navy veteran, proposed a seven-step economic plan that he says would create jobs and allow Florida to become a job creation model for the nation. In seven years, the 7-7-7 economic plan aims to create 700,000 jobs and generate $74 billion in state GDP, $41 billion in higher personal incomes, and $1 billion in total state revenues as a direct result of increased economic growth. [SSTI, Nov 3] Keeping Florida green with wishful thinking. IA New-old governor Branstad aimed at eliminating what he refers to as excessive government interference in new job creation by requiring a small business jobs impact statement for any new administrative rule in Iowa. Branstad also would sunset all regulations affecting job creation and retention and replace the state's current economic development agency with a public-private partnership tasked with promoting and marketing the state to attract new investments and jobs. [SSTI, Nov 3] Anybody expecting rule of law in Iowa should consider that Iowa voters removed three judges by affirmation vote failure for ruling for same sex marriage. Said one of the candidates, It's we the people, not we the courts. Meanwhile, all over the country, the Tea Party wants government to get out of such business altogether. They think they are going to re-write the Constitution and 200 years of development of government. Just by snapping their fingers and shouting platitudes. [SSTI, Nov 4] Federal financing of science research, which has risen quickly since the Obama administration came to power, could fall back to pre-Obama levels if the incoming Republican leadership in the House of Representatives follows through on its list of campaign promises. .... research and development at nonmilitary agencies — including those that sponsor science and health research — would fall 12.3 percent [Kenneth Chang, New York Times, Nov 3] Massachusetts got its share of the handouts as biomedical firms landed 546 federal grants and tax credits, totaling $126 million, as part of a "therapeutic discovery" program created as part of the omnibus health care reform package. [Boston Globe, Nov 3] More pork as a legislative lubricant. North Carolina's portion of the Affordable Care Act grants, about $36million, will be divided among more than 150 companies. [Raleigh News & Observer, Nov 3] The University of Texas will be opening a research laboratory to entrepreneurs to develop life sciences technologies and evaluate the potential to turn them into products. ... Biotech entrepreneurs, including those from outside the university, will be able to reserve space in the wet lab to work on their projects. The entrepreneurs will retain all rights to their intellectual property. [Austin American Statesman, Oct 29] What are prospects for government spending on useful R&D? Republicans want to cut spending drastically (on politically weak programs) and they hate market assistance programs (except for large corporations who can afford lobbying with money). Which means that programs like TIP and SBIR enter another danger zone. Rick Shindell SBIR Insider says SBIR 2.0 is an initiative by the SBA and the federal agency SBIR program managers to modernize and streamline the SBIR program. You can (and should) read the entire description of the program as listed on the SBA's web site at www.sba.gov/sbir2/ In his newsletter, Shindell ID's one of the dilemmas with SBIR: there are lots of SBIR companies in Texas as a comment on how the House member from Texas would view SBIR. Just what does he mean by an SBIR company ? One reason that SBIR has little return to show is that so much of the money and attention go to companies that live on SBIR or merely use it as a revenue filler by doing federal R&D of no particular future. The SBIR community with political voice is not companies who have never heard of SBIR and want a chance to use it for economic innovation; the community is merely companies who know how to capture its money without regard to any larger national goals. wiredmikey writes "Launched by the CIA in 1999, In-Q-Tel's mission is to identify and partner with companies developing cutting-edge technologies that serve the national security interests of the United States. In-Q-Tel has invested an undisclosed sum in Silver Tail Systems, an emerging online fraud prevention and analytics company, an investment they say enables them to offer powerful technology companies in the U.S. intelligence Community and further protect the Nation's assets." [slashdot.org, Oct 27] China said on Thursday that it will not use rare earths as a diplomatic "bargaining tool", in response to challenges against its management of the vital metals. It also said measures to restrict the exploitation, production and export of rare earths are in line with World Trade Organization (WTO) rules. [Wang Xing, China Daily, Oct 29] even though he has more faith in government than most Americans, he will relentlessly oppose programs when the evidence shows they don’t work. [David Brooks, New York Times, Oct 29] If Obama is indeed data-driven, what would be his attitude toward SBIR? Has it succeeded, and if so, on what criteria? Does GAO count with its "result not demonstrated" finding? TR: If energy research is underfunded by $11 billion, what is a better approach to funding new energy technologies? Bill Gates: It's not a problem that lends itself to a Manhattan Project-type approach. It has to be low cost and usable in different circumstances. You can't just get a bunch of smart people together and know which path they should go off and pursue. Actually, it's amazing that that worked for the Manhattan Project. [Technology Review, S/O10] Last week Albert Teich, director of AAAS's Science and Policy Programs, joined three other witnesses in testifying before the House Subcommittee on Research and Science Education on NSF's Science of Science and Innovation Policy, noting that the impact of S&T Policy has proved to be "just as unpredictable as basic research in physics, chemistry, or life sciences." Written testimony and an archived copy of the webcast can be found on the Committee's web site. [AAAS, Sep 29] Hearing the hoofbeats. The American public, already skeptical of free trade, is becoming increasingly hostile to it. The ire has clouded prospects for approval of pending free-trade pacts, and prompted concern among U.S. businesses reliant on the rest of the world for growth. [Sara Murray and Douglas Belkin, Wall Street Journal, Oct 4] The short sighted attitude of the SBIR world is contributing its negligence to the competition for world economic influence. The agencies want to do only stuff for their immediate benefit and the beneficiary companies don't want any economic criteria to ruin their picnics on the decks of the Titanic. So, they resort to protectionism as if the world competitors would sit for it. Can't afford prudence any more. The State of Wisconsin Investment Board is considering putting more money from the big state pension fund into top-performing venture capital funds on the coasts and, as part of that move, trying to steer money toward investment opportunities in the upper Midwest. [Kathleen Gallagher, Milwaukee Journal Sentinel, Sep 28] The small-business bill signed into law by President Barack Obama Monday eliminates capital-gains tax for investors who put money into qualifying startups. The change will likely benefit angel investors, high net-worth individuals who back technology startups, but it’s unclear whether the tax break will actually spur more individuals to put money into more companies. [Mass High Tech, Sep 28] No matter, any bill that connects small business with tax cut is a political winner. No one will check results later with any view to program evaluation. Buying jobs. Wausaukee Composites (Cuba City, WI; no SBIR) will get $1.5 million in state assistance for creating 200 jobs ... to help Wausaukee build and equip an addition to its manufacturing plant that makes wind-turbine components ... The company is a subsidiary of Sintex Industries, headquartered in India. [Rick Barrett, Milwaukee Journal Sentinel, Sep 22] Globalization and state assistance to private companies. Clusters in vogue. The Wisconsin Entrepreneurs' Network, which provides resources and expertise to entrepreneurs, plans to partner with the Defense Alliance of Minnesota, a group that concentrates on developing defense technologies. The partnership is part of a Small Business Administration loan that will result in creation of an Advanced Defense Technologies cluster. [Don Walker, Milwaukee Journal Sentinel, Sep 24] The University of Wisconsin-Milwaukee's plan to develop a science campus and a tech-oriented business park in Wauwatosa has won approval for up to $12 million in city financing. ... Innovation Park will generate property tax revenue for the city once the debt is paid off, while also creating jobs, McBride said. [Tom Daykin, Milwaukee Journal Sentinel, Sep 22] Hope in debt springs eternal as several cities around the country wallow in insolvency from great schemes gone sour. What happens to these schemes if the federal government retrenches on spending as a groundswell rises against government? Evaluation of Handout Programs. the Maine Technology Asset Fund (MTAF) is a competitive award program, funded by Maine state bond proceeds, that builds capacity and infrastructure to support R&D projects leading to significant economic benefits across the state. The MTAF program has completed two successful rounds of competition and executed contracts for $46 million to 25 projects, leveraging $69 million in matching private investment and federal and philanthropic grants. The program will award another $7 million in October 2010. [SSTI, Sep 22] The state borrowed $50M to fund a variety of entities and its biannual report details how much it gave out and how many employees the firms have and how much they paid in taxes. But nowhere does it calculate a Return on Investment for the taxpayers who supplied the money to repay the debt. And nowhere does it show a control group of similar firms who got no handout. The problem with all these handout programs, SBIR included, is a lack of capital investment standards for the taxpayers' dollars. But since the beneficiaries like the money and the politicians can be seen doing something for small business technology, all is well at least politically and the charade will continue. N.C. State University has its own stimulus plan for the lackluster state economy: a new initiative to double the number of private companies it spins off every year, and to boost by 50 percent annually the amount of grants and contracts its faculty and staff win to fund research. NCSU will open an "innovation hub," where companies can come to gain access to expertise and technology that university researchers are developing, and where faculty and staff can get support to market their technologies or create new companies based on their work ... planned to create a $2.5 million fund for grants to university researchers to use after they have made discoveries with practical applications. These grants would help to pay for things such as prototypes and market research to bridge the gap between lab and marketplace. [Jay Price, Raleigh News & Observer, Sep 18] There's a place for SBIR to look for opportunities to fund companies and technologies with a future. But the federal agencies have no incentive to actively seek investment opportunities; they are organized to receive proposals over the transom and to throw back yes-or-no answers from committees. SBIR Insider notes the Senate and House Armed Services Committees will consider if they should just take the DoD SBIR program into their own hands and bypass these clowns in the House small biz committee. even if the $100 billion plan [research tax credit for businesses] is approved, it won't begin to address the fundamental question of how to turn that research and new technology into U.S. jobs and renewed prosperity. ... said Robert Atkinson, president of the Information Technology and Innovation Foundation, a nonpartisan think tank. "We're pretty much the only country with the illusion that we're not in competition with the rest of the world." [Don Lee, LA Times, Sep 13] A neutral observer [no one connected to the US innovation or political system] should conclude that USG programs for "competitiveness" or "technology" or "commercialization" are merely political creatures, not effective economic strategies. "Let's spend $100B on tax relief for companies" is followed shortly by "re-elect me." In the minor leagues of such political schemes is SBIR which hands most of its money to mediocre companies doing government R&D. More DFAR pages. [DOD] announced more than 20 changes in purchasing procedures intended to rein in the ballooning cost of weapons systems and make military ships and planes more affordable. ... will give preferential treatment to suppliers with good cost-control records and will require more competitive bidding for service contracts [Christopher Drew, New York Times, Sep 15] The government may resume funding of embryonic stem cell research for now an appeals court said, but the short-term approval may be of little help to research scientists caught in a legal battle that has just begun. [AP, Sep 9] The appeals court only said that it wasn't as certain of the eventual outcome as the trial judge. Leaders available. Tightened spending at the Pentagon is unsettling the defense industry, with Lockheed Martin announcing Wednesday that one-quarter of its executives had applied for buyouts as the company cut costs. ... Boeing would cut the number of executives in its military aircraft business by 10 percent ... Northrop Grumman recently announced plans to close troubled shipyards [New York Times, Sep9] Handout programs always sound better than they produce. The Texas Enterprise Fund, which backs major economic development projects in the state, has fallen short of the job creation targets claimed for it, according to a report released Wednesday by watchdog group Texans for Public Justice [Austin American Statesman, Sep 9] Public fund handouts, including SBIR, are just acts of faith with no intention of honest accountability. The only thing SBIR can count for sure is the amount of money handed out. SBIR saved for next Congress. Fred Patterson (SBIR Coach) reports that Congress has decided to punt the SBIR re-authorization past the election to the next Congress which convenes in Jan 2011. If the party control changes in either house, expect no quick action as the Republicans grope for the handles with which invent a governing plan other than the being against everything for the past four years. Remember that if it doesn't look like anarchy, then it's not democracy. The Kauffman Foundation, which studies entrepreneurship, argues that the productivity of federal funding for R&D, in terms of patents and licences, has been falling for some years. Funding is spread too thinly. It would yield better results if concentrated on centres of excellence, but fashionable chatter about the “knowledge economy” stirs every congressional backwoodsman to stick his fingers into the university pie. [The Economist, Sep 2] As long as every state has two senators, we will have fair-sharing for the flyover states. National competitions like SBIR (in principle anyway) don't have much appeal in Nebraska. Expedited Transition of Propulsion Modeling & Simulation Capability $1.2M Phase 2 STTR A multivariate interface/data structure for insensitive munitions (IM) applications, technology and hazards/effects analysis can facilitate transition of propulsion modeling and simulation (M&S) capability. Expected benefits are reduced testing and overall acquisition cost and increased safety margins. etc, etc. A million plus is tons of money for computer modeling that will make the government smarter. It's a sign that MDA has more SBIR money than it ever wanted (which is none), that it has an immediate need for its urgent programs, and that it has no desire to use it for growth in US innovation. Computer modelers are everywhere in America and need no government handouts to spur innovation in a low capital barrier to entry industry. And anyone wanting a piece of the MDA SBIR pie must find ways to appeal to immediate application of its tech to MDA development/procurement. Unfortunately, the outsiders have almost no way of penetrating the public information screen to find out what those perceived needs are. Advantage to companies already in the know. Good news and bad. As the world's economies rebound, governments are investing heavily in innovation and research infrastructure. Australia and Ireland, for example, will fund significant investment in national innovation strategies. Australia will commit $1.1 billion to develop national clusters in targeted sectors, and Ireland will attempt to become the "innovation hub" of Europe. [SSTI, Aug 26] If government is doing it. we have less to fear from foreign innovation. NIH announced Tuesday that it has suspended funding new human embryonic stem cell research and that all federally funded experiments already underway will be cut off when they come up for renewal if a new court order is not overturned. [Washington Post, Aug 25] A U.S. judge blocked the federal government from funding research involving human embryonic stem cells, a surprise blow to one of the most promising yet controversial areas of current scientific research. .... said it violated a law first passed in 1996 prohibiting federal money for research in which an embryo is destroyed. [Wall Street Journal, Aug 24] Stand by for science v. religion battles between those who want to understand life and those who already know unknowable answers. Economically, it gives the social conservatives a chance to divert attention from basic economic policy questions for which they have no good answers. Note that the ruling applies only to federal funding which is running about $100M a year. The California group spends $250 million annually on stem-cell research, with some 30%-40% of the money directed to embryonic stem-cell research. "California may be the only safe haven now, at least temporarily, for human stem cell research," said Dr. Snyder. Obama administration officials are considering overhauling 26 troubled federal technology projects valued at as much as $30 billion as part of a broader effort by White House budget officials to cut spending. Projects on the list are either over budget, haven't worked as expected or both, say Office of Management and Budget officials. ... The U.S. government spends about $80 billion annually on technology systems. [Amy Schatz, Wall Street Journal, Aug 23] But the prez can't forget that there are 535 competing technology experts in Washington. The same 535 that act as Secretaries of State and Defense. Iran said it has built an armed aerial drone. The announcement came a day after a ceremony to roll out Iran's first nuclear power plant, as Tehran continued to defy international pressure over its military ambitions. Western analysts brushed off the drone news as saber rattling. ... The weapon's effectiveness is in question amid doubts Iran could guide such a drone over long distances. [Wall Street Journal, Aug 20] For diplomatic purposes it doesn't have to actually work; it just needs to sound like it might work. Pawns. Obama is urging Republican Congressional leaders to stop blocking a bill aimed at helping small businesses hire more people. [AP, Aug 219] Meanwhile, the Republicans blame the Dems for hurting small biz with the death tax. Unfortunately, both sides treat small biz as a symbolic pawn in their great chess game for power while small biz lobbies to extract the maximum handouts. Fair and balanced. News Corp., owner of the Fox network, Fox News and newspapers including the New York Post and The Wall Street Journal, gave $1 million in late June to the Republican Governors Association, making it one of the largest corporate donors to the GOP group this election season. ... News Corp. spokesman Jack Horner said the contribution was intended to promote the company's core beliefs [Wall Street Journal, Aug 18] We should remember that most newspapers were invented as political organs, and that claims like "fair and balanced" are mere puffery. A Pentagon official said he is withholding a contract from Lockheed Martin over concerns about problems with a missile interceptor [Terminal High Altitude Area Defense, or THAAD] that is a centerpiece of the Obama administration's missile-defense strategy. [Wall Street Journal, Aug 18] Not just the Obama administration; anti-missile defense is a long standing program going back to the 1950s and supported by every President since missiles were invented. "As Americans, we're all going to have to cut back and take less," said Lois Profitt, a 58-year-old small-business owner and political independent from Chesterfield, Va. ... "It's a brutal predicament for politicians because the rhetoric of deficit cutting is enormously popular, but the details are incredibly unpopular," said Matt Bennett, a vice president at the Democratic group Third Way, which has polled extensively on the issue. [Jonathan Weisman, Wall Street Journal, Aug 17] Meanwhile, elsewhere in Virginia - what's ours is ours, what's yours is negotiable - as Democrats and Republicans oppose closing a military command and cutting civilian contracts around the Washington Beltway. [Washington Post, Aug 17] The Greenwoods (SBIR consultants) warn that Grants.gov was a noble experiment to standardize the grant proposal submission process. It is complicated, it is cumbersome, and despite several years of revisions and massaging, it continues to have odd and unexpected idiosyncrasies and peculiarities that few normal people understand. Home cooking breaks deal. Great public fanfare on preliminary agreement with China last fall to build the world's largest solar-power plant in the Mongolian desert. But now, Chinese competitors in the solar business have complained openly about the U.S. company, First Solar, getting such a lucrative contract. A planned June 1 date to break ground has been missed. Government officials from the Chinese region of Inner Mongolia, where the plant would be built, say they plan to open the project to competitive bidding. [Keith Richburg, Washington Post, Aug 13, 10] Need, want, deserve a government subsidy? In the rich world the record shows, again and again, that industrial policy doesn’t work. ... Governments rarely evaluate the costs and benefits properly. .... Not all such money is wasted, of course. The internet and the microwave oven came out of government-led research .... Few quarrel with the need for governments to help business with straightforward “horizontal” measures, such as research and development or fostering high-tech skills. But there is no accepted framework for “vertical” policy, favouring specific sectors and companies. But, never mind efficiency, the public funds have an odd habit of flowing towards politically connected projects. [because] None of this excites politicians as much as donning hard hats and handing out cash in front of the cameras. [The Economist, Aug 7] Economic-stimulus funds for scientific research are becoming a political target for Republican skeptics who say they have identified some grants as evidence of wasteful spending. ... [Two prominent Senators] have criticized a range of stimulus spending as failing to address what they say is the immediate priority of creating jobs in the U.S. [Louise Radnofsky, Wall Street Journal, Aug 12] "Waste, fraud, and abuse" is any spending that benefits someone else. Companies seeking grants from Texas's Emerging Technology Fund can begin applying Oct. 5. Twenty-six Austin-area companies have received a total of $41 million. [Austin American Statesman, Aug 11] We're still waiting to hear an auditable economic gain beyond the companies getting the money and the politicians approving the "investment". Just like SBIR. Stimulus of war. Steady paychecks and a growing flow of Pentagon dollars pushed average pay in North Carolina's two largest military communities [Fayetteville and Jacksonville] beyond bigger metro areas like Charlotte and Raleigh. .... Federal figures showed seven of the country's top 10 metro areas for greatest growth in personal incomes were powered by military paychecks. [Raleigh News & Observer, Aug 11] A white paper from the Wisconsin Technology Council (WTC) lays out a plan to increase access to capital for Wisconsin entrepreneurs, create new workforce development strategies, improve the state's infrastructure and business climate, and implement technology development and transfer strategies. Another report calls for greater coordination and streamlining of Wisconsin's existing programs through the creation of two new entities with a statewide reach. Both papers include extensive recommendations for the state's efforts to make capital available to startup businesses. [SSTI, Aug 5] Hand out spending and call it capital, and re-organize. Two years later, change everything again. If the elements for private capital investment aren't present, the state government will wind up with just a budget hole. Twenty-six members, spanning university presidents, investors, serial entrepreneurs, and nonprofit leaders, were appointed to the National Advisory Council on Innovation and Entrepreneurship announced yesterday by Commerce Secretary. The group will support President Obama's innovation strategy by helping develop policies that foster entrepreneurship and identifying new ways to take ideas from the lab to the marketplace to drive economic growth and create jobs. ... Read the press announcement [SSTI Weekly Digest, Jul 14] Maybe this group will say that direct government funding of companies doesn't have much track record to recommend it beyond scratching a political itch to be seen doing something. Meanwhile, A new state agency to promote innovation and job creation in New Jersey was established by Gov. Chris Christie earlier this year. Envisioned as a hub for all economic development activity, the New Jersey Partnership for Action consists of three interconnected organizations to promote the state's incentives and resources, develop pro-growth policies, and assist businesses in navigating government programs [SSTI Weekly Digest, Jul 14] Let's guess that the latest Republican poster boy will find that cutting business taxes is the best growth remedy. The U.S. Justice Department has issued a press release announcing that former University of Wisconsin geneticist Elizabeth B. Goodwin has pled guilty in federal court to fraudulently submitting a grant progress report containing falsified data that misrepresented the progress of genetic research at the lab she directed. She will be sentenced in September and faces a maximum penalty of one year in prison and a $100,000 fine. [AAAS Policy Alert. Jul 14] More fantasy. The DOE announced $188 million to small businesses in 34 states to develop technologies with a strong potential for commercialization and job creation. More fantasy that government funded tech work will lead to job creation. The winners list is riddled with the usual suspects that have been living on SBIR for at least two decades, and economic return won't come from SBIR just because the awarding agency says it will. For political purposes, the federal agencies claim doing good work on commercialization and spinoff without much in the way of economically intelligent analysis. Show us some hard evidence, like third party co-investment or a great economic track record from those winners with previous SBIR experience. Otherwise, it's just DOE satisfying its own objectives for knowledge. Massachusetts highest court has upheld a tax break for a Bedford start-up in a long-running dispute whose outcome could help reduce costs for companies seeking to design and launch new products in Massachusetts.The Supreme Judicial Court found that the state’s Department of Revenue wrongfully denied Onex Communications Corp. a manufacturing tax break for materials it purchased for its first product, a kind of super chip used to transmit large amounts of data. The state had argued that Onex had not yet finished making any of its chips and therefore did not qualify as a manufacturer under an 80-year-old law that grants tax exemptions to encourage those companies to expand here. [Casey Ross, Boston Globe, Jul 31] On the basis of the belief that better education in Soviet Russia contributed to Sputnik, federal money poured into the American higher education system, making it a key component in the battles of the cold war. These policies the creation of new government agencies, further increases in state-sponsored R&D, and expansion and restructuring of higher education—had enormous influence on America's political, social, and cultural trajectory during the cold war. [Asif Siddiqi, Toward a Global History of Space Exploration, Technology and Culture, Apr 10] Now that the programs and agencies have beneficiaries and administrators, they are seen as a sine qua non for tech progress. [OMB] released their annual joint memo to agency heads last week titled "Science and Technology Priorities for the FY 2012 Budget." The memo reiterates the President's long-term goal for investment in R&D to reach 3% of GDP, and encourages agencies to pursue transformational and multidisciplinary approaches aligned with six "challenges and areas to be strengthened." [AAAS, Jul 29] More money for pet projects; more fantasy revenue to pay for it. Pamper the little darlings. both sides are noisily clamoring to prove their support for a critical constituency: America's small-business owners.... "Helping small businesses, cutting taxes, making credit available. This is as American as apple pie," Obama said. "Small businesses are the backbone of our economy. They are central to our identity as a nation. They are going to lead this recovery." Republicans are blocking action on the bill in the Senate ... "They've hit small business with a sledgehammer and now they're going to go around and say they're picking up some of the pieces," said Sen. Judd Gregg (R-N.H.), dismissing the small-business initiative before the Senate as "tinkering at the edges." [Lori Montgomery and Michael Shear, Washington Post, Jul 29] The winning formula is clear: clear the deficit but don't raise anyone's taxes nor cut anyone's handouts. Until the voters grow up to real math, there's no reason to expect the politicians to act like adults. SBIR Insider Rick Shindell implores small businesses to call their local, regional or state office [of members of Congress] to invite them to visit your business. Let them know how important the SBIR program is to you, your business, and potential new jobs. Programs such as SBIR that help keep or add employment for good wage paying jobs, are usually popular with the politicos. But the only companies who would have a direct interest in SBIR are the SBIR junkies who lives on the program. Many of the worthwhile beneficiaries haven't been born yet and the new innovations worth funding haven't yet been invented. The political arguments being offered are the standard stuff of vested interests keeping government money flowing to present beneficiaries. the Obama administration has championed giving loans and awards to innovative companies through programs such as the Department of Energy's ARPA-E. But it is not a simple journey from funding these programs to actually creating jobs. Government to compete with industry. A government program focusing on rare diseases has launched five pilot projects that are taking the NIH in a new direction: developing drugs. The NIH Therapeutics for Rare and Neglected Diseases (TRND) program was established last year with $24 million of funding. ...will work together with scientists, advocates and others to do the required research and testing on drugs before a compound can be tried in humans in a clinical trial. Promising new drugs discovered through basic research often flounder during this stage. [AD Marcus, Wall Street Journal, Jul 24] NIH has contracted with Foresight Science and Technology to perform Technology Niche Analyses (TNAT) for 100 NIH SBIR Phase I awardees funded in fiscal years 2010 and 2011. For each eligible SBIR Phase I project, the TNAT will assess potential uses of the technology and then provide a report that addresses the end-user needs, current and emerging competing technologies, the market dynamics, and the technology's competitive advantage. For a full description of the program, check (http://grants.nih.gov/grants/guide/notice-files/NOT-OD-10-112.html). [SBIR alerting service, Jul 16] Oh great, the government will hire a consulting firm to tell SBIR awardees how good their their technology will be in market competition. Why didn't the government think to ask the companies that before giving them the money? Actually, NIH does ask them such questions but mostly ignores the answers. Which must somehow be OK because NIH awardees are producing a lot of real commercialization. DOE said that $30 million will be made available to qualified small businesses to support the commercialization of promising new technologies [for] projects that include developed technologies with a strong potential for commercialization and impact on U.S. manufacturing and job creation. ... up to $3 million over 3 years to research, develop and deploy new technologies. apply by Aug 4 [SBIR alerting service, Jul 16] apply by Aug 4. Oh sure, first they give SBIR to the companies that serve DOE needs and then they pretend that more money will create commercialization. Why cannot they start by giving the SBIR money to great ideas and market-driven companies, instead of making lemonade from the best mediocre lemons? Because feeding DOE programs comes first and the SBIR law gives them unilateral authority to fund anything at any small company they please. DOE won't worry about the problem because Congress doesn't care enough to hold them accountable for SBIR results. What's more popular than corn? after receiving subsidies for 30 years... The once-popular ethanol industry is scrambling to hold onto billions of dollars in government subsidies, fighting an increasing public skepticism of the corn-based fuel and wariness from lawmakers who may divert the money to other priorities. [Martha Lalonick, AP, Jul 16] Moonshine! I can't tell you how hard it has been for the Senate staffers to construct a compromise that they feel retains the integrity of the program, and gives some additional access to the powerful VC and BIO community. Without some sort of compromise there will be no reauthorization in this congress. Rick Shindell, SBIR Insider, Jul 15] Stay tuned for the resolution of how much VC is just right for SBIR. Cool pork for Wisconsin. Astronautics Corp. of America (Milwaukee, WI; no SBIR) will work to develop a next-generation air-conditioning system using magnetic refrigeration technology, under a $2.9 million energy research grant funded through the federal stimulus package. ... now moving into a civilian application for the technology ... Astronautics has been conducting research into magnetic refrigeration technology for U.S. Navy ships for years, with the aid of federal funding. U.S. Rep. Tammy Baldwin (D-Wis.) has supported $7.5 million in funding in recent years, said Bill Murat, Baldwin's chief of staff. Another $4 million earmark remains pending. [Thomas Content, Milwaukee Journal Sentinel, Jul 13, 10] Is SBIR popular? Did you ever notice that when government programs are labeled “popular,” it is always by their beneficiaries, e.g. "for the second time in two years, the state universities are weighing whether to limit or even get rid of the popular AIMS scholarship, which waives tuition and fees for thousands of college students." Since most similar government programs consist of giving people something of value for free or at least for a below-market price, aren’t they always going to be popular with their recipients? ... The only meaningful definition of “popular” vis a vis a public program should be “popular with those who fund it.” [Warren Meyer, coyoteblog.com, Jul 12] We’ve been mired in debates over macroeconomic models recently. But maybe the real issue is how we are going to light a fire under the country’s loners, its contrarians and its narrow, ambitious outsiders. [David Brooks, New York Times, Jul 13] If the big mission agencies keep shuffling SBIR money to safe performers, the disruptive innovation of the outsiders will continue to depend solely on the private sector. Which is fine by the agencies since they never wanted or believed in SBIR from the beginning. a Sustainable Defense Task Force of defense analysts that has recommended $1 trillion in spending cuts over the next decade. ... stopped production of the ultra-expensive F-22 fighter jet, cut back on some missile-defense programs he thought unrealistic, and killed an Army combat vehicle considered out of sync with today's counter-insurgency warfare. The reaction in Congress: revolt. [Gerald Seib, Wall Street Journal, Jul 9] Basic criterion: a good defense program is one that puts money in my district. Opponents say Congress, which is deeply divided on the issue, should have responsibility for regulating greenhouse gases. [Science, Jun 18] Congress has enough knowledge for politics and law, but detailed science? Those "opponents" don't want government to regulate anything, except abortion and unions. NSF released the beta version of a new Research.gov, a website designed to provide information by state, congressional district, and science field on research sponsored by NSF and certain other federal agencies. ... to promote transparency and highlight outcomes and impacts of agency-funded grants. Currently, NASA, the Army Research Office, and the National Institute for Food and Agriculture are also providing selected services on the website. [AAAS, Jun 30] The Obama administration has forced [Emcore, based in New Mexico makes components for fibre optics and solar panels] to abandon a planned joint venture with China’s Tangshan Caofeidian Investment Corporation because it believes the tie-up would threaten national security. ... the second time in less than a year that the administration has sought to block a transaction involving a Chinese company because of security concerns. [Stephanie Kirchgaessner, Financial Times, Jun 29, 10] If China can't use American money to buy American assets, why should they take it or keep it? Are we still the big dog that makes the rules? Hope and money aren't enough. Mr Kissinger added that fighting the Taliban until it was reduced to impotence “would take more time than the American political system would permit”. [Daniel Dombey, Financial Times, Jun 29, 10] Congress always wants something by the next election cycle and lectures the generals on strategy. Policy and job turmoil. Workers at Bastion Technologies (no SBIR) and elsewhere are caught in a growing conflict between Congress, which has banned NASA from canceling any part of Constellation, and agency leaders who have directed program managers to scale back their work while preserving the parts that would fit into the new space policy proposed by President Obama. [Kenneth Chang, New York Times, Jun 26] The usual Congressional response: cut the deficit somewhere else. NASA SBIR junkies could feel the pinch also. Somewhere, somehow, lots of folks have to lose jobs if the deficit finance is to be fixed without raising revenue (not on our watch, say the Republicans). Patenting still foggy. The Supreme Court on Monday loosened the limits on the kinds of inventions that are eligible for patent protection in a case that was closely watched for its impacts on innovation ... rejected a lower court's reasoning that only inventions involving machinery or physical "transformations" are eligible for patents. ... Although the court was unanimous in rejecting the claims of the inventors in the [business finance method] case, the justices differed over why, issuing three separate opinions that sparred over what types of inventions should be eligible for patent protection. [Pete Whoriskey, Washington Post, Jun 29] Breast-beating time again. Pentagon officials said Monday that they plan to try to cut as much as $100 billion over the next five years out of the billions of dollars spent annually in buying weapons systems and other services from outside contractors. [Dana Hedgpeth, Washington Post, Jun 29] As the Pentagon staffers regularly write to themselves, "in these times if limited resources," .... Look for more fantasies about "cost saving" as members of Congress protect their local industries. Dems at commercialization, again. DOUGLAS P. HART, a [MIT] professor of mechanical engineering who sold his last start-up for a tidy $95 million, is already on to his next big thing. On Tuesday, he expects to lock up $1.5 million in funding for his new start-up, Lantos Technologies. ... developed a 3-D scanner that it hopes will streamline the current generation of earphones and hearing aids by precisely fitting them to the dimensions of the ear canal, right up to the eardrum.... able to bring his hearing aid concept closer to reality with $50,000 in backing last year from the Deshpande Center for Technological Innovation, an M.I.T. entity originally funded by two private investors, Jaishree Deshpande and her husband, Gururaj. ... A proposal from the Obama administration would experiment with all of this by allocating $12 million among several institutions next year in what proponents hope will be a continuing effort to support and study proof-of-concept centers. If successful, supporters say, universities could spread the model faster. But the idea represents a shift in thinking about the federal government’s role in stewarding the more than $50 billion it gives to university researchers annually. Until now, that money has been for the discovery, not commercialization, of scientific breakthroughs. [Bob Tedeschi, New York Times, Jun 27, 10] Can the federal government do commercialization decently? Probably not! Where is any evidence that it ever succeeded with its host of programs? After nearly three decades of SBIR, for example, where's the economic evidence of success? Government understands science and technology, but not business, and has no incentive for agencies to succeed at business. The political cycle also works against any long-term plan as whenever the Republicans own the White House, the commercialization programs get canned. Then when the Democrats regain and re-start them, the cycle repeats. Despite the theory that SBIR was intended to supplement private R&D, the DOE beneficiaries don't want to contribute anything to post-SBIR development. In a White Paper on Phase III, the SBTC writers want DOE to waive normal cost-share rules for contracting with mainline DOE funds. Apparently the SECEnergy has the authority to waive the cost-share and the governing statue exempts SBIR anyway. The two paragraphs on the subject don't delve into whether the department's insistence on cost-share has actually prevented any contract, whether the Secretary has issued any detailed guidance, and whether such insistence made good sense in light of SBIR being only a supplement. Ah well, DOE asked a lobbyist for a solution and get the natural answer - send us more money. One solution for DOE is to choose a better class of company for its SBIR awards. If it wants post-SBIR success, pick companies most likely to be pointed in that direction. Look beyond the criteria of "scientific and technical merit" and realize that there is a wide choice among companies with about the same technical merit. Russia's [President] Dmitry Medevedev visits Silicon Valley for the first time, eager to reinvent his country's outmoded, oil-dependent economy - and lure talent and money from the high-tech capital..... knows he needs to attract some of the best minds and investors in the United States. [Nataliya Vasliyeva, AP, Jun 23] Why would smart people and capital go where there is no rule of law and no protection for private property? what is the best way for governments to boost innovation? Sensibly if predictably, the OECD urges investment in education, research and “knowledge-supporting infrastructure” (such as broadband internet networks and smart electricity grids). Skimping on this while money is tight, says the agency, will cause growth to suffer in the long term. ... If governments want to see a blossoming of clean technology, therefore, they should use taxes to put a price on environmental externalities (such as carbon) rather than coddle pet technologies. [The Economist, May 29] What Good Did It Do? NIH, in cooperation with other federal agencies, launched an initiative to monitor the impact of federal science investments in universities, called “Science and Technology for America’s Reinvestment: Measuring the Effect of Research on Innovation, Competitiveness and Science,’’ or STAR METRICS. One key effort will be to count the number of people whose salaries are paid by federal grants — a seemingly simple task that is currently impossible because of the way grant data are collected, said Julia I. Lane, program officer with the National Science Foundation’s Science of Science and Innovation Policy program. “We basically don’t have any way of knowing who is touched by science funding,’’ Lane said. [Karen Weintraub, Boston Globe, Jun 21] What a convenient story for SBIR advocates: if NIH can't quantify program benefits, how could a program as diverse as SBIR? Just keep sending money as having faith. Political Economy. Russia’s wheat farmers are undercutting America’s, increasing Russia’s global market share from 0.5% in 2000 to 14% today, while the share of US farmers fell from 26% to 19%. Senators from farm states are beginning to demand help for their constituents — subsidies, or bilateral trade deals with wheat-importing countries. [Irwin Stelzer, The Sunday Times, Jun 20] Never mind deficits when the farmers want subsidies. Or when small business wants an advantage. The speech — ending with the words “Let us therefore brace ourselves to our duties, and so bear ourselves that if the British empire and its Commonwealth last for a thousand years, men will still say, ‘This was their finest hour’ ” — has resonated ever since. ... Seventy years ago, on June 18, 1940 [John Burns, New York Times, Jun 18] The Portland Development Commission has chosen five prominent business leaders to help launch a seed fund for regional startups, aiming to boost to the city's entrepreneurial class. [Mike Rogoway, The Oregonian, Jun 4, 10] On writing grant applications, Mandala Biosciences’ (San Diego, CA; $800K SBIR) Larocca adds, “My advice is to be passionate. You have to be able to write your grant in a way to make it sound exciting.” [Bruce Bigelow, signonsandiego.com, Jun 8] it takes two politicians to change a light bulb (one to change it, another to change it back again) [Eamonn Butler, Adam Smith Institute] pour large sums of money at the problem. The United States is badly lagging in basic research on new forms of energy, deepening the nation’s dependence on dirty fuels and crippling its international competitiveness, a diverse group of business executives [American Energy Innovation Council] warn in a study to be released Thursday. The group, which includes Bill Gates, the co-founder of Microsoft; Jeffrey R. Immelt, chief executive of General Electric; and John Doerr, a top venture capitalist, urges the government to more than triple spending on energy research and development, to $16 billion a year. And it recommends creation of a national energy board to guide investment decisions toward radical advances in energy technology. [John Broder, New York Times, Jun 10] The Patent Office said yesterday that it has signed a two-year deal with Google to provide bulk downloads of patent and copyright data to the public. Google will provide the service at no charge to the government or to users of the data. [Hiawatha Bray, Boston Globe, Jun 2] Enlisting support from industry, policymakers and academics, Gov. Deval Patrick unveiled an initiative to help the state's manufacturers evolve with changing technology, adopt new innovations, and grow their operations through a new multi-tiered loan program. The Advanced Manufacturing Initiative is a public-private collaboration designed to maximize job creation within the manufacturing sector, which added more than 19,000 jobs last month, according to the governor's office. A new loan program from MassDevelopment will offer up to $50,000 for planning loans and up to $500,000 for growth initiative loans to reduce interest rates on real estate and equipment lending to manufacturers allowing companies to pursue expansion opportunities [SSTI, May 26] The Obama Administration has released guidance on a new tax credit for medical research conducted by small biotech businesses. Claims for the credit could total $1 billion. Eligible companies must apply by July 21. [AAAS, May 26] A paper by MIT physicist Ted Postol and Cornell physicist George Lewis published in Arms Control Today analyzed the reliability of the interception capability of the Pentagon's SM-3 antimissile and found that the success rate of the program was 10-20 percent, far lower than previous government reports. The Pentagon criticized the analysis as "flawed" and "inaccurate". [AAAS, May 26] The United States wastes at least $6.4 billion each year in "forgone innovation" - legitimate technologies that cannot get licensed and start-ups that cannot get funding - because of backlogs and dysfunction at the U.S. Patent and Trademark Office, the agency that's supposed to protect and encourage innovation in America. [John Schmid, Milwaukee Journal Sentinel, May 22] Every society develops a layer of complexity to deal with a new problem but eventually the solutions beget more problems in non-linear ways we cannot foresee because we have such a poor understanding of the dynamics of the system into which we deploy them. The persistent short-term thinking of governments and the public mean we will lurch from crisis to crisis. It is precisely because our solutions beget more problems that we are forced to innovate. The fact that we can develop solutions to problems we create through our previous solutions only tells us we are not especially good at creating sustainable solutions. [commenter super_critical, The Economist, May 15] U.S. trustbusters have set their sights on Silicon Valley, with a growing number of investigations targeting possible anticompetitive behavior by technology companies. Now they are having to deal with potential witnesses using blogs to blurt out details of inquiries. [Wall Street Journal, May 21] Small life-sciences companies in the U.S. will soon get details, expected to emerge in the next few days, of a federal program that will give a $1 billion boost to the industry. .... The funds will come in the form of tax credits, or as a grant for the many unprofitable companies, covering 50% of project-development costs in 2009 and 2010 for companies with fewer than 250 workers [Thomas Gryta, Wall Street Journal, May 21] New seeds near Ground Zero. the Varick Street incubator, run by the Polytechnic Institute of New York University with help from the New York City Economic Development Corp., is one of five that the city has founded with hopes of nurturing a robust start-up culture. ... "there are no garages in New York…you start out of your living rooms or bedrooms," Mr. Mody said. [Joseph de Avila, Wall Street Journal, May 20] Planning to plan. Minnesota Science and Technology Authority was established to develop and implement a comprehensive strategy for growing the state's economy through investments in science, technology and innovation. [SSTI, May 19] Prescribing for Others. Taking matters into his own hands. Mike Pence, the House GOP conference chairman, is on the forefront of the deficit-reduction campaign—for the European Union. He is drafting legislation that would require the Treasury to vote against any IMF assistance to euro-zone nations until every member of the broader European Union has brought its debt-to-gross-domestic-product ratio below 60%. [Wall Street Journal, May 14] How about getting his constituents to belly-up to deficit reduction at home? Potentially opening the way to greater freedom in stem cell research, the U.S. patent office has reversed a key decision that enabled a Wisconsin research foundation to maintain patents on all embryonic stem cells used for research within the United States. ... But the Wisconsin Alumni Research Foundation said it would challenge the ruling [Dean Calbreath, San Diego Union Tribune, May 4] Dilemma. Illinois lawmakers were in disarray Thursday as they groped for stopgap measures to address a $13 billion deficit equaling nearly half of the state's general-fund revenue. The state faces one of the nation's worst budget crises. … little appetite for drastic spending cuts. An income-tax increase is going nowhere … And California officials said this week that April personal income tax-collections lagged projections by 30% [Amy Merrick, Wall Street Journal, May 7] Prime candidates for drastic cuts are programs with long term (if any) payoff and few active political defenders. The good news at the federal level is that politicians can pass out money to small business without making any voters mad since SBIR taxes only federal agency programs. voters approved a four-year, $700 million bond to extend funding for the Ohio Third Frontier initiative through 2016. Established in 2002, the initiative offers programs for emerging and established high-tech companies, including grants for pre-seed funding, research initiatives, product development and commercialization. [SSTI, May 5] The Massachusetts Life Sciences Center, the quasi-public agency that seeks to promote the life sciences industry in the Bay State, said that is now accepting applications for the 2010 Life Sciences Tax Incentive Program. [Boston Globe, May 4, 10] Montgomery County [MD (DC burbs)] Council's unanimous approval of a plan to spur creation of a $10 billion, 17.5 million-square-foot center for bioscience research. .... The county is home to almost 300 biotech companies and institutions [including NIH], ... " in a highly competitive industry. We had to do something to really up the ante," [said one council member] [Washington Post, May 5] And where will $10B come from in America's richest county? the Office of Science and Technology Policy (OSTP) and the Office of Management and Budget (OMB) issued a memorandum on standardized Research Performance Progress Reports for federal grantees, to be universally applied across federal agencies so that "researchers spend less time managing paperwork and forms" and more time on research. Details of the new standards are posted on the NSF web site, and federal agencies have nine months to post implementation plans. [AAAS, Apr 28] To remain the world’s pre-eminent nation, the U.S. is going to have to develop energy sources that are plentiful, clean and don’t enrich the worst people on earth. That means in the short term, the U.S. has to unleash the tens of billions of dollars of potential energy investments now being pent up by uncertainty and regulatory hurdles. To make a difference in the long term, the U.S. is going to have to invest more and differently in energy research and development. ... It’s clearly going to take legislative action to catalyze private investment and to increase federal research to where it should be — about $25 billion a year, according to Mark Muro of the Brookings Institution. It’s going to take some equivalent of the Pacific Railroad Acts to kick this into gear. [David Brooks, New York Times, Apr 30] Visible cost, invisible benefits. Issue 1, a ballot proposal, would allow Ohio to issue $700m of bonds to finance research and development, the so-called “Third Frontier” programme. ... Voters, however, have reason to be wary of spending and empty promises. It is unclear that they will support a vision that is, for most, still hazy. ... The programme spends nearly $58,000 for each new directly created job, though the state points out that increased tax revenue outweighs these costs. A bigger challenge, however, is that few Ohioans feel that Third Frontier has affected them. [The Economist, Apr 29] What if SBIR were put to a direct public vote? Even Congress doesn't want to vote on it. Two decades of federal agencies serving themselves and of beneficiaries suppressing economic evaluations have guaranteed the invisibility of results other than temporary jobs. And even those jobs were taken from other citizens. Don't cut us. The federal government wants to save taxpayers billions of dollars by reducing spending on crop insurance [below last year's $3.8B] after years of big profits [26% last year] by insurers , Oh no, say the beneficiary farmers and insurers. And even if insurance is reduced, vice president of government relations for the National Farmers Union, said any savings should be put back into other risk management tools for farmers [Steve Karnowski, AP, Apr 28] Another group with a fair share attitude that keeps government spending rolling. Meanwhile, Bernanke said the USG. needs a quick plan to cut the deficit. The aggies response: cut deficits but not farmers. SBIR has a similar response: More is better! The USA.gov Web site, which serves as a virtual front door for thousands of citizens accessing government services, is undergoing a comprehensive redesign to encourage more public interaction. ... already installed new search tools that are 10 times as fast as the old ones and that suggest popular phrases as users type in keywords ... considering adding mobile applications to its site [Washington Post, Apr 28] The biggest threat to Democracy comes from the People when they start believing they can demand more and more public services from government while simultaneously demanding ever decreasing taxes. The end result is debt slavery. [commenter, The Times, Apr 28] The Senate passed a bill to extend SBIR until July 31, says SBIR Insider Rick Shindell
The CIA announced a five-year strategic plan that would invest heavily in new technologies to combat nontraditional threats such as cyber attacks from overseas and gain better intelligence on rogue states. ... Officials said the agency would boost the technology budget by tens of millions of dollars. [Siobhan Gorman, Wall Street Journal, Apr 27] No, CIA has no SBIR, but it does have a VC - In-Q-Tel. The giant federal deficit and debt—the subjects everybody loves to talk about but nobody likes to do anything about ... Don't expect much to actually happen this year, an election year in which political leaders will grow increasingly allergic to making hard decisions. ... Most political will in Washington is devoted right now to prevailing in this fall's midterm election, Looking for the culprit? Try the mirror. Nearly everybody in America expects more from government than taxpayers will pay for. [Gerald Seib, Wall Street Journal, Apr 27] And if you think more SBIR is a great idea, look in the mirror again. Washington's habit of spending today the money it hopes to collect tomorrow is getting worse and worse ... The short term looks awful, and the long term looks hideous. Under any likely scenario, the federal debt will continue to balloon in the years to come. .... Whether on taxes, entitlements, military retooling, financial reform, energy policy or climate change, Washington is mired in a political enmity that makes tough decisions nearly impossible. [Joel Achenbach, Washington Post, Apr 25] The SBIR advocates have an answer - more for us! Subsidy. Massachusetts is giving A123 Systems a $5 million forgivable loan in return for creating 250 jobs and expanding operations for making large batteries that connect to the electricity grid. [Boston Globe, Apr 22, 10] Companies with jobs exploit inter-state competition to pull in government subsidies. Free Access means fewer archival journals. Committees in both the House and Senate are reviewing the Federal Research Public Access Act (H.R. 5037 and S. 1373). The bill would require agencies with research budgets of $100 million or more to provide online access to research manuscripts stemming from federal funding within six months of publication in a peer-reviewed journal. The bill gives individual agencies flexibility in choosing the location of the digital repository for this content, as long as the repositories meet conditions for interoperability and public accessibility and have provisions for long-term archiving. [AAAS, Apr 21] Spend Today, Pay Tomorrow. America’s fiscal picture is even worse than it looks. The non-partisan Congressional Budget Office just projected that over 10 years, cumulative deficits will reach $9,700bn and federal debt 90 per cent of gross domestic product – nearly equal to Italy’s. Global capital markets are unlikely to accept that credit erosion. If they revolt, as in 1979, ugly changes in fiscal and monetary policy will be imposed on Washington. [Roger Altman, Financial Times, Apr 19] Meanwhile of course, beneficiaries of government handouts scream for more. Are there any adults out there? NIST-TIP (the re-named ATP program that the free-market Republicans hated) is seeking proposals for high-risk, high-reward research projects $25 million in first-year projects in "Manufacturing and Biomanufacturing: Materials Advances and Critical Processes." http://www.nist.gov/tip/cur_comp/index.cfm or http://www.nist.gov/tip/. As the dust settles on healthcare reform, Stewart Lyman helped show readers one of the overlooked elements of the new law that will provide a windfall of tax benefits for biotech companies. [Luke Timmerman, Seattle Times, Apr 15, 10] Tax Before Profit. BioBehavioral Diagnostics (no SBIR) raised millions of dollars in venture capital and invested heavily in its technology to get its medical device to market. Now, with revenues just beginning to roll in, the six-year-old start-up faces another hurdle as it reaches for success: a new federal tax that will take a cut of every sale it makes. ... developed a system that tests for attention deficit and hyperactivity disorder, is an example of why Massachusetts business and political leaders worry about the medical device tax, recently enacted as part of federal health care reform. The 2.3 percent excise tax, which takes effect in 2013 to help finance the expansion of coverage, will be levied on sales, not profits, [Boston Globe, Apr 14, 10] Once a Program, Hard to Change. experts say U.S. manned space travel will likely be grounded for years longer than previously expected. The [NASA] Florida summit comes amid an escalating battle between the White House and Congress over the fastest and least expensive way to revitalize the space program. Mr. Obama has been pushing ambitious plans for start-up companies to ferry astronauts into space on private rockets. Congress, meanwhile, is bent on defending NASA's traditional rocket and spacecraft programs, which the Obama administration wants to kill. Meanwhile, China's manned space program aims to leapfrog the U.S. by deploying advanced spacecraft and in-orbit refueling systems as early as 2016, when American astronauts still may be relying on rides on Russian spaceships. [Andy Pasztor, Wall Street Journal, Apr 15] The reality is that a lot of things have to be cut, because the public won't tolerate big tax increases. Look for much pontificating. Jobs Today or Pensions Tomorrow? Maine is diverting money from its pensions funds to speculate in creating jobs today. a new Innovation Finance Program that allows the Maine Public Employees Retirement System to invest its pension funds into venture capital funds, in an effort to boost venture activity and spur innovative startup growth in the state. [Mass High Tech, Apr 14] Whatever happened to fiduciary responsibility wherein the pension fund has only one mission - providing secure funds for tomorrow's pensions? Venture activity is interesting and sometimes rewarding, but risky beyond a standard of prudence for public pension funds. And sub-optimizing by directing the venture funds to Maine startup enterprises adds even more risk. The future pensioners should object to such political shenanigans that pretend to create local jobs. Betting on Government as Commercial Customer. Both Boeing and Lockheed were stung during the last burst of optimism for the commercial space business about a decade ago. They invested several billion dollars — Lockheed to develop its Atlas V, Boeing for the Delta IV — in the hopes that the huge market for commercial satellites would supplement their traditional business of launching American military spy satellites. The market did not materialize, and what business there was went to European and Russian rockets that were cheaper. With the United Launch Alliance, Boeing and Lockheed Martin share costs and profits equally. The joint venture now operates in the black, but the companies did not recoup their original investments, and much of the infrastructure they built remains underused. [Kenneth Chang, New York Times, Apr 12] Government is about to lose its cachet as a honey pot as the deficit hawks gain traction. Russia’s rich scientific traditions and poor record of converting ideas into marketable products are both undisputed, cited as causes for the Soviet collapse and crippling dependence on mining and petroleum. Not surprisingly, then, its leaders look longingly at Silicon Valley. ... [a new town is intended to incubate scientific ideas using generous tax holidays and government grants until the start-ups can become profitable companies. ... an effort to blend the Soviet tradition of forming scientific towns with Western models of encouraging technology ventures around universities. Skeptics see a deeper strain of Russian tradition: trying to catch up with the West by wielding the power of the state. ... conceived by the Commission on Modernization, deep within the Kremlin bureaucracy ... still a thriving tradition of government crackdowns on private business with capricious enforcement of the tax laws [Andrew Kramer, New York Times, Apr 9] Government going to create innovation? Look at the economic record of SBIR for expectations as government serves itself. $150K and 1000K. The SBA announced new "limits" for SBIR awards. SBIR winners cheered, as should the agencies. SBIR wannabes can't tell whether it matters or not. The practical effect is that the agencies will continue to do whatever they please because no loser can make a certain case of damage and SBA has no teeth. Small Business in R&D. NSF released an InfoBrief last week highlighting indicators of U.S. R&D performance by the size of the performing company. From 2003 to 2007, small businesses (less than 500 employees) increased their share of U.S. industrial R&D investment from 17.9 to 18.7%. Over the same period, they increased their investment in R&D from 3.1% of sales revenues to 8.6%, while medium-to-large companies saw their percentage of R&D investment decrease from 3.6 to 3.4%. [AAAS, Mar 24] Since the federal agencies want to spend their SBIR money on life style companies that make the government smarter, let's hear Tim Kane suggest, We've long advocated here at the Kauffman Foundation for something like a Startup Visa, a program that would grant citizenship to migrants who want to (and are able to) create new firms and jobs in America (but be sure to read this counterpoint). [growthology.org blog, Mar 23] Tim Kaine also says, conventional wisdom assumes a linear link between more R&D spending and more innovation. What about entrepreneurs? Most startups I know don't have an R&D budget -- the whole company is a tech gamble! How can government officials measure that? They can't. [growthology.org blog, Feb 25] The Administration wants your opinion. is interested in working with all stakeholders (including universities, companies, Federal research labs, entrepreneurs, investors, and non-profits) to identify ways in which we can increase the economic impact of Federal investment in university R&D and the innovations being fostered in Federal and private proof of concept centers (POCCs). ... This RFI is designed to collect input from the public on ideas for promoting the commercialization of Federally funded research ... should be sent to NECGeneral@who.eop.gov with the subject line ‘‘RFI Questions.’’ Deadline. Apr 26. [http://www.gpo.gov/fdsys/pkg/FR-2010-03-25/pdf/2010-6606.pdf ] Be sure to tell them they should push more money your way and cut your taxes. Otherwise they won't think you're serious about capitalism. The serious R&D people could also say that if SBIR cannot prove that it does a better job of economically useful innovation than the rest of the agency budget, that the money should go back into the general agency R&D pool. Prove, not just blather platitudes. Enduring Myths. Elect me for tax cuts and job growth! [The candidate] called for incentives to bring American jobs back from overseas. That includes creating what she called “jobs for Americans zones” where business in targeted geographic areas would receive a 10-year “tax holiday” for facilities brought back from abroad and a five-year one for startups and expansions. also proposed lowering the tax rates for businesses that reinvest overseas profits in creating jobs and purchasing equipment in the United States. [John Marelius, San Diego Union Tribune, Apr 1] If all that worked and didn't involve blatant protectionism, they would have been done long ago. Of course, Republicans genetically see tax cuts as the universal solution to any public dilemma. And every party is for job growth, good job growth with great pay and benefits. But the world is too competitive to allow infinite good American jobs at America's standard of living. To get good jobs we have to raise productivity (which reduces total jobs) and out-innovate the foreign competition. Unfortunately, passing out government money for pretend innovation of no economic portent simply raises the national debt for no gain. Come on voters, give us politicians based in reality and admit that we have to pay for the free lunch of the last three decades. A Funding Proposition for SBIR. It’s hard to imagine a more naked example of rent-seeking than this one. A group representing Arizona hospitals is pursuing a ballot initiative that would tax the state’s high-income earners to help pay the health-care tab for the state’s neediest kids and adults. The Arizona Hospital and Healthcare Association expects to file paperwork for the initiative later this week, aiming for a place on the November ballot. It asks voters to raise the state income-tax rate 1 percentage point on income exceeding $150,000 per individual and $300,000 per couple. The association estimates the initiative would raise more than $140 million each year to pay for health insurance for low-income children and adults, graduate-school medical education and reimbursement to hospitals that care for the poor. In other words, the government will take the money and hand it over to hospitals to do the things they are already doing. [Warren Meyer, coyote.blog, Mar 30] Oh wait! That's how SBIR is already funded: rich agencies get taxed to spend money on a political class to do what the agency would do anyway. If there has been a theme to the Obama administration’s disparate domestic policies, it has been to invest more in public goods. The administration has increased spending on schools, highways and scientific research and tried to play a more active role in energy policy and health care. “They’re all a necessary part of the network of what makes market economies work,” Timothy F. Geithner, the Treasury secretary, told me recently, “and we have not been good enough about doing them in recent years.” [David Leonhardt, New York Times, Mar 28] Music to the ears of beneficiaries of public handouts. Maybe Innovation, Maybe Here. The new $232.3 million N.C. Innovation Fund plans to take a multipronged approach to investing in businesses with a North Carolina connection. ... Although the fund's primary focus is making money for the pension fund, it also aspires to support economic development in the state. [David Ranii, Raleigh News & Observer, Mar 24] What'll it be? Home cooking or fiduciary responsibility to the pension fund? Haven't we learned enough about the meager ROI from government investment in innovation? When politics "invests", it's mostly for votes. Any politician been caught investing his own money in the schemes after proper laundering? Collection Outruns Analysis. flow not only exceeds capabilities to interpret and exploit the data, the GAO told lawmakers, but probably soon will exceed the bandwidth available to carry it to ground stations. Service peculiar collection jealously guarded, shortage of language capability on the ground and in the US, Army won't share until 2014, Marines don't even have a sharing date. [Walter Pincus, Washington Post, Mar 23] Technology advancing faster than human system can absorb. ‘How big of a bong is he smoking?’ Seeks $5 Billion (With a “B”) from Feds to Support VCs ... “Tom’s approach [is] to have the federal government fund VCs,” Roth wrote in an e-mail in response to my query. “I proposed that the private sector fund early stage (pre VC) and that the federal government would match at the same terms and conditions as the private sector.” [Bruce Bigelow, San Diego Union Tribune, Mar 22] Isn't a fair-share for VCs as compelling as a fair-share for SBIR companies whom VCs wouldn't touch? If economic gain from innovation is the objective, why not help the most likely to get there? Not to worry; no VC worth the money wants to tangle with government as a partner. Where's the Innovation? From the empty BioValley site in Malaysia to the many [SBIR]grants won by DC-area firms that produce few real innovations, the pattern is depressingly familiar. ... The big winner of the Department of Energy's battery funding orgy, A123 Systems, spent about a million dollars on Washington representatives from 2007 through early 2009. ... The only sure way to prevent political and other pressures from distorting public efforts to boost innovation is to look carefully at which firms private investors think are viable. By focusing on supporting firms that have raised matching funds, public officials can boost innovative entrepreneurs far more successfully. [Josh Lerner, MIT Tech Review, Mar/Apr 10] Josh has been watching SBIR from its beginnings, first at GAO, then at Harvard's School of Government, and now as professor of investment banking at HBS. In the same issue, James Surowiecki of the New Yorker reviews Lerner's latest book Boulevard of Broken Dreams: When Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed - and What to Do About It . Perhaps Nydia Velazquez's staff has been reading Lerner seriously and sees no compelling reason to repeat the last two decades of SBIR. Perhaps also the SBIR advocates could come up with a new story that promises some decent ROI for the public dollars being poured into life-style companies beyond job for the boys. Here We Go Again. Meg Whitman will "root out fraud" and "cut wasteful spending." Carly Fiorina wants to eliminate "the billions of dollars of waste and bloat that sits in our federal budget." Ho-hum. Is it campaign time again? ... One fact Whitman doesn't mention is that California's government workforce is already among America's leanest -- the ratio of state employees to population is the third lowest in the country, according to 2008 figures from the U.S. Census. [Michael Hiltzik, LA Times, Mar 21] Does it work? It's a way to claim government efficiency without making anyone mad. Does it ever happen? Only to programs with politically weak advocates. But there are few such programs after decades of accretion of government benefits for "all shall have prizes." Just count all the SBIR defenders, for example, and listen to their passionate speech with claims as vague as cutting waste, fraud, and abuse. Defensive Maneuvers. Shifts in Chinese policy are making it harder for foreign companies to succeed and suggest Beijing is reassessing the liberalization it made when it joined the World Trade Organization in 2001. [Andrew Browne and Jason Dean, Wall Street Journal, Mar 17] Meanwhile, Do Like We Do. A bipartisan group of senators on Tuesday introduced legislation aimed at forcing the Obama administration to take action against China over its currency policy, reflecting growing anger on Capitol Hill over the issue. [Corey Boles and Shayndi Raice, Wall Street Journal, Mar 17] The Chinese view is that we dug ourselves into a hole and we want them to do likewise. And since isolation is better politics than cooperation and responsibility, our politicians haste to make speech. All the while, our angry Tea Party citizens want us to do extreme austerity which would raise the value of the dollar and make our trade balance even worse. Be careful what you wish for. But giving up earmarking would not be "in the best interests of the Congress or the American people," [the Senator]added, because some earmarks had produced outstanding results." [RJ Smith. Washington Post. Mar 15] Sound familiar and hollow? It's the same argument being made for SBIR. If your child spent 10% of allowance on books and 90% on candy, should you increase the allowance to get more books? House Democratic leaders banned budget earmarks to private industry, ending a practice that has steered billions of dollars in no-bid contracts to companies and set off corruption scandals. [New York Times, Mar 11] Senate not so enthusiastic. End of an Era. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more. [Stephen Olmacher, AP, Mar 14] Now Congress has to find more revenue than it appropriates rather than less as it invades the trust fund of nothing but IOUs. President Barack Obama laid out plans Thursday to help U.S. businesses double their export sales and add what he said would be 2 million more jobs at home during the next 5 years. [Stephen Thomma, McClatchey Newspapers, Mar 12] Domestic politics. Every elected national leader wants to increase exports in what classic mercantilism treats as a zero-sum game. Since America's main competitive industrial asset is technology innovation, and our leaders won't tolerate lowering wages, net exports aren't going to grow unless American continually hones that edge. In that spirit, among baser political motives, SBIR was supposed to be a small engine. But after two decades plus, there's little evidence that it is coming close to even a net gain over doing nothing about steering federal R&D toward economic goals. No matter, the mini-battle over SBIR is purely political now. Corporate Welfare? SBIR Insider Rick Shindell reports in high dudgeon that House SB Committee Velazquez said, Without the participation of venture-backed companies, the SBIR program has become little more than corporate welfare for marginal companies who are unable to secure external market-based funding. Shindell counters that, This statement is not only an outrage, but is untrue and ignorant! Velazquez is debasing thousands of small businesses and SBIR projects that have provided significant results, more often than not resulting in innovations exceeding that of any other sector including large business and academia. SBIR success is universally acclaimed by numerous sources, including extensive studies by the U.S. General Accounting Office (GAO) and the National Research Council of the National Academy of Sciences, not to mention many other countries that are now emulating the program. The bad news for SBIR advocates is apparent agreement among the Committee with the chair's opinion. Says Shindell, There were no objections nor amendments so the document was approved/passed by unanimous consent with only a few committee members present. While only Velazquez knows what's really motivating her, taking on the myth that small business is America's economic savior is pretty brave stuff. Perhaps the SBIR advocates can reflect that their two decades of opposition to economic evaluation of SBIR has finally come to haunt them. Stay tuned for developments. Fund Us, or Else. Britain will suffer decades of economic decline if the next government cuts science spending to help to contain the £178 billion national debt, an influential panel of researchers, business leaders and former ministers warns today. [Mark Henderson and Suzy Jagger, The Times, Mar 9] The same argument made by every beneficiary in S&T. How's a Congress to decide how much for whom is enough for a reasonable return? Who's going to argue against science since no one has a vested interest in less funding? Senators Kerry and Lugar introduced a bill (S. 3029) that would provide a new type of visa to allow foreign entrepreneurs to enter the U.S. The proposed EB-6 visa would allow foreigners to enter the U.S. for two years if they can secure at least $250,000 from U.S. investors in support of a start-up venture. This proposal builds upon the EB-5 visa program, which allows foreigners to enter the U.S. if they invest at least $1 million of their own money in a new venture which creates at least ten jobs. [AAAS, Mar 5] Science Wins One. A prominent [religious] conservative lost his seat on the [Texas] state education board, a shift that weakens the board's powerful social conservative bloc. ... to challenger Thomas Ratliff, viewed as a moderate, on the board that shapes what millions of students read in textbooks. [Wall Street Journal, Mar 4] But Religion Soldiers On. South Dakota Legislature Considering Resolution on "Balanced" Teaching of Climate Change.By an 18-17 vote, the South Dakota State Senate passed a concurrent resolution on the teaching of climate change in public schools, urging that the subject be taught in a "balanced and objective manner" and stating that the debate on global climate change is "subject to varying scientific interpretations." The Senate amended an earlier resolution (HCR 1009) that passed the state's House of Representatives 36-30, which had included a recommendation to include in classroom instruction discussion of "a variety of climatological, meteorological, astrological, thermological, cosmological, and ecological dynamics that can effect [sic] world weather phenomena and that the significance and interrelativity of these factors is largely speculative." The bill now returns to the House. [AAAS, Mar 5] "Balanced" apparently includes superstition, holy scripture, faith, and astrology. Need Government Support? Viktor Petrik shows off what he describes as his discoveries: a cell that generates electricity when you breathe on it. A new way to produce silicon for computer chips from fertilizer waste. A filter that cleans the toxins—and the color—from red wine. "This is real, serious science here," he says ... He has won some high-level support. United Russia, the ruling party, regularly gives him prominent roles in events on innovation, while officials including Boris Gryzlov, the speaker of Russia's parliament and No. 2 in the party, have publicly endorsed his products ... Mr. Petrik's detractors say he's the latest in a long history of false experts who owe their success to their ability to fool people in power. Says Petrik critic Rostislav Polishchuk, a member of the pseudoscience commission: "Russia is especially vulnerable to this." [Gregory White, Wall Street Journal, Mar 5, 10] Give cold-fusion another whirl and invoke your US Representative. Political Help Claimed. NeuroDx Development (Bensalem, PA; no previous SBIR) received a $143,000 SBIR to continue its development of improved diagnostic tests for children and adults with brain injuries and diseases. ... “This grant supports the vital research that NeuroDx is conducting to help those suffering from this brain condition, as well as supporting employment in this cutting-edge field,” said U.S. Rep. Patrick Murphy, D-Bucks, who helped the company secure the funding. [Philadelphia Business Journal, Mar 1, 10] calls for the Small Business Administration to help business owners find willing lenders and, as a last resort, issue the loan directly. While this provision passed a House vote in October, the direct-lending provision has an uncertain future as it awaits consideration from the Senate. ... The president, in his response, said that the SBA "does not have the infrastructure to go all across the country in every region and process loans." He added that creating a direct-lending system would make a "massive bureaucracy." .... If businesses are being told 'no' because they are not creditworthy and lenders won't make the loan with a 90% SBA guarantee, why should the taxpayers do it with a 100% guarantee?" says Jonathan Swain, an SBA representative [Emily Maltby, Wall Street Journal, Mar 4] Medicare vs Moonshots. NASA chief Charles Bolden has asked senior managers to draw up an alternate plan for the space agency after members of Congress indicated they wanted to reject a White House proposal to hire private companies to ferry U.S. astronauts into orbit and beyond. In an internal memo viewed by The Wall Street Journal, Mr. Bolden ordered officials to map out "what a potential compromise might look like" to satisfy critics on Capitol Hill. By calling for an alternative plan, Mr. Bolden threatened to undercut White House efforts to get its proposed NASA budget through Congress. [Andy Pasztor, Wall Street Journal, Mar 4] Florida's efforts to boost its biotechnology sector may not be paying off as quickly as originally hoped. ... $449 million invested through the Innovation Incentive Program has yet to result in industry growth in counties where the program's grantees have their facilities. ... suggests that the state's lack of early-stage capital for biotech startups may be contributing to the sluggish pace of development. [SSTI, Feb 24] Government "investment" always sounds good, until ROI time comes. In R&D particularly, the sci-techs have more interest in good science than in economics and profit. SBIR Insider Rick Shindell fulminates on the House's old-trick blatant attempt to get all its pet SBIR ideas into law by default as a rider on the "must pass" jobs bill. Says Rick: virtually unlimited majority ownership and control of small businesses by VC syndicates; no limitations on the overall percentage of award dollars made to these larger entities; elimination of mandatory phase I (allows direct to phase II); allowing and encouraging "Jumbo Awards", award amounts with no ceilings, only loose guidelines not requiring justification (makes possible $10B, $20B or more awards,); allowing earmarking of SBIR award dollars; only 2 year reauthorization (contributes to continued destabilization of the SBIR program but acts as a fund raising mechanism for incumbent house members, bipartisan at that); no allowance to raise the SBIR allocation (Senate raises from 2.5% to 3.5% over 10 years). There are many additional issues beyond the scope of this article. For those who believe SBIR is the greatest advance since sliced bread, Rick goes on the repeat the usual arguments for SBIR. NIH is proposing to expand its definition of human embryonic stem cells, enabling the university researchers it finances to work with cells derived from a very early human egg. The proposal will benefit several academic researchers and a company, Advanced Cell Technology (Santa Monica, CA and Worcester, MA; $500K SBIR) , that has filed a request with the FDA to test a treatment for macular degeneration, an eye disease. If approved, it would be among the first clinical tests of embryonic stem cells, which were first discovered in 1998. [New York Times, Feb 20, 10] Last month the Department of Defense (DOD) asked SBTC to come up with a list of possible improvements to make the DOD's SBIR program more efficient. The parameters for SBTC's recommendations were that the improvements had to be non-legislative and could be quickly implemented. To address this issue, SBTC formed a committee of about 16 small businesses that have had experience working with the DOD SBIR program. After coming up with a number of good ideas, the committee whittled the recommendations down to five main topics. 1) The Office of the Secretary of Defense (OSD) and the Director of Defense Research and Engineering (DDR&E) should direct DOD to prioritize the use of SBIR technology in acquisition programs. 2) Simplify and streamline the SBIR contracting process. 3) Provide incentives and rewards to government organizations and prime contractors for successful transitioning and commercialization of SBIR technology. 4) Educate DOD contracting, management, and technical personnel. 5) Increase SBIR allocation in the DOD from 2.5 percent to 5 percent, and implement scheduled 1 percent increase in SBIR transitioning funding immediately, rather than over 10 years. [SBIR Alerting Service, Feb 19] In other words: lobbyists say give our clients more money (from somebody else's wallet), and pay more attention to their whining. I suppose that's responsive to DOD's request if they adopt a twisted idea of efficiency, which should mean more output per unit of input. If they really wanted efficiency (instead of just more money) they would recommend picking companies and ideas with a future. None of those recommendations would make any efficiency from a rocket plume model project, and passing out money faster to the wrong places won't help efficiency. How about starting with: 1) give some experienced VCs and financially successful SBIR business execs a voice in selections and project structures; 2) toss out every year the bottom some percent of companies with no financial success after an SBIR technical success; 3) give a specified portion of the money to managers who will go for, and be willing to measured and rewarded by, economic success from tech success for a military objective; 4) institute some kind of structure that forces every successive SBIR for a company's technology to meet a steeply progressive requirement for third-party co-investment. Anyway, if DOD were serious about efficiency, it wouldn't be asking such question of lobbyists. Since Marc Stanley is retiring, ... NIST is seeking qualified applicants for the director of the Technology Innovation Program (TIP). ... to support, promote, and accelerate innovation in the United States through high-risk, high-reward research in areas of critical national need [SSTI, Feb 16] Applicant needs steady nerves to withstand Republican free-market drumbeat. Replenishing the Innovation Incentive Fund and investing in space industry, public research, and green energy technologies are among Gov. Charlie Crist's FY11 budget recommendations to grow the state's innovation economy and establish Florida as a pre-eminent global hub. ... includes $100 million for the Innovation Incentive Fund, which was established in 2006 to attract R&D companies and create high-wage jobs ... The fund was depleted in 2008 [SSTI, Feb 16] When in doubt, re-organize. The Oklahoma Center for the Advancement of Science and Technology (OCAST) is among a list of 16 state agencies slated for consolidation in Gov. Brad Henry's budget proposal, which he says will result in cost savings of $5.3 million. Under the proposal, OCAST would be moved to the Department of Commerce, along with Aeronautics, Indian Affairs and the Oklahoma Space Industry Development Authority. Funding for OCAST would be reduced by 3 percent [SSTI, Feb 16] Let's Have an Industrial Policy? The U.S. is down to four world leading industries: entertainment, out of Los Angeles (heavily indebted to Democrats); information technology, out of the Bay Area (likewise); energy, out of Houston (heavily indebted to Republicans); and financial services, out of New York (indebted to both parties). That's it, folks. We're otherwise second- or third-rung suppliers across the range of manufactured products—except for biotech, a small industry—and we can still (mostly) feed ourselves. ... We've never systematically used government incentives to help U.S. industry compete across the board. It's time we did, like everyone else. [John Hofmeister (formerly of big oil), Wall Street Journal, Feb 8] SBIR advocates would be for it, even though they cannot prove economic success after nearly three decades of handout. The industrial policy advocates similarly cannot prove that their ideas work better in a competitive world than free markets. Like most advocates, they believe in sub-optimizing and pretend that it's global optimizing. even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car. [Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Jan 30] And the Republican ardor for free markets and anti-Democratic brakes will probably block any effective USG regulation to control the car. Why should the world richest nation not have the best Congress money can buy? Since TARP was of course a bonanza for fraudsters as government passed out money as fast as it could without the usual procurement type safeguards that fill the volumes of the Federal Acquisition Regulations, the TRAP IG has 77 ongoing criminal and civil investigations. To see all SIGTARP actions www.SIGTARP.gov A Confidence Game. "Everyone is depending on sovereign and fiscal authorities to keep the music going," he says. However, because the huge government deficits eventually act to slow economic growth, "people know that eventually the music is going to stop playing." The key unknown is at what point bond markets force governments to cut back on the stimulus. The answer, Mr. Brynjolfsson says, "is purely a function of confidence." [Tom Lauricella, Wall Street Journal, Feb 8] The Russian finance minister on Wednesday floated a new approach to catching up with the West in technology ... The government will order ministries and state companies to use more of their procurement budgets to buy products that qualify as “innovative” and that are made in Russia. [New York Times, Feb 4] A national security state going to enliven useful and advanced technology? Certainly no better than the US DOD does with its national security SBIR. Public growth, private shrinkage. NSF, NIST laboratories, and the Department of Energy's Office of Science continue on the path to doubling their budgets. [SSTI, Feb 4] As always, scientists believe that deficit reduction beef must come from some other sacred cow. But, GSK plans to expand previous cost-cutting efforts by saving nearly $800 million more a year by 2012 than previously planned. Half of that savings will come from reducing research and development spending, which will affect its R&D hubs, including the one in Research Triangle Park [Raleigh News &Observer, Feb 5] Ready, Set, Continue. Congress is extending non-DOD SBIR again, until Apr 30. Which, unfortunately, gives the agencies that don't like SBIR an avenue to interrupt the flow of proposals and awards. Obama wants to offer tax credits to companies that hire new workers, a plan that drew a cool reception from Congress last month despite the nation's double-digit unemployment rate. With polls showing that jobs are Americans' top priority [AP, Jan 29] Some things the government does not do well, including stimulus by creating jobs that lasts only as long as the money. Wealth creation belongs in private hands after the government has built a safe and invigorating milieu. But until people stop rewarding their politicians with re-election for handing out public money, the inefficient machine will grind on at least at the federal level where running bills up on the national credit card is rewarded with hands on the levers of power. For a view of what can go wrong, look at Venezuela. Any program to fund private business must be done with great restraint and a structure that provides support only at critical junctures where there is a clear path beyond the barrier to privately based development. A greatly scaled down and highly targeted SBIR, for example, might - might - qualify; not the broad and loose handout of the last almost three decades. federal deficits have only climbed to 5% of GDP four times since the end of World War II—in 1946, under President Harry S. Truman, and three years under President Ronald Reagan. Why are deficits labeled by president when the president has so little to do with it? One reason: Congresses are ID'd by a number that no one knows nor remembers. What's the number? Subtract 1787 from the year and divide by two to know that we now have the 111th Congress. Anyway the whole business of deficit is enfogged with attitudes that keep changing. The widening deficit and growing federal debt show how the political ground has shifted. During the Clinton administration, deficit concerns were pre-eminent. "Rubinomics," named for then-Treasury Secretary Rubin, said balanced budgets helped the economy flourish and kept interest rates down. By the time Vice President Dick Cheney famously said deficits didn't matter, the pendulum had swung back. Republicans passed tax cuts totaling nearly $2 trillion over 10 years and approved a Medicare prescription-drug benefit, the largest entitlement expansion since the 1960s. Now, there is a new orthodoxy. Democrats argue that fiscal discipline must be restored—but not before the nation regains its economic footing. The debate is how quickly to shift from fiscal stimulus to fiscal austerity. [Jonathan Weisman, Wall Street Journal, Jan 30] The quasi-public agency Connecticut Innovations Inc. today released a report indicating that the 20-year-old authority has brought about a $23.80 return — measured in impact on the state’s gross domestic product — on each dollar invested in local companies. ... CI invested $152 million in 84 companies [1995-2008]. .. CI’s investments helped to create an average of 1,610 jobs each year, including 563 direct jobs and 1,046 indirect jobs. The activity also brought in more than $209 million in state tax revenue, an average of $14.9 million a year, according to the report. The report also said that CI’s investments led to an additional $1 billion in outside investments. [Mass High Tech, Jan 21, 10] Yet Another Subsidy. The highly lucrative market for radioactive isotopes used in cancer scans and other medical procedures is at the center of a political struggle in Congress ... over the uncertain future of a $4 billion market now controlled by foreign suppliers with aging nuclear reactors .. [Markey's] bill, which the House overwhelmingly passed and the White House supports, would require the Department of Energy to provide at least $130 million to encourage the creation of domestic manufacturers of the special compounds. [Bryan Bender, Boston Globe, Jan 29] Governments are good at home cooking [protectionism] and spending public money, but terrible at wealth creation [competitive markets] and paying for the subsidies. Over the past five years, Washington has tried to reform Social Security, immigration, health care and energy policy. All of these efforts have either failed or are close to failure — thousands of people working millions of hours and in all likelihood producing nothing. .. as each party interprets victory as a mandate to grab everything [David Brooks, New York Times, Jan 29] Continuing Irresolution. SBIR Coach Fred
Patterson reports that the House Small Business
Committee has chosen not to respond to the Senate's
compromise proposal, and we'll have a sixth Continuing
Resolution, this one for 90-days. Since SBIR is
mainly a political program, why be surprised that the
politicians want to extract the most from it? And the
advocates are still in angst over the $200M "stolen" by
NIH in the stimulus handouts. If you're looking for a
model of responsible political restraint, look to...... The board of the Massachusetts
Life Sciences Center, a quasi-public agency formed
to oversee the state's $1 billion life sciences
initiative, today approved up to $3 million in new
matching grants to small businesses in 2010. ...
will focus on emerging life sciences businesses with
production-ready products and high potential to create
jobs in Massachusetts. It will begin accepting online
applications for the grants on Feb 1 through its
website,
www.masslifesciences.org. [Robert
Weisman, Boston Globe, Jan 27] Pay Me Now, Or ... Debt for jobs now, settlement later. The world has issued so much debt in the past two years fighting the Great Recession that paying it all back is going to be hell--for Americans, along with everybody else. Taxes will have to rise around the globe, hobbling job growth and economic recovery. [Daniel Fisher, Forbes, Feb 8] No problem: politicians always prefer Pay Me Later when they will be out if office. We voters apparently believe the same thing because we keep re-electing them. But there are practical limits to the return on more debt: says Carmen Reinhart, a University of Maryland economist. The coauthor, with Harvard professor Kenneth Rogoff, of This Time It's Different: Eight Centuries of Financial Folly (Princeton, 2009), Reinhart has found that a 90% ratio of government debt to GDP is a tipping point in economic growth. between 1941 and 1960, she observes, the
government’s share of R. & D. funding went up
13-fold until it supplied a whopping 64 percent of the
country’s research funds The freshly inaugurated governor reeled off a litany of new actions to increase college graduates, double the Governor's Opportunity Fund and target bioscience companies, invest in renewable energy, and provide tax credits for green job creation [SSTI, Jan 20] How will he pay for all that plus a $4B starting deficit? Don't ask, nor how all that fits into his required Republican limited government. Aurora Flight Sciences (Manassas, VA (R&D in Cambridge, MA); $15M SBIR) to develop technology for a hot air balloon to operate on Saturn’s moon, Titan. [Brendan Lynch, Mass High Tech, Jan 18, 10] NASA and the SBIR advocates will no doubt continue to bleat about commercialization while the Centers fund R&D for outer space. The company's website does standard R&D spin for government-use stuff. It must be good stuff to get $15M and growing SBIR over twenty years from DOD and NASA. BTW: what would you consider a decent nursery period for small high-tech companies before they can compete on their own for government R&D work. What really happens is that the mission agencies won't let them compete for much of that work because the agency must put at least 3% of their outside work into SBIR. "Go get SBIR," say the agency managers to such companies. NASA and InnoCentive, which operates a global network of 200,000 potential problem solvers, [to apply the principles of crowd-sourcing to solve the research and development problems that face its corporate customers] are collaborating to open a new NASA Open Innovation Pavilion designed to provide the public with the opportunity to solve difficult problems in human health and performance facing the US space program. ... seeking input from the public on [among others]: How to keep food fresh in space and how to develop an effective aerobic exercise program that keeps astronauts fit in space, [Boston Globe, Jan 15] $16.56 Impact for Each State Dollar, says North Dakota. Providing strong evidence for how public investments in research and TBED pay off even on a short time horizon, a recent impact analysis calculated the total impact from the first $19.9 million North Dakota spent over the past four years for the establishment of 20 Centers of Excellence across the state. Analysts from North Dakota State University reported a combined cumulative impact of $329.5 million for the 30 months ending June 2009. The total includes both direct reported results and estimates for indirect impacts .. seven new spin-off companies were created, five companies expanded within North Dakota, and five companies expanded to the state [SSTI, Jan 13] Let me control the assumptions and the "indirect effect" and I can give you any impact you want. Thousands of Massachusetts small business owners who have been pummeled by rising health insurance costs should see some relief under a program approved yesterday by state regulators. The Health Connector board voted to take over the administration of health insurance plans for roughly 17,000 small businesses, a task that had been handled by a private company, Worcester-based Small Business Service Bureau. The new program is aimed at the smallest of small businesses, those that employ between one and five workers. There are roughly 40,000 such employers in Massachusetts that offer health insurance to their workers, according to state figures. [Kay Lazar, Boston Globe, Jan 15] The Government Accountability Office has recommended that the U.S. government establish a central national security budget and then set aside money by responsibilities, breaking with the current arrangement of letting departments and agencies decide how best to arrange their budgets. [Walter Pincus, WashPo, Jan 18] The investigating arm of Congress ignores the legislating arm of Congress where committee turf is guarded even more ferociously than the Executive Branch departmental turf. The conservatives' focus on ideology, they say, is an opportunistic way of distracting attention from the mistakes of the Bush years and the role conservative policies played in bringing us to this point. To cite ideology rather than the economy in explaining the poll numbers is like analyzing the causes of Civil War without any reference to slavery or the rise of the New Deal without mention of the Great Depression. ... many, especially political independents, are upset that the government has had to spend so much and that things have not turned around as fast as they had hoped. [EJ Dionne, WashPo, Jan 18] The nation of instant gratification wants to know why the financial and economic mess isn't cured yet. T'row da bums out; bring back da odder bums? Jobs, or else. Polspeak Laying out her goals for the year, [NC Gov] Perdue promised to push tax incentives for small businesses and use federal training dollars to give small employers administrative support they wouldn't otherwise get. She also challenged business and education leaders to guarantee that every public school student is prepared for college or a career. .. "We're tired of business as usual." ... I am, and will continue to be, known as the 'jobs governor'." [Raleigh News & Observer, Jan 14] She's looking forward to $400M federal handout for education (while Texas declines $700M). We are no closer today to SBIR reauthorization than we were when the House and Senate SBIR legislation was passed back in July of 2009 with conference talks starting in August. [SBIR Insider Rick Shindell, Jan 12] Rick sees a pure political stratagem by SB Chair Velazquez of two-year re-authorization which aligns with her bi-annual need for campaign contributions. But since SBIR is mostly a political handout anyway, where's the great injustice of playing both sides of it? the N.I.H. currently prohibits its funds from being used to support the graduate or the postdoctoral training of foreign-born science students, who make up the majority of our talent pool in many fields. In addition, the N.I.H.’s conservative review panels make it very difficult for young scientists to secure funding for creative, risky basic research, once they establish their own labs. This affects senior scientists as well. [David Anderson, letter to the New York Times, Jan 13] We are seeking submission of white papers that bring forward new and innovative science & technology ideas and/or educational programs that could support the future efforts of DoD biometrics and forensics capabilities. Details. Helping the Neighbor. Beavercreek-based UES (once called Universal Energy Systems (Dayton); Beavercreek, OH; about $40+M SBIR) was awarded a $22.7 million [USAF-AFRL] contract [for] research, development and technology transition on advanced metallic and ceramic structure materials. In September, UES snagged a six-year, $44.5 million deal to provide research and development for the nano and biological materials. [Dayton Business Journal, Dec 31, 09] in 2009, it was still getting Phase 1 SBIR awards, its 140th Phase 1 following about 40 Phase 2s. DOD's due diligence on SBIR must not include a check on whether a firm is ready to compete for mainline DOD R&R funding and thus does not need nursery funding. Did the Congress intend such situations in SBIR? Well, the Dayton Congressional delegation will certainly not be complaining about a firm parked outside the DOD gate getting a lot of contracts. What are neighbors for anyway? I do hope that the big contracts do not include consulting work on SBIR topics and selection of winners. the federal research and development investment for FY 2010 is an estimated $150.5 billion, 2.0% more than FY 2009 [AAAS, Jan 7] any stimulus money would be extra what should we expect to be a good return on public investment in research? A new working paper available from the National Bureau of Economic Research helps clarify the range of possible answers, though, and strongly suggests the investment is worthwhile. Reviewing studies from the past half century, the authors conclude the rates of return for R&D are "usually higher than those to ordinary capital" and social returns "are almost always estimated to be substantially greater than the private returns" - both conclusions supporting an increasing role for public research investment. ... Prepared as a chapter for the Handbook of the Economics of Innovation, the December 2009 NBER Working Paper is available for purchase at: http://www.nber.org/papers/w15622. [SSTI, Jan 6] The Ohio Business Roundtable’s independent assessment of the outcomes and impacts from the first $473 million invested from Ohio’s Third Frontier (OTF) Program since its creation in 2003 shows the program providing an annualized return of 22 percent – and climbing. .. the report reveals product sales of OTF-funded projects already equal $440 million alone, nearly matching the state’s investment. An additional $3.2 billion of follow-on funding has been secured for OTF projects as well. [SSTI, Jan 6] The Missouri Science and Reinvestment Act (MOSIRA) would dedicate an annual portion of new tax revenues generated by biotechnology companies to a newly-created state fund administered by the Missouri Technology Corporation. Funding would be reinvested in a wide-range of technology-based economic development programs designed to grow science and technology companies across the state. More information regarding MOSIRA is available from the governor's office. [SSTI, Jan 6] Gov. Pat Quinn's Illinois Economic Recovery Plan .. would establish an Angel Investment Tax Credit program to allow investors making an early-stage investment in a technology startup to receive a capped credit against their Illinois tax bill. [SSTI, Jan 6] Need an Investor? Look Abroad. Since October 2006, U.S. companies have raised more than $1 billion and have created over 20,000 jobs (directly and indirectly) through EB-5, estimates the USCIS. ... foreign investors--through the so-called EB-5 program--can snag a slice of equity and a quick-and-dirty U.S. visa in just three-to-six months; plus, unlike other immigrant visas that might expire in a few years, the EB-5 flavor promises permanent residency. EB-5 minimum requirements: a $1 million investment from a lawful source in a new or existing commercial enterprise that directly creates at least 10 U.S. jobs. Investors can put up as little as $500,000 if the company is in a rural area or in a county sporting 150% of the average national unemployment rate. [Katy Finneran. Forbes.com, Jan 6] Meanwhile, A group of technology investors is trying to make Silicon Valley friendlier to foreign entrepreneurs. The group is lobbying lawmakers for a new visa for noncitizens who want to found technology start-ups in the U.S. Dubbed the Startup Visa, it would allow entrepreneurs sponsored by a venture capitalist to come to the U.S. for two years to start their business. [Jessica Vascellaro, Wall Street Journal, Jan 7] Command economies [think China] are good at spending money on infrastructure, less good at getting a return on capital. [Paul Maidment, Forbes.com, Dec 31] USG mission agencies do the same since they don't see their R&D as capital that should have a measured return. But then, real capital investors don't have to get elected. The economy is a complex, intricate subject. It is highly doubtful that the current crop of attention-seeking, power-grabbing legislators whose sole concern is their own re-election are equipped or inclined to tackle it in any meaningful and effective way, beyond, perhaps, reinstitution an old law [Glass-Stiegel] that they never should have rescinded to begin with. [carouzer blogging on thedailybeast.com, Jan 4] Patent Mining. to pay for a fraction of its largesse [pork], Congress added one late change to the budget: It slapped a restrictive spending ceiling on the U.S. Patent and Trademark Office, further cramping an agency that was already incapacitated by more than a decade of congressional raids on its fees. [John Schmid, Milwaukee Journal Sentinel, Dec 29] Congress is urging the federal government to take a larger role in helping small businesses with exports. The Senate Committee on Small Business and Entrepreneurship this month approved legislation to bolster small business trade opportunities, and asked the [SBA] to appoint an official to focus on international trade programs. Federal lawmakers have also asked Ronald Kirk, the United States trade representative, to appoint a top-level official to open overseas markets to more American small businesses. [Elizabeth Olson, New York Times, Dec 31] The board of the Massachusetts Life Sciences Center awarded $25 million in tax incentives to 28 life sciences companies that commited to creating a total of 918 new jobs in the coming year. The tax breaks were established under the Patrick administration's 10-year, $1 billion life sciences initiative. [Robert Weisman, Boston Globe, Dec 23, 09] Several "SBIR involved" companies in the list. The Ohio's $1.6 billion Third Frontier [an unprecedented and bipartisan commitment to expand Ohio's technological strengths and promote commercialization] will award $17 million to companies developing biomedical and medical imaging technology. Proposals due Mar 1. [Dayton Business Journal, Dec 14, 09] The Obama administration is setting aside $30 billion from the financial bailout fund for a program designed to encourage lending to small businesses to aid the economic recovery. [AP, Dec 19] The biggest problem will be finding willing and qualified borrowers since banks prefer to lend to people who don't need loans, and the banks already have a lot of burned fingers from government-encouraged landing. It's becoming clear that the government's attitude to the beleaguered greenback can only be described as benign neglect. [David Rosenberg, BusinessWeek.com, Dec 17] SBIR Coach Fred Patterson http://sbircoach.blogspot.com/ says, As predicted, Omnibus Appropriations bills were rushed through this week, but SBIR reauthorization was not included among them. So it'll be January before any more attention is paid NIST Market Intervention Still Alive. The FY10 Consolidated Appropriations Act that passed Congress during the past week includes $124.7 million for the Manufacturing Extension Partnership (MEP) and $69.9 million for the Technology Innovation Partnership (TIP). [SSTI, Dec 16] Patrick Clemins, director of the AAAS R&D Budget Policy Program, said in a briefing on Capitol Hill that the $147.5 billion federal science budget proposed for next year, an increase of 0.3%, or $ 491 million over the previous year’s funding levels, is an all-time high. [AAAS, Dec 17] Scholar and columnist Norman J. Ornstein told an AAAS audience that despite strong support from the White House, science policy and research funding could face challenges due to a weak economy and a sour national mood. Ornstein said that the public frustration with elected officials and financial and corporate executives has thus far spared S&T leaders, but in a sharply polarized political environment, issues such as climate change, science funding, and visa reform may face significant opposition. Read more about the current challenges and possible options discussed during the seminar, held 16-20 November. [AAAS, Dec 17] The University of Wisconsin-Madison has landed a $10.1 million, five-year [NIST] grant for research into use of nanotechnology in metal castings, the university said. [Joe Taschler, Milwaukee Journal Sentinel, Dec 16, 09] The government has been sponsoring research on composite materials for a long time with a lot of money, but they are still too expensive, however wonderful. The story does quietly say Bringing down the cost of producing the materials also is a goal of the research. But scientists who do great research don't do economics. "Christmas is a time when children tell Santa Claus what they want, and we pay for it. Now, with budget deficits, we tell the government what we want, and our children pay for it." -- Josef Ackermann, CEO of Deutsche Bank [Wall Street Journal, Dec 14] The DOE hopes to lend or give out more than $40 billion to businesses working on "clean technology," everything from electric cars and novel batteries to wind turbines and solar panels. ... By contrast, venture-capital firms -- which have long been the chief funders of fledgling tech firms, taking equity stakes in the start-ups that will pay off if they go public -- poured just $2.68 billion into the sector in that time, according to data tracker Cleantech Group. [Neil King, Wall Street Journal, Dec 14] Guess which "investor" will be around to help with future management and equity funding? Oh right, these companies are so smart and agile that they don't want any business guidance from their investors? GREENHOUSE-GAS emissions targets can be implemented through three sorts of policy instruments—regulation, carbon-pricing and subsidies. Governments generally like regulation (because it appears to be cost-free), economists like carbon prices (because they are efficient) and businesses like subsidies (because they get the handouts). [The Economist, Dec 3] Subsidies, Meet Prizes. Recently a scientist named Andrzej Bartke made a laboratory mouse live 1,819 days. He did it to win the Mprize, run by the Methuselah Foundation, which aims to find ways of extending human life. Prizes work, and they are cheap. In return for its $10m, the X Prize Foundation stimulated $100m in private-sector rocket research. A $30m X prize is now being offered for the first private-sector robot on the moon, $10m for a superefficient car and $10m for a way of giving your doctor an instant readout of your DNA. And so on. [Brian Appleyard, The Sunday Times, Dec 13] Subsidies generate a horde of government junkies; prizes stimulate private risk. all depends on policy. Nothing is written. It is for elected politicians to decide. They are vote-maximisers, and will calculate whether [downgrading American public debt] is more threatening to their futures than the hard steps necessary to rein in spending and avoid a downgrade. ... Meanwhile, the off-balance-sheet liabilities of the federal government are rising — the debts of troubled states, underfunded pension plans, the unbooked obligations to an ageing population. [Irwin Stelzer, The Sunday Times, Dec 13] So, do the American thing: argue for a subsidy that diverts government spending into politically dictated inefficiencies that favor you. How Slow the Mill Grinds. Many health IT firms that were promised stimulus funding [ARRA announced Feb 09] have yet to take action on their plans. The ARRA does not begin offering incentives to doctors and hospitals to implement electronic medical records until 2011, and providers are waiting for guidance on so-called “meaningful use” rules, which are expected to be finalized next month. [Julie Donnelly, Mass High Tech, Dec 9, 09] Federal officials alleged that Nova Gen (LaJolla, CA; no SBIR) bamboozled investors [through fraud and the unregistered sale of corporate securities] out of $2.3 million with promises of a new technology that would covert coal into green fuels and make trillions of dollars. [Onell Soto, San Diego Union Tribune, Dec 5, 09] Note that you can still make outlandish promises of future benefits in SBIR proposals as long as you don't lie about any of the supporting facts. Sometimes the government wants to hear wild promises so it can pass out "stimulus" money for favored political programs like working on algae-based fuel technology, [with] a $50 million grant from the Department of Energy and a $54.5 loan guarantee from the Department of Agriculture... to expand a commercial-scale pond system in a desert state with lots of dust and sunshine but little water. [Thomas Kupper, San Diego Union Tribune, Dec 5, 09] There is no doubt that politics and science make uncomfortable bedfellows. Politicians sell certainty. Science lives off doubt. [The Economist, Nov 28] Raw fear has given way to anxiety that the recovery will be feeble and drab. Companies are hoarding cash. Banks aren’t lending to small businesses. Private research spending is drifting downward. ... What should USG do? ... education reforms, pay for basic research, rebuild the nation’s infrastructure, find a fiscal exit strategy, gradually address global imbalances, loosen the so-called H-1B visa quotas, encourage regional innovation clusters, lower the corporate tax rate ... Direct funding of innovation? National Economic Council argued that the U.S. should not be in the industrial policy business. Governments that try to pick winners “too often end up wasting resources and stifling rather than promoting innovation.” .. [David Brooks, New York Times, Dec 8] As the military shifts its focus toward more high-tech and specialized warfare, experts predict that contractors will continue to rely heavily on the new technologies coming out of small and startup companies. ... “Small businesses tend to be the sources of innovation in technology and large primes are always looking for potential partners,” said retired Brig. Gen. Donald Quenneville, executive director of Defense Technology Initiative, a regional trade group. ... [DOD] requirements that 37 percent of large contracts go to small businesses [Mass High Tech, Dec 2] Social Investing. [North Carolina] is starting a $250 million equity fund to invest in North Carolina companies with two goals in mind: make money for the state pension fund and create jobs in North Carolina. [Mark Johnson, Raleigh News & Observer, Dec 3] Present and future state pensioners should question the fiduciary responsibility of sub-optimal investing for political purposes. Fortunately for SBIR, which is the same kind of political targeting, no pensioners are at risk except in the grand sense that federal investments are also sub-optimal, regardless of all the hoopla about small business virtue. But vote-getting always takes priority over efficient finance. Now, attention is turning to longer-term reform of the economic system (the good news) by hysterical populist politicians (the bad news) who just might destroy the system in their effort to save it. [Irwin Stelzer, The Sunday Times, Nov 29] With equally hysterical vested interests in danger. Democratic state legislators plan to hold hearings, possibly as soon as next week, on a proposed $15 million economic growth package that would bulk up Wisconsin's angel investing tax credits, better connect businesses with university research, and include other measures to rebuild the state's economy. [Kathleen Gallagher, Milwaukee Journal Sentinel, Nov 29] As the [New York] Times notes, “Nothing stirs passions for a massive public-works project like a wad of federal cash.” [CATO's downsizinggovernment.org, Nov 10] Department of Commerce Office of Innovation and Entrepreneurship issued a notice seeking nominations of individuals to serve on a new Advisory Council on Innovation and Entrepreneurship. ... who have "proven experience in innovation and entrepreneurship." Nominations are due November 30. [AAAS, Nov 25] 91% for SBIR. The internet overwhelmingly favors SBIR 91-9 according to What Does the Internet Think? Not surprising that SBIR has few enemies on such a poll since the many beneficiaries love it and no one has to pay for it. But since we have a democracy with a popularly elected legislature, the people will probably get what they say they want. The University of Rochester's Center for Emerging and Innovative Sciences has added $600 million to New York’s economy in the last five years by creating jobs, saving companies’ money and spurring spending on new equipment and infrastructure, the center reported ... The center is funded through the New York State Foundation for Science, Technology and Innovation. .... roughly $5 million in state funding ... The state measures economic impact using a formula in which companies report how many new people they hired, new pieces of equipment they purchased, new sales they made and projects they started due wholly or partly to CEIS subsidies. [Nate Dougherty, Rochester Business Journal, Nov 25] Down to Earth Travel. Downey [CA] City Council has approved an agreement aimed at luring Tesla Motors' electric car manufacturing plant to the former site of a NASA plant that helped develop the Apollo program and the space shuttle fleet. ... The city is pinning hopes that the car factory could bring $21 million in city revenues over 15 years, create about 1,200 jobs and help revitalize its reputation as Southern California's high-tech hub. ... a city of 115,000, was once a vibrant center of high tech manufacturing jobs where aerospace engineers designed and built parts for America's space program. At its height, there were some 30,000 employees at the complex, but when the plant closed in 1999, the complex fell into disrepair. .... In June, the company was awarded $465 million in low-interest loans from the U.S. Department of Energy to help build the Model S, which is designed to travel as far as 300 miles on a three- to five-hour charge. [Daisy Nguyen, AP, Nov 26] Surprise - Market Saturation. Two years ago, Congress ordered the nation’s gasoline refiners to do something that is turning out to be mathematically impossible. To please the farm lobby and to help wean the nation off oil, Congress mandated that refiners blend a rising volume of ethanol and other biofuels into gasoline. They are supposed to use at least 15 billion gallons of biofuels by 2012, up from less than seven billion gallons in 2007. But nobody at the time counted on fuel demand falling in the United States, which is what has happened during the recession. And that decline could well continue, as cars become more efficient under other recent government mandates. At the maximum allowable blend, in which gasoline at the pump contains 10 percent ethanol, updated projections suggest that the country is unlikely to be able to use all the ethanol that Congress has ordered up. So something has to give. “The market is full,” said Jeff Broin, chief executive of Poet [Matthew Wald, New York Times, Nov 27] Sound like a classic story of a great government sponsored innovation that the market doesn't need or want? New Big Science. The Obama administration's push to solve the nation's energy problems, a massive federal program that rivals the Manhattan Project, is spurring a once-in-a-generation shift in U.S. science. The government's multibillion-dollar push into energy research is reinvigorating 17 giant U.S.-funded research facilities, from the Oak Ridge National Laboratory here to the Lawrence Berkeley National Laboratory in California. [Gautam Naik, Wall Street Journal, Nov 25] Forty-one Nobel laureates have signed an open letter to Congress in support of the Federal Research Public Access Act (S. 1373), which would direct all major federal research agencies to create policies that would allow public access within six months to publications resulting from federally funded research. [AAAS, Nov 18] I asked Geithner what government could do to help promote innovation. Usually when I ask leaders that, they reel off some cool technologies that government should promote — windmills, nanotechnology, etc. Often they sound like children trying to play at being entrepreneurs. Geithner didn’t do that. He said that government’s limited job was to get the underlying incentives right so the market could figure out what innovations work best. That suggests a pretty constrained view of government’s role. [David Brooks, New York Times, Nov 20] In SBIR, like all government programs, the big boosters are the beneficiaries who get the money and don't have to find the money or suffer a true evaluation. And as long as Congress is treated as a source of free lunch, we will continue down the road of financial irresponsibility. Like Japan, we have an aging population, which is pushing up entitlement costs. Our government seems not to have any economically realistic or politically feasible plans either to raise revenue or cut spending, but instead plans ambitious new spending programs (notably but not only on revamping health insurance). Proposed economies seem tokens. There is an air of complacency about deficit spending and public debt--again like Japan. [Becker-Posner blog, Nov 15] Since we are not yet ready to bite the financial bullet , we continue so many government programs whose only beneficiaries are the firms that collect the money for mundane research. Lerner provides more than a dozen rules of thumb for effective government intervention in the private sector. Attesting to his own belief in capitalism, he urges governments to “let the market decide the direction” of their stimulus programs and the selection of the appropriate companies and venture capital funds to carry them out. [Harry Hurt III, reviewing Lerner's book Boulevard of Broken Dreams, New York Times, Nov 15] Unfortunately, the Congress's ongoing wrestle with SBIR shows no sign of hearing what Lerner has to say as their dominant question is how to satisfy as many interests as possible. Voices. More than a dozen lawmakers’ statements on the health care debate were ghostwritten by lobbyists working for Genentech, a biotechnology company. .. Genentech, a subsidiary of the Swiss drug giant Roche, estimates that 42 House members picked up some of its talking points — 22 Republicans and 20 Democrats, an unusual bipartisan coup for lobbyists. [Robert Pear, New York Times, Nov 15] San Diego’s free high-tech incubator, announced that it has enrolled three more startup companies: TetraVue is developing a high-resolution 3D camera and video recording system; MicroPower Technologies is developing ultra-low-power wireless video surveillance camera technologies; EcoATM plans to install self-serve kiosks for recycling mobile phones and other consumer electronics. None has SBIR. Administration officials say the Obama economic team is especially concerned that rapid deficit reduction could hurt the economy. [Wall Street Journal, Nov 12] Of course, why pay down your credit card balance if the bank isn't threatening your credit? Don't we have a no-limit card? Meanwhile, back at the ranch, After months of spending cuts and layoffs, states are drawing up plans for tax increases and an even larger round of service reductions next year as budget shortfalls continue to widen. [Amy Merrick, Wall Street Journal, Nov 12] States don't have the open credit plan; they have to balance their budgets annually (except for California's smoke and mirrors pretense that borrowing isn't deficit finance). One difference is that states can cut public programs that aren't demonstrably pulling their weight, whereas the federal government can simply defer any action that would anger any constituency. That way, everybody can keep their pet programs and pretend that someone else will pay for it. In NIST’s three year programmatic plan, the discussion of an R&D Investment Framework cites advanced materials as one research area for consideration because it is among the most strategic and enables other rapidly developing technologies. [NIST White Paper on Manufacturing] Do your proposals sound like such mush? there is a role and an opportunity for the public
sector to be directly involved in the funding of
commercialization of innovative activity, but it’s a
tricky matter and it really needs to be done right. ...
one of the real problems with many of the public
programs. They’re trying to encourage innovation, but
they’re doing stuff from a very top-down perspective,
where government bureaucrats are imagining what they’d
like to see and then chasing after it. NIST with a twist. Fred Patterson (SBIR Coach) describes NIST SBIR's new idea: Essentially, if you can show how you'll close the gap [to commercialization] in some NIST research, Clara will give you a FREE non-exclusive research license to use the NIST technology in your project. On top of that, she'll fund your project with NIST SBIR money! Just as with any other SBIR project, rights to the results of the project are yours. And you get access to NIST personnel, facilities, and knowledge regarding the invention. What a deal! FY2010 solicitation proposals due January 22. Economics and politics confront the same fundamental problem: What everyone wants adds up to more than there is. Market economies deal with this problem by confronting individuals with the costs of producing what they want, and letting those individuals make their own trade-offs when presented with prices that convey those costs. That leads to self-rationing, in the light of each individual's own circumstances and preferences. Politics deals with the same problem by making promises that cannot be kept, or which can be kept only by creating other problems that cannot be acknowledged when the promises are made. [Thomas Sowell, townhall.com, Nov 5] Pork in the Right's Places. U.S. Senators Sam Brownback, R-KS, and Pat Roberts, R-KS, applauded Senate passage of the Conference Report to the Department of Homeland Security appropriations bill. The bill includes $32 million of funding for the new National Bio-Agriculture Facility to be relocated in Manhattan, Kansas. [the DailyBell.com, Nov 3] Small-business owners I have been meeting this past week tell me they are in a state of paralysis as they follow the debate over the healthcare “reform” bill wending its way through Congress. Lurking in its 1,501 pages (the Senate version) are provisions that will markedly raise their costs and their personal taxes. So even as business gets better, they won’t take on more staff. [Irwin Stelzer, The Sunday Times, Nov 8] Hope, choice, and a free lunch isn't quite happening on the dreamy scale of election euphoria. Good things take time. [MI Gov] Granholm offered the company tax incentives, grants, and promises of federal funding while promoting Michigan’s charms: manufacturing expertise, a workforce loaded with engineering talent, and a population of ready-made clients. Today Mascoma, which makes a gasoline substitute from wood chips and other materials, is spending more than $200 million to build a factory in Kinross, Mich. ... Michigan is emerging as one of Massachusetts’ fiercest competitors in the race to become a hub for clean technology companies. And Massachusetts, despite being the birthplace of many of these technologies and the companies they spawn, is losing ground to Michigan’s money and determination. [Erin Ailworth, Boston Globe, Nov 9] A widening insider-trading probe is causing new tremors in Silicon Valley, as prosecutors say a network of employees at technology companies acted as paid informants for managers of a San Francisco hedge fund implicated in the case. [Don Clark, Wall Street Journal, Nov 7] The AZ TechCelerator, housed in the former municipal buildings [in Surprise AZ] is the city's attempt to grow a biotech industry by providing financial help, business mentoring and inexpensive rent. About $14 million in grant money is available to help fund start-ups for the next five years, said Ron King, president of Catapult Bio, an independent non-profit organization that has teamed with Surprise. [Cecilia Chan, Arizona Business Gazette, Oct 1] A biomass energy project was awarded $2.5 million in a congressional earmark that Utah Sen. Bob Bennett included in a pending federal budget bill. Viresco Energy (no SBIR) is a company headed by a Southern California real-estate developer who owns a ranch in Alton in southern Utah, where Jim Guthrie proposes to turn wood waste, manure or coal into 40 barrels of fuel a day. ... Bennett's office says it did some diligence before sponsoring the taxpayer-funded item. [AP, Oct 29, 09] Stryker Biotech (large firm) employees engaged in a scheme to deceive doctors into using its bone-healing devices for purposes that had not been approved by the FDA, the government alleged. [Mass High Tech, Oct 28, 09] SBIR Insider says, Today (October 26, 2009), the Senate passed S. 1929 that extends SBIR/STTR for all agencies (except DoD) as well as other small business programs for 6 months, expiring on April 30, 2010. DOE's ARPA-E will announce 37 grants totaling $151 million, mostly going to small businesses and educational institutions but also to a few corporations. Some of the ideas may be supported until they are picked up by venture capitalists or major companies, ... the grants average $4 million ... “It’s not supposed to be things that are 90 percent worked out, but more what-if kinds of things.” [Matthew Wald, New York Times, Oct 25] Funding high risk stuff will produce a high percentage of technical failures which will eventually be criticized by elements of Congress who want brand new ideas that have been thoroughly tested, and something with which to beat the administration. It takes a while for most start-up companies to gain the confidence of a U.S. congressman and the promise of federal funds. But last year, a small Illinois company accomplished its goal in 16 days with the help of Rep. Peter J. Visclosky, a little-known Indiana Democrat who sits on the House committee that funds the Pentagon. ... In rapid succession, the three-employee technology firm, NanoSonix, filed its incorporation papers in Skokie, Ill., and hired a Washington lobbying firm, K&L Gates, which boasted to clients of its close relationship with Visclosky. A week later, Visclosky wrote a letter of support for a $2.4 million earmark for NanoSonix from the House Appropriations Committee's defense subcommittee. [Paul Kane and Carol Leonnig, Washington Post, Oct 26] I'm all for progress as you know/ Long as we keep the status quo. -- line from the 1950s musical "Oh, Captain" From SBIR to health care to foreign war, everyone is for improvement as long as someone else pays for it. The reason Americans have turned against health-care reform, after electing President Obama in part for promising it, is simple: Despite protestations to the contrary, Americans don't like change. [Michael Kinsley, WashPo, Aug 28] The DOD half of SBIR re-authorized for a year, says SBIR Insider. The other half is still in the political grinding mill. The bad news is that neither half is likely to produce anything advancing an economic goal for SBIR, just more political handout to small business with neither success criteria nor economic evaluation. Even any claim to job creation is a myth since the money for the jobs is diverted from other companies that would also buy the jobs. Are SBIR companies better economic creators than non-SBIR companies? No one knows and the SBIR advocates avoid the question. Ah well, government is not a wealth creator anyway, just a guardian and political re-distributor. SSTI gave an attaboy to The TechColumbus TechStart Program supports and develops viable entrepreneurial companies from their earliest phase through their launch as significant economic contributors. The TechStart team in collaboration with its partners has invested $11.5 million directly in technology startups, resulting in the creation of 912 jobs having an average annual salary of more than $62,000. The team serves startups located in its business incubator and across the 15-county Central Ohio region. also in Ohio Since its inception (2004 in Northeast Ohio) , JumpStart has invested in 40 portfolio companies and worked with almost 400 others, assisted companies in raising $140 million in external funding, and created total economic impact of $177 million. As reported by the various local Business Journals... Since Sept. 1, the National Institutes of Health (NIH) has awarded more than 12,000 research grants totaling $5 billion, the largest infusion into biomedical research ever, as a result of an increase in federal budgets as part of the "Stimulus" funding [LARTA, Oct 20] When Government Bets on Companies. Battered by the ailing economy, stiff global competition, and plunging prices for solar panels, Evergreen Solar says it may be forced to downsize its new manufacturing plant, .... The company says it expects to burn through most of its $83 million in cash by year-end, and last month it persuaded the state to lend it another $5 million ... Once in office, Patrick sealed the deal by offering Evergreen more than $76 million in grants, land, loans, tax incentives, and other aid. It was one of the largest investments the state has ever made in the success of a private company. [Boston Globe, Oct 17, 09] When consulting group McKinsey asked executives in February where the government should direct the majority of its stimulus spending, 59 percent of respondents said on "fostering innovation and potential new industries," putting it in the top spot, even before potential solutions such as "helping workers who have been laid off" or "helping existing companies." [Daniel Harrison, Washington Post, Oct 18] Unfortunately, handing money to federal R&D agencies to do with as they please is highly unlikely to foster new industries. If economic gain is the objective, there need to be mandated economic objectives and criteria. Momentum. Hydrogen car advocates said that the vote to restore funding represented a sensible step toward funding a variety of alternative energy possibilities. But critics said the vote reflects only the difficulty of killing a government program. The money keeps alive about 190 projects around the country, officials said. "It's an insult to the American taxpayer to pretend that hydrogen cars are a practical and affordable near-term or even medium-term greenhouse gas reduction strategy," said Joseph J. Romm, a former Department of Energy official in charge of clean-technology programs. [Peter Whoriskey, Washington Post, Oct 17] The "S&T for National Security" study, conducted by the independent science advisory group known as JASON, is quoted as stating that defense basic research programs are "broken" and that "throwing more money at the problems will not fix them." [AAAS, Oct 15] While the Small Business committees argue, the Armed Services Committees agreed to extend DOD's SBIR for another year. SBIR Insider Rick Shidell observes that Almost everyone on the hill agrees that SBIR is a good program that accomplishes what it was created to do. If its purpose was to throw a fish to a section of small business, it succeeded. Whether it did much to satisfy the stated objectives can be debated endlessly. As big-company R&D spending is dropping, investment in new and innovative firms has collapsed. One dollar of venture capital yields as many patent applications as $3 of R&D spending, say Samuel Kortum of the University of Minnesota and Josh Lerner of Harvard Business School. But investment by venture capitalists in America in the second quarter of this year was 51% down on the same period last year. ... America has never been entirely faithful to the ideal of laissez-faire. In his forthcoming book “Boulevard of Broken Dreams”, Mr Lerner points out that even Silicon Valley in its early years depended more heavily on military contracts than its current denizens care to admit. Mr Lerner has no theological objection to industrial policy and believes that bureaucrats can help entrepreneurs. But as the title of his book suggests, they mostly do not. One reason is that bureaucracies need a steady stream of quick wins to reassure their political sponsors. They do not cope well with a long series of defeats, interrupted by sporadic flashes of success. [The Economist, Oct 3] DARPA Goes Long Again. In her conversations with researchers, [new DARPA Director] Dr. Dugan noted the criticism of the shortened time horizon for Darpa financing and acknowledged that increasing classification of research had lessened the impact of the agency’s technology on both civilian and military infrastructure, according to several people who participated in the discussions. ... but some Congressional opponents have proposed a $500 million cut and there is language in a Senate version of the defense appropriations bill that would prohibit the agency from starting new projects. [John Markoff, New York Times, Oct 7] The path of productivity growth will determine the nature of the new normal more than anything else. In the rich world, innovation sets the pace. Elsewhere, trade is often more important. Both are now under threat. Cash-strapped companies are skimping on research and development. Emerging economies are having to rethink their reliance on exports for growth. Both rich and poor governments will be tempted to intervene. They should avoid cosseting specific industries with subsidies or protection. Allowing market signals to work will do more to boost productivity than cack-handed industrial policy. [The Economist, Oct 3] Big Land, Big Dream. Texas gave birth to the modern oil industry, invented the handheld calculator and sent man to the moon. But can the Lone Star State cure cancer? Texas is ready to try by investing $3 billion over the next decade in cancer research and prevention, which would make the state the gatekeeper of the second largest pot of cancer research dollars in the country, behind only the National Cancer Institute. ... now putting out the call to scientists: Come and get the money. ... A sagging economy also makes some skittish about whether the state will follow through with funding for an entire decade. [Paul Weber, AP, Oct 3] States have a way of starting big programs and then not finding the money to continue after the problem isn't solved in two years. If the NIH couldn't do it the four decades, why would Texas succeed with a mere $3B? Unfortunately, Molly Ivins is no longer around to puncture the Lone Star chutzpah. Three Oregon nonprofits that specialize in helping low-income entrepreneurs are among 58 nationwide that snared $5 million in grants from the [SBA] ... The SBA received about 400 applications for grants, which run as much $250,000 and require a 50 percent match, and are funded by the Program for Investment in Microentrepreneurs Act. [Jonathan Brinckman, The Oregonian, Oct 2] The government is about to get a lot more involved in the economy, particularly the entrepreneurial sector of the economy. I am sure the lobbyists are streaming from K Street to the Commerce Department to help "shape" how the government will be "shaping" entrepreneurship in the U.S. I can't wait to see who gets a seat at that advisory panel table [National Advisory Council on Innovation and Entrepreneurship].... [drjeffcornwall.com, Sep 28] Since the new government fiscal year starts today, do you think that the government has a finance plan for the year? Not exactly, so far the only agreement is to seek as many political points are possible without actually doing anything. And since there is no fixed budget and no agreement on whether SBIR will continue in its former shape, all is uncertainity for the high tech companies looking for a handout at that door. The FDA said that four New Jersey congressmen and its own former commissioner unduly influenced the process that led to its decision last year to approve a patch for injured knees, an approval it is now revisiting. .. The agency’s scientific reviewers repeatedly and unanimously over many years decided that the device, known as Menaflex and manufactured by ReGen Biologics (Franklin Lakes, NJ; $400K SBIR a decade ago), was unsafe because the device often failed, forcing patients to get another operation. But after receiving what an F.D.A. report described as “extreme,” “unusual” and persistent pressure from four Democrats from New Jersey ... agency managers overruled the scientists and approved the device for sale in December. [Gardiner Harris and David Halbfinger, New York Times, Sep 25, 09] [The Commerce Dept ] plans to create a new Office of Innovation and Entrepreneurship and launch a National Advisory Council on Innovation and Entrepreneurship. ... The Council [expected to be comprised of successful entrepreneurs, innovators, investors, non-profit leaders and other experts] will advise the Commerce Department on policy relating to building small businesses and help to keep the department engaged in a regular dialogue with the entrepreneurship and small business communities. ... the Office is to unleash and maximize the economic potential of new ideas by removing barriers to entrepreneurship and the development of high-growth and innovation-based businesses. [DOC Press Release, Sep 24] Big old Democratic talk, big plans, perhaps big bureau probably with only a vague idea of how to pick winners with an economic future in a way that doesn't try to do what the market can do better. Sounds like a resurrection of Clinton 1993 plans. The White House instructed government agencies to keep politics away from the awarding of federal grants, a step taken as the administration sought to minimize the fallout after an official at the National Endowment for the Arts urged artists to advance President Obama’s agenda. [Jeff Zeleny, New York Times, Sep 23] The politics of earmarks and handout programs like SBIR are unmentioned. More PhDs than money. Managers at [NIH] are increasingly ignoring the advice of scientific review panels and giving hundreds of millions of dollars a year to scientists whose projects are deemed less scientifically worthy than those denied money. ... Many of the favored recipients are “new investigators,” or scientists who had never before received a grant from the health institutes. .. agency managers hope to use the scientific equivalent of affirmative action to encourage graduate students and newly minted professors to make careers in academia. .... But Peter Farnham, a spokesman for the American Society for Biochemistry and Molecular Biology, said the health institutes had gone too far. “At 19 percent, they’re taking too much from the more seasoned investigators,” Mr. Farnham said. “We would be comfortable with a somewhat lower level.” [Gardner Harris, New York Times, Sep 21] Mr. Gates's reordering of the Pentagon budget has improved the fortunes of many smaller defense companies, which account for many of the department's nuts-and-bolts technologies, as well as weapons systems used on the ground in Afghanistan and Iraq. Smaller companies focused on a narrower range of products can often react more quickly than the industry's giants, in part because they tend to be less bureaucratic. [August Cole, Wall Street Journal, Sep 22] Fred Patterson SBIR Coach sees the SBIR re-authorization negotiations going nowhere. There's as much spirit of compromise here as there is on the health care debate. Nada. Zilch. [Sep 11] The U.S. Commerce Department has awarded a $4.7 million grant to build a technology park in Whitewater that is expected to spur business growth in that area of [Wisconsin]. [Kathleen Gallagher, Milwaukee Journal Sentinel, Sep 11, 09] Using "economic geography", the study of the processes that make economic activity cluster in particular locations, the British government could follow in the footsteps of Silicon Valley and develop new industrial sectors to revive its economy. The trick for governments is to spot these innovation hotspots early on and facilitate their growth with an injection of investment. Innovation hotspots that occur accidentally can fizzle if they are not incubated. By spotting the spillover elements that give rise to such sectors, and helping them with tax breaks and targeted funding, the British government could seed many industrial communities for relatively little outlay. [Paul Krugman, The Independent on Sunday, Sep 6] And If you want to attract the visionary nerds who drive innovation, pay close attention to how start-up culture in your country is financed. ... Seedcamp (www.seedcamp.com) is trying to fill that gap in the UK, running a lean £3m fund to seed early-stage technology companies in the UK and Europe. Seedcamp not only provides small amounts of capital, it also mentors companies, connects them with industry heavyweights and introduces them to London's venture capitalists. [Reshema Sohoni, The Independent on Sunday, Sep 6] Heaven forfend that America gets into "injection of investment" into "innovation hotspots" - an irresistible invitation to pork. But the government might do something useful to get innovations started in disruptive technology wherever it happens to show bright potential. Let geography be no factor, but do demand some noticeable third-party investment interest. The more the interest, the better to prospects. But as good as that scheme sounds, the federal government has little skill in picking such winners, as demonstrated by its failure to make much of SBIR in 25 years (with the exception of NIH which seems to have fostered a lot of good ideas once was forced into doing business with for-profit enterprises). New York plans to invest $20.4 million in stem cell research. ... $5.4 million would earmarked to recruit research fellows and transition them into research institutions in New York. The remaining $15.4 million would be used to establish multi-institutional research facilities. The facilities would be shared by researchers from across the state. [The Business Review (Albany), Aug 28] The question is whether anyone can come up with the breakthroughs to create millions of new jobs ... The country's [R&D] leadership is no longer unrivaled. ... The key is recognizing that the future of research will transcend national boundaries and corporate walls. ... The Obama Administration has promised to make science and technology top priorities, but the economic meltdown forced it to focus on the crises du jour. Thomas Kalil, deputy director of the Office of Science & Technology Policy, says the tens of billions in stimulus money allocated for science research, clean energy, and other projects is only a "down payment." [Steve Hamm, Business Week, Sep 7] And the more Congress lets the federal agencies pour SBIR into incremental life-style companies, the more the waste of whatever percentage is diverted into the socio-political program. It's not the percentage that matters, it's how it's used. SBIR Still Delayed. With the conferees being extremely closed-lipped, it's hard to tell, but the smart money says "No," there will have to be another [continuing resolution]. The biggest sticking points are still the VC eligibility, the award amounts, the length of reauthorization, the direct to phase II path, and a litany of preferences. [Rick Shindell, SBIR Insider] Note that Rick's list does not include the idea that the SBIR is an economic waste of time. Rather it is a battle among vested interests for pieces of the pie. It's Ugly But It's Money. Georgia's Republican senators voted against the $787 billion economic stimulus package, blasting the bill as a bloated government giveaway. But their disdain didn't stop them from later asking Defense Secretary Robert Gates to steer $50 million in stimulus money to a constituent's bio-energy project. [AP, Aug 27] Status-quo anxiety: Why Americans support health care reform in concept, but grow uneasy when faced with actual change. [Loren Steffy, Houston Chronicle, Aug 25] The same reasons why they cry over a deficit (when egged on by suddenly fiscally conservative Republicans) but oppose any action that would sacrifice their federal benefits while reducing the deficit. Sacrifice? Our politicians suggesting that their constituents sacrifice anything? Not in free-lunch-land. Virtually every strategic plan ever concocted for the United States or Wisconsin economy revolves around innovation as a bastion of competitive advantage. ... the finding by two Journal Sentinel reporters that it takes 3½ years for the U.S. Patent Office to issue the average patent is unnerving. The 1.2 million patent-applications backlog is an indictment of the government's management of this critical function for maintaining our lead in the rapidly changing world of technology. [John Torinus, Milwaukee Journal Sentinel, Aug 23] The answer, of course, is to cut taxes and government fat. investment for the long term requires more than simply throwing money at a problem. In the modern research environment, even well-intentioned governments fail to make good investments in scientific and technological infrastructure. ... grant officers found they could no longer fund all of the promising young scientists who asked for research support and still keep the large educational programs in operation. "NIH research funding is more difficult to get now than it was before the NIH budget doubled," Michael Teitelbaum of the Alfred P. Sloan Foundation observed in Science in August 2008. ... Many of the problems with scientific research come from the uncertainty of the scientific process itself and the inability of both researchers and policymakers to predict the consequences of policy decisions. [David Alan Grier, Business Week, Aug 21] One innovation barrier in the mission agencies, who control a large majority of SBIR money, is their distaste for uncertainty of results. Better, they think, a small increment with high probability of technical success than a gamble on something really new. For fiscal conservatives [a la Hoover], the answer is equally clear: Start cutting the federal deficit and slowing the growth in the money supply now, before the binge generates a burst of inflation. Ms. Romer is "sending the absolutely wrong message -- that we can't do anything to worry about inflation until the recovery is locked in because of concern for unemployment," says Allan H. Meltzer, a political economist at Carnegie Mellon University. "The reason economists and central bankers have two eyes is so they can do two things at once." [Michael Phillips, Wall Street Journal, Aug 24] The people who believe in trillion dollar wars don't believe in trillion dollar economics. The U.S. Patent and Trademark Office, the steward of the nation’s most important technologies, has been rejecting applications at an unprecedented rate during the past few years, yet it still cannot keep pace with the torrent of applications. [Milwaukee Journal Sentinel, Aug 17] The JS has a long feature article on patents "New Century Cities" Spain's 22@Barcelona project, for example, involves transforming 115 blocks of industrial land in Barcelona's historic cotton district into an international hub for more than 1,000 media, information technology, and medical technology companies; research institutes; and university labs that could employ 150,000 in 15 years. Seoul's new 135-acre Digital Media City aspires to be a global ecosystem for developing and deploying cutting-edge technologies for entertainment, games, and interactive workplaces. And Singapore is pouring some $10 billion into futuristic architecture for a megadevelopment called One North, which integrates new research complexes and "living laboratories" for biotechnology, advanced materials, and medical services. [Pete Engardio, Business Week, Jun 1] Which raises an interesting question of whether an interventionist techno-hungry government should build large complexes or simply provide nursery funding for infant technologies. Nursery programs are a lot cheaper and don't develop expensive commitments to grand ideas. Not content with trusting in private incentives for innovation, University of Tennessee Board of Trustees approved last month the master plan for a 77-acre state-of-the-art research park called Cherokee Farm. The site will house technology and research-oriented centers focusing on renewable energy, supercomputing, materials science, biomedical science, and climate and environmental challenges. Construction is expected to begin in August to accommodate the Joint Institute for Advanced Materials, which will house the Tennessee Solar Institute. Approved last month by the legislature, the Institute is part of the $62 million Volunteer State Solar Initiative (see the July 1, 2009 issue of the [SSTI] Digest). Suspicious of grand schemes, Last month, the House and Senate committees responsible for appropriating money to the Department of Energy shot down Chu's proposed "Energy Innovation Hubs," with the House killing funding for all but one of the eight proposed hubs and the Senate provisionally funding only three. The House committee called the hubs redundant and criticized the Department of Energy for a lack of planning and clear communication about them. [Kevin Bullis, MIT Tech Review, Aug 7] Congressional leaders have been fixated on short-term conventional priorities throughout this entire episode. There is no evidence that the power brokers understand the fundamental transition ahead. They are practicing the same self-indulgence that got us into this mess. [David Brooks, NY Times, Jun 12] As long as Congress is going to be fiscally irresponsible to (pretend to) satisfy voters' myths, SBIR might as well argue for its "fair share" (whatever that is and whatever the uncompelling basis). [North Carolina] Lawmakers in the last hours of the legislative session Monday night began hustling through a new and unfamiliar funding mechanism to help small life-science companies expand or open shop in North Carolina. Five hours later, as debate began tilting against the bill, House leaders shelved the idea until next spring. [Raleigh News & Observer, Aug 11] Neither of the two Austin firms that had hoped to win grants received any money. Valence Technology Inc. had applied for $225 million to build an advanced battery plant in Leander, which would allow it to move production to the United States from China. The company did not return calls for comment. It also applied for federal low-interest loans to build the plant. Austin-based ActaCell Inc. is part of the National Alliance for Advanced Transportation Batteries consortium, which had hoped to win a grant to help build a plant in Kentucky. [Dana Hedgpath, Austin American Statesman, Aug 6, 09] Neither did Boston Power [Boston Globe, Aug 6] “Ohio Third Frontier” program has up to $27 million to invest and is requesting proposals for its 2010 fiscal year. The 2010 Request For Proposals [now open] for the following programs:• Fuel cell research;• Photovoltaic research (used in solar panels); and• Advanced Energy research. Closes Sep 18 [Dayton Business Journal, Aug 3] SBIR Coach Fred Patterson http://sbircoach.blogspot.com/ says: the DOE is putting a nice chunk of their ARRA Stimulus money ($8.5 million) into new Phase I SBIR and STTR projects that place an emphasis on near-term, clean energy technology commercialization. Sixty six-month Phase I projects will be funded in amounts up to $150,000. The Funding Opportunity Number is DE-PS02-09ER09-27. (CFDA 81.049) Here's the complete topic list (For details: technical topic descriptions) A major effort to revamp research and development at the DOE, which Secretary Steven Chu says is critical to solving energy-related challenges, hangs in the balance as the Obama administration attempts to make its case to a skeptical Congress. ... The House committee called the hubs redundant and criticized the Department of Energy for a lack of planning and clear communication about them. [Kevin Bullis, MIT Tech Review, Aug 7] The solution to a government productivity/effectiveness problem is rarely re-organization; moving tghe same people around into different boxes won't do much. And DOE has a hard time convincing Congress to appropriate more money for a dream machine. SBIR can get away with low productivity because no appropriation is needed. To test what Congress and the agencies really think SBIR is worth, make it either optional or requiring appropriation. $2.4 billion in stimulus grants to jump-start an electric-vehicle industry centered in the Midwest. ... will leverage another $2.4 billion in private investment by recipients. The bulk of the Department of Energy money goes to seven companies in Indiana and 11 in Michigan, two states with the nation's highest unemployment that will play a strong role in Democrats' fates in 2010 congressional races and Mr. Obama's 2012 re-election run. ... Some companies that failed to get grants questioned why most of the winners were large, well-established companies, such as GM, Johnson Controls Inc. and Saft Groupe SA of France. "Innovation in this arena frequently comes from the smaller guys," said Mark Mills, chairman of International Battery Inc., a venture-capital-backed battery maker in Allentown, Pa., that had unsuccessfully sought DOE funding for an expansion. "If we wound the clock back to 1980 and had the government funding computer operating systems, the probability that Microsoft would have been funded then would have been small." [Elizabeth Williamson, Wall Street Journal, Aug 6] If the government builds a bridge, and... [do so] by taking tax money away from somebody else, and using that to pay the bridge builder -- the guys who work on the bridge -- then it's just a wash. It has no first-starter effect. There's no reason to expect any stimulation. And, in some sense, there's nothing to apply a multiplier to. You apply a multiplier to the bridge builders, then you've got to apply the same multiplier with a minus sign to the people you taxed to build the bridge. [Robert Lucas, Council on Foreign Relations, Mar 30] An exact parallel to why SBIR creates no jobs as it taxes away money from other federal contracting. . Where Half-Truths Serve the Purpose (besides SBIR blather). In certain GOP circles, the conclusion had already been drawn that the recent fiscal stimulus had failed to cure the patient even before the patient really swallowed the medicine. [EconoSpeak blog, Jul 31] Cutting Back. The Oregon Innovation Council (Oregon Inc.) will receive $16 million over the biennium to continue R&D and commercialization efforts in nanoscience and renewable energy through the state's signature research centers. This is scaled back from the governor's recommendation of $20.5 million and $12 million less than the 2007-09 biennial appropriation. [SSTI, Jul 30] More Waiting. SBIR Coach reports that SBIR will be extended another two months while the conferees cook up a compromise (and the principles take their August break). No harm done since the only people hurt are the SBIR junkies. China can force government-owned corporate entities to borrow and spend, and spend quickly itself. This isn't some slow-moving, touchy-feely democracy. If the Chinese government decides to build a highway, it simply draws a straight line on the map. ... But don't confuse fast growth with sustainable growth. Much of China's growth over the past decade has come from lending to the United States. [Tyler Cowen, Marginal Revolution blog, Jul 27] The politics are still raging over renewing SBIR. Fred Patterson - SBIR Coach - suggests ways that you can add your half-truths to the half-truths already being promoted by the SBTC. Vested interests arise! Get Charged for Subsidy. The Energy Department is getting ready to hand out about $2 billion in grants to create a domestic industry for electric-car batteries, and 122 companies are scrambling to get pieces. ... But U.S. hopefuls face stiff competition from foreign firms such as Japan's Panasonic and Sony and South Korea's LG Chem, which already dominate the lithium-ion battery market in power tools, laptops and cell phones. Some domestic firms have recruited foreign companies as partners. Some economists warn of the perils of government subsidies. [Steve Mufson, WaPo, Jul 28] How could my getting a subsidy ever be bad? Feed Us ... Now! The Economist has a cartoon of Obama watering a small garden next to which stands a bag of stimulus fertilizer while saying “Give it time; it will grow”. Standing in a queue are a crowd of people with a plate and a fork while the front person in working clothes with a cap showing a large American flag says “No problem; we’ll come back in ten minutes.” A new study of University of Wisconsin-Madison start-ups shows more than 250 companies have been launched by the school's faculty, staff and students since 1950. [Kathleen Gallagher, Mi |
