Congress has once again allowed a popular tax break that encourages U.S. companies to invest in research to expire. The lapse of the research and experimentation tax credit, estimated to be worth $7 billion last year to U.S. firms, has reignited debate about whether the measure is a costly corporate windfall or a vital incentive for research. [AAAS, Jan 2] Everybody loves his subsidy. Note that the only named benefit from the program is that the companies get $7B, good for company profit margin, but of unknown value to the nation of taking money from taxpayers to supply the $7B.
Minnesota has begun accepting applications from startups that want to participate in the popular angel investor tax credit program. .... awards tax credits to individuals who invest in young Minnesota companies certified by the state. .... Last year, the state had $12.7 million in credits to give out and ran out of funds May 9. Nelson expects 2014’s $12 million in credits to go even faster ... The state has so far certified 14 companies to participate in next year's program .... Last year, 128 Minnesota companies raised nearly $51 million through the program. [Katharine Grayson, Minneapolis / St. Paul Business Journal, Dec 5, 13]
Following the Supreme Court’s rejection of gene patents, the U.S. proposes steep cuts to reimbursements for breast cancer-gene tests..... Hours after that decision was announced, other molecular-diagnostics companies announced that they would offer similar tests at a lower cost than Myriad Genetics’s test. And now, the federal government’s Centers for Medicare and Medicaid Services, or CMS, is proposing to lower the amount of money it pays for the tests. The new rate is approximately half of what the agency has previously reimbursed, according to GenomeWeb. [Susan Young, technologyreview.com, Dec 31]
A crime too frequent and easy. AT&T, Verizon and the other carriers are under growing pressure to install the switch, a technical fix making cellphones useless to robbers. .... CTIA-The Wireless Industry was not available for comment but most industries typically oppose technical mandates. [Michelle Quinn, San Jose Mercury News, Dec 31]
Promises, promises. As the battle for financing heats up, some startups are making big promises to their early investors: a guaranteed return on their money when the company goes public. ..... pledging to investors that their shares will go public at a certain price, often much higher than their current value. If the price doesn't meet the target, the companies will agree to give the investors more shares to make up the difference. [Telos Dimos and Douglas Macmillan, Wall Street Journal, Dec 25] For SBIR proposers to the mission agancies, don't worry, they don't care abut or rely on such promises; they just want your technology.
SBIR skipping Phase 1 and straight to Phase 2 proposal is now allowed for three agencies: DOD, NIH, and DoED. DARPA and NIH have said they will start doing it. Read - carefully - the specific instructions in the solicitation.
Eternal hope in incubation. Hamilton County Business Center has been awarded $500,000 from the Ohio Third Frontier on Thursday as part of more than $12.8 million in loans and grants to fund biomedical companies and tech startups. The grant amounts to half of the incubator’s funding. .... The Dayton/Miami Valley Entrepreneurs Center was also awarded $450,000 to provide incubation services and leased space for tech-oriented businesses in the Dayton region. [Andy Brownfield, Cincinnati Business Courier, Dec 12] from 12 in 1980 to more than 1,400 today reflect the nation’s unyielding interest in entrepreneurship (Knopp, 2007) Incubators thrive because of the underlying belief that they select and nurture good business ideas that generate new companies, jobs, and local economic development ... A surprising finding is the low level of incubated firms that exit the incubator, signaling that incubators find it difficult to wean their tenants out of the protective environment of the incubator [Just like SBIR!] .... incubated businesses have slightly lower survival rates than their unincubated counterparts while also having slightly higher employment grow th and sales growth rates than their unincubated counterparts. These effects while statistically relevant do not offer compelling evidence on whether incubation programs as a whole should continue being expand [Alejandro Amezcu, Boon or Boondoggle? Business Incubation as Entrepreneurship Policy, financial support from the Kauffman Foundation, circa 2007] Don't worry incubators, the politicians love the publicity of kissing babies. But remember that we encourage them to act that way.
Love the subsidies, hold the economics. Three Greater Cincinnati companies were awarded tax credits to create jobs in Southwest Ohio, including Tom + Chee Worldwide LLC, which is a franchise restaurant known for its grilled cheese sandwiches, is expanding rapidly thanks to exposure on ABC’s “Shark Tank.” The company received a 45 percent, seven-year job creation tax credit for its expansion project in Cincinnati. The company expects to create 65 full-time positions that will generate $3.5 million in additional annual payroll and retain $215,385 in existing payroll. [Tom Demeropolis, Cincinnati Business Courier, Dec 2] Where will Tom's new customers come from? A sudden surge in demand for cheese sandwiches (as a low budget meal)? A big population increase? Or from existing eateries whose biz loss will offset any gains by Tom? Especially since Tom avoids taxes while the existing joints keep paying taxes. Econo-politico-flummery, again and again; politicians turning nothing into something. Quick, someone mention "market-failure" without defining it.
Proposals for two new research deals — worth a combined $83 million — came out of Wright-Patterson Air Force Base this week. The Air Force Research Laboratory published the two request for proposals, which includes a $46 million effort to advance CERFER (contested environment radio frequency exploitation and research) technology and $37 million to accelerate the transition of energy efficiency and alternative energy technologies. The contracts are good news because they mean more business opportunities for Dayton-area defense companies ..... Proposals are due Jan. 4. Air Force officials expect to award that contract to one company, which would then bid for individual tasks. more information. [Joe Cogliano, Dayton Business Journal, Nov 26]
NC IDEA has awarded more than $200,000 in grants to five North Carolina startups. Three of them are: FokusLabs (Wake Forest, NC; no SBIR) has developed an intervention tool designed to remind individuals with autism and ADHD to get back on task when their attention wanders. NIRvana Sciences (Durham, NC; no SBIR) is focused on novel fluorescent dyes developed at N.C. State University for use with medical diagnostic and imaging tests. Panacea Solutions (Research Triangle Park, NC; no SBIR) is using robotic technology to create low-cost, 30-day supply nutritional packets that are personalized for an individual’s needs. [David Ranii, Raleigh News & Observer, Dec 10, 13]
Caveat emptor investor. Officials in nearly a dozen states, including Georgia, Alabama, Kansas and Wisconsin, have enacted or proposed new laws—or tweaked existing policies—to make it possible for resident entrepreneurs to secure financing from everyday local investors, also known as "equity crowdfunding," according to the North American Securities Administrators Association. [Ruth Simon and Angus Loten, Wall Stret Journal, Dec 10]
Only a government could love. The National Renewable Energy Laboratory’s 26th Industry Growth Forum, a showcase for startup cleantech companies pitching what could be the next big thing, routinely draws a lot of attention. .... among the nearly 400 attendees at the annual two-day forum were investors and business executives from the United States, the United Kingdom, and Canada. .... forum got started because NREL, which works with startup companies working in the cleantech sector, was getting calls from investors asking if the federal laboratory knew of any companies with good ideas, Farris said. [Cathy Proctor, Denver Business Journal, Dec 6] The government talks up tech transfer and wonders why so few of its "investments" draw private investment.. Because the government looks at technology with public (and political) benefit government eyes while private investors look at ROI. As a result, few projects getting government subsidy (political handout) appeal to investors. If government really wants tech transfer, it has to involve investors at the project early development stage. If no private money is willing to make any commitment or contribution, government is probably looking at the wrong incentives. Subsidies like SBIR are a prime example of funding stuff only a government could love and having forum after forum to moan about the lack of tech transfer. They should look in the mirror for the answers.
More Colorado handouts ("investments"). Colorado's economic development arm awarded $3.135 million in grants to four university and trade groups that help scientists form companies and turn university research into biotechnology products..... under the Bioscience Discovery Evaluation Grant Program meant to help commercialize new biotechnologies discovered in the state. The Colorado Institute for Drug, Device and Diagnostic Development, based at the Fitzsimons Life Science District in Aurora, won a grant of $1.35 million. CID4, as it’s known, incubates a small number of companies each year, helping them find investment and other resources to form companies around technologies patented from research in Colorado. The Colorado Center for Drug Discovery, affiliated with Colorado State University, was awarded $750,000. C2D2, as it's called, helps researchers identify refine potential new drug compounds and conduct proof-of-concept studies, providing research databases and chemical libraries that small companies and labs usually cannot afford. The Skaggs School of Pharmacy and Pharmaceutical Sciences at the University of Colorado received $410,248 from OEDIT. The Aurora-based pharmacy college conducts research on new medicines and pharmaceutical chemistry. The BioFrontiers Institute, at the University of Colorado Boulder, was awarded $624,752. The institute is a multidisciplinary biological research center combining molecular biology, chemistry, physiology, computer sciences, engineering and other disciplines with the intention of yielding new technologies with applications to improve human health. [Greg Avery, Denver Business Journal, Nov 13]
Thievery charged. Envia Systems (Newark, CA; no SBIR), a battery startup, made a big splash in early 2012 when it claimed it had achieved a milestone: a rechargeable lithium-ion battery with the highest "energy density" ever recorded. The company had been awarded a $4 million grant from ARPA-E, the innovation arm of the Department of Energy, and General Motors invested in the company with the hopes of licensing the technology. Now, in an explosive and highly detailed lawsuit, three of Envia's top former executives allege that Sujeet Kumar, the company's co-founder and chief technology officer, created the company using intellectual property that he stole outright from NanoeXa (Santa Clara, CA; no SBIR), his previous employer. [Dana Hall, San Jose Mercury News, Dec 4, 13]
Evidence-free SBIR
dogma.
Enhancing Technology Commercialization
through SBIR/STTR Reform,
a talkfest housed by the Information
Technology and
Innovation
Foundation in Washington think-tank land, brought the usual
speeches about more organizing for innovation, a handful of success
stories, talk about commercialization, blather about beautiful small
biz, etc. Charles Wessner who has run several SBIR studies at
the
National Academy noted that "we are the best in the world at innovatiom
but we aren't very good at it." , "public research stimulates private
research, " and "The program works pretty well, so
why are
we trying to fix it?" It works: relative to what? lots of
theoretics on investment and VC disdain for risk [but SBIR in the main
avoids most of the same risk] talked up how SBIR takes no
equity
as if that mattered in incentivising real innovation. Talk about jobs
and the myth of small biz without asking whether SBIR created more jobs
than the agency money would have done if left unmolested. "Big business
does not do innovation any more, " said the biggest political lobbyist
for SBIR. Oh, really? Great commercialization, he
said. Oh really, by what standard and from what data source?
Not a word about whether SBIR made any notable difference in
innovation,
however measured. No words about market failure, other than some small
companies like free money from government. Some lo-o-ove it. No words
about a controlled experiement with a control group for comparison. One
audience member actually asked
the question, What
would the federal
agency have done with the money if SBIR never existed? ,
followed by Did SBIR do
any better?.
Wessner answered No, but, some good things came from it, and that
the program has been one of the most studied programs (at least by the
Academy). One SBIR beneficiary [with over $50M SBIR] told a
nice
anecdote of a project that worked for the military with the implied
idea that anecdote is the singular of data. She did not answer for her
other $49M. Thanks
to Cass
Sunstein for the "evidence-free dogma" phrase. The advocates for
government intervention in the US innovation system made the usual
pleas that ignore the history of the US's rise to the top of the
technology and economic world. Some of them make their living on the
recommended government programs. The show can be seen from ITIF at
http://www.itif.org/media/enhancing-technology-commercialization-through-sbirsttr-reform
Imagine you are going to a picnic. Government is properly in charge of maintaining the essential background order: making sure there is a park, that it is reasonably clean and safe, arranging public transportation so as many people as possible can get to it. But if you remember the picnic afterward, these things won’t be what you remember. You’ll remember the creative food, the interesting conversations and the fun activities. Government is the hard work of creating a background order, but it is not the main substance of life. [David Brooks, New York Times, Dec 3] Which is why we should not expect miracles from programs like SBIR where government gets into details of choosing winners and losers in competition for capital.
SBIR Hoedown on Capitol Hill. Enhancing Technology Commercialization through SBIR/STTR Reform, Tuesday, December 3, 2013 - 9:00am - 10:30am Cannon House Office Building with the usual suspects benefitting from SBIR. Real reform unlikely to appear.
Indiana Biosciences Research Institute founders [raised] $25 million in private funding, including $7.5 million from Eli Lilly .... match a $25 million grant from the state of Indiana announced last May ..... The nonprofit institute was created as a place for Indiana life sciences companies and academic researchers to collaborate on research on the pressing human health issues of diabetes, cardiovascular disease, and obesity and nutrition. As many as nine research teams will be funded. ..... Indiana is one of few states where a collaborative research institute with private companies could work, Johnson said, because Indiana’s life science firms are diverse and most are “not competing for the same piece of intellectual innovation.” [Jeff Swiatek, Indianapolis Star, Nov 19]
Political rhetoric today – no matter what side – is principally about the repetition of ideological narrative and tropes. It's the marketing of worldviews in order to win elections and undermine rivals. [Andy Fitzgerald, The Guardian, Nov 23] Or as put earlier, Winning isn't everything; it's the only thing. [Vince Lombardi, winning football coach] The politicians' problem is that, having won, they will enact something so awful that they will soon lose again. Basically bescause the polity looks for unrealistic solutions to complex problems.
the New Democrat Coalition -- which represents Members of Congress interested in innovation, technology, and economic growth -- issued a statement outlining their principles for the America COMPETES Act. In its press release the Coalition states that "public and private sector leaders called for federal funding to strengthen the United States' R&D enterprise and develop a world-class workforce for the innovation economy." [AAAS, Nov 21] Happy words with the devil in the details. Other than the idea that the government spent a lot of money over decades on research, it is hard to credit the government for most of the tech advances over seventy years other than staying out of the way of the investment capital markets. But since the politicians have to be seen doing something, they will concoct some grand scheme with a timeline that stretches long after the next election while the Democrats take credit for wonderful government schemes and the Republicans grouse about too much intrusive government. Neither will have credible data for their subsequent claims.
The next growth spurt for New York's budding computer-chip economy won't happen in the Capital Region, but 100 miles west, in the city of Utica. There, six companies on the front- and back-end of the supply chain are creating 1,000 jobs in a combined $1.5 billion investment, Gov. Andrew Cuomo announced .... IBM is among the companies now expanding to the SUNY Institute of Technology campus in Utica .... Cuomo is devoting $200 million over the next decade to buy equipment for the companies to perform research and development. [Adam Sichko, Albany Business Review, Oct 10, 13]
Universities try to cash in on discoveries — gene splicing, brain chemistry, computer-chip design — but the great majority of them fail to turn their research into a source of income, according to a new study from the Brookings Institution. Research universities have “technology transfer” offices that make thousands of business deals annually for the use of their patents. But in any given year, at about seven of eight universities, the resulting revenue funneled into university budgets is not even enough to cover the cost of running that office, said the study’s author, Walter D. Valdivia. [Richard Perez-Pena, New York Times, Nov 20] University researchers, like researchers everywhere, prefer the comfort of the lab paid for by someone else, disdaining the "purple of commerce". Which may be good or may be bad, but it "butters no parsnips". If government and government-supported universities want economic return, they need a new model. In principle, SBIR was invented to induce spin-off of research to private investors. But since the federal agencies have no incentive to use SBIR that way, they probably have a worse economic result (never even measured) than the universities which lose only a little. get the report.
NASA SBIR solicitation opened on November 14 and will
close on January 29. New
NASA SBIR website. Note that last year's winners
list reeks
with old hands (career SBIR firms) doing low risk stuff because NASA
prefers predictability in its R&D. Which is
understandable
for an agency sending things to remote places where problems are not
easily repaired. But that preference shuts the door to a whole lot of
innovation. Agencies also have to protect their backsides
from
grandstanding Congresscritters pontificating for the folks back home
about wasted money. What can you do? Don't reward your Congressional
candidates with applause and votes for empty talk.
Unmanned Aircraft Systems Airspace Operations Challenge, a NASA Centennial Challenge Program wherein competitors try for $500,000 in prizes by demonstrating UAS technology. Rules and registration
Accelerate Long Island (NY) will partner with the area's largest venture capital firm to fund local startups through access to a $213 million fund. A shared interest in advancing research-based startup companies through commercialization helped bring about the alliance. The goal is to move beyond seed funding to give the startups coming through the Accelerate LI pipeline an avenue to potentially access the type of cash to get them going, reports Xconomy. [SSTI, Nov 13]
Accelerant, the DDC’s initiative to develop entrepreneurs in the Dayton region, hopes to raise $15 million in the Accelerant Fund I, a new 10-year seed-stage venture fund. “We’re betting that the Dayton region will bet on itself,” said Joel Ivers, vice president for entrepreneurial development ..... The fund will focus on companies in the aerospace, advanced materials manufacturing, IT and sensor systems industries. [Tristan Navera, Dayton Business Journal, Nov 13, 13] And the envisioned buyer in right in town - the US Air Force - which will find itself shrinking until the next war. Better hope the Ohio CODEL can keep the AF spending in Dayton, as in A new $50 million materials development program for the U.S. Air Force will be run locally. [Joe Cogliano, Dayton Business Journal, Nov 6, 13] Not like The DoD announced late last week it closed the Defense Information Systems Agency data center operations in Dayton, as well as a DISA data center in Chambersburg, Pa. and transferred their functions to other Defense Enterprise Computing Centers. [Tristan Navera, Dayton Business Journal, Nov 4, 13]
A measure to increase the sales tax in Jackson County, MO, to fund medical research across Kansas City and St. Louis was rejected by greater than a 5-to-1 ratio, reports the Kansas City Star. [SSTI, Nov 6] No medical research nor taxes, please, we're conservative. Taxes would support government and research might undercut our beliefs.
Are you ready for a public competition with other businesses in your industry on who has the safest workplaces? OSHA wants to require employers to report their injury and illness records to the agency electronically. Naturally, former SECTREAS Paul O'Neill, the great CEO champion of safety at Alcoa, approves. [Kent Hoover, Portland Buusiness Journal, Nov 7, 13]
Sen. Elizabeth Warren (D-MA) called for leaders from both parties to make "a renewed commitment to innovation" and added "we need two things: to double our investment in scientific and biomedical research and to create more year-to-year certainty for that funding." She also touted federal research and development as a boon to innovation, saying "refusing to invest in the [NIH] is the budgetary equivalent of cutting off your feet to save money on shoes." [AAAS, Nov 5]
Cytori Thera up 60% [Nov 5, 13] unveiled a pact to commercialize the company's cell therapies for the cardiovascular, renal and diabetes markets in Australia and several Asian nations. [Wall Street Journal, Nov 5]
the Center for New American Security sees the next decade as “likely to be the most disruptive since the early 1980s” with the “exponential growth of unmanned and increasingly autonomous robotic systems, the power of data-mining technologies . . . and the possibility that directed-energy weapons [like lasers] could dramatically alter the offense-defense balance in key military competitions.” The study notes that in contrast to the Cold War — when the Pentagon led by investing in missiles, satellites, precision munitions and stealth technology — it will be the commercial sector that “will drive many of the innovations that will most define the next 20 years” in robotics, unmanned systems and cyberwarfare. [Walter Pincus, Washington Post, Nov 4] The military hates changing course after it has battled day-after-day to defend its dogma and investments, especially if commercial advances are making the dogma irrelevant. Its SBIR loves to buy an deeper understanding of its what it already has. One classic change came in Desert Storm when soldiers were getting and using pagers from their parents at home and a whole era of battlefield communication went obsolete.
Innovate in PA will raise up to $100 million that will flow through Innovation Works, Ben Franklin Technology Development Partners, three Life Sciences Greenhouses and the Venture Capital investing program. The plan is to create at least 1,850 technology jobs and double the return on the state's investment.. [Paul Gough, Pittsburgh Business Times, Sep 28, 13] As long as the politicians are in charge of calculating the ROI, it should look good or have some brain-testing excuses. The difficulty will come form public entities' collecting meaningful business data from private firms.
in a recent opinion piece for Politico, House Science Committee Chairman Lamar Smith (R-TX) linked entitlement reform with the prospects for science and innovation funding. [AAAS, Oct 30] Politics is about first pleasing the voters of whatever persuasion and then national priorities for long term advance. Science and tech funding today won't produce a campaign nugget before the next election.
Although not a statewide measure, Jackson County, MO, voters will be asked to approve a sales tax of one-half of 1 percent for 20 years to fund medical research and discovery across Kansas City. [SSTI, Oct 30]
Endocyte down 10% [Oct 30, 13]
MILLIONS of Americans negotiating America’s health care system know all too well what the waiting room of a doctor’s office looks like. Now, thanks to HealthCare.gov, they know what a “virtual waiting room” looks like, too. ... For the first time in history, a president has had to stand in the Rose Garden to apologize for a broken Web site. ... Indeed, according to the research firm the Standish Group, 94 percent of large federal information technology projects over the past 10 years were unsuccessful — more than half were delayed, over budget, or didn’t meet user expectations, and 41.4 percent failed completely. [Clay Johnson and Harper Reed, NY Times, Oct 24]
Kicked the can, again. The government is open and the debt limit slightly boosted, all until the end of the year when the battle will be re-joined. Resolved are the ideas that the debt limit is too dangerous to play with, and Obamacare is stoutly defended by the Democrats and will eventually be popular enough with the public to be tamper-proof.
So the farcical stand-off in Washington, the unruly “Occupation” movements, the recall votes and rallies in Madison, etc., are probably all symptomatic of marshalling efforts of the future in the battle between SMALL and BIG using the mobile information technology as a call to arms. For a more detailed discussion of this, see Nicco Mele’s book, The End of Big: How the Internet Makes David the New Goliath. In it he coins the phrase “radical connectivity” which would seem to convey how the internet is undermining the power of large institutions. [investment letter, realclearmarkets.com/docs/2013/10/TFC, Oct 16]
Don't tax you, don't tax me.... Medical device makers in Washington state [which has 242 medical device/tech companies] are hoping the budget showdown in the other Washington will end a tax on their products that they say is hampering growth and innovation. [Valerie Bauman, Puget Sound Business Journal , Oct 14] .... Tax that guy behind the tree. We all want something that someone else will pay for, and we elect Congresscritters to make such wishes come true.
How close is good enough? California governor vetoed a biosimilar bill that allowed biosimilars to be substituted by pharmacists if the F.D.A. deemed the biosimilar “interchangeable” with the reference product, a higher standard than merely being similar. ... would have required pharmacists to tell the patient’s doctor whether a biosimilar or the brand-name drug had been dispensed. The pharmacist also would have been required to notify the patient if a substitution had been made. [Andrew Pollack, Wall Street Journal, Oct 13] Human chemistry is still loaded with mysteries over the body's reaction to a single atom difference in any medical molecule.
The North Carolina Chamber, the state’s powerful business lobby, is setting up a private statewide insurance exchange to sell health policies to people whose employers drop health coverage for their workers. It’s a first for North Carolina and is scheduled to go public next week [John Murawski, Raleigh News & Observer, Oct 11] Eventually the conservative/ libertarian political assault on Affordable Care will subside and practical solutions will appear to enable people and business to buy competitive health insurance. Why? An opinion poll June 2012 showed that a majority of Americans, while opposing Obamacare, strongly support most of its provisions. [Slavoj Žižek, The Guardian, Oct 12] The older of us remember the same political machinations around establishing Medicare.
Zero-sum game in prospect. In 1955, household debt was 49 percent of Americans' disposable income; by 2007, it was 137 percent. Government moved from the military-industrial complex to the welfare state. In 1955, defense spending was 62 percent of federal outlays, and spending on "human resources" (the welfare state) was 22 percent. By 2012, the figures were reversed. ..... Slow economic growth now imperils this postwar order. [Robert Samuelson, Washington Post, Oct 14] The battle is joined to grab a choice piece of a shrinking pie. And The simple fact is that Congress is getting worse at avoiding the traps it sets for itself. ... Standard & Poor’s downgraded the U.S. in 2011 on the grounds that “the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges.” [Ezra Klein, WashPo, Oct 14] Congress's struggle is to balance the books without getting tossed from office by voters who don't understand economics. We want or economic miracles, or else.
Games they play. Passing what Washington calls a "clean CR" (continuing resolution) just kicks the proverbial can down the road—an activity at which Congress excels. It takes no imagination, no complex negotiations, no concessions to the other side, and CRs come in any size you like: a week, a month, a quarter. You just continue arguing over the budget and live to fight another day. [Alan Blinder, Wall Street Journal, Oct 11]
NASA is facing an extraordinary backlash from US researchers after it emerged that the space agency has banned Chinese scientists, including those working at US institutions, from a conference on grounds of national security. ..... The recent Congressional action refers to a broader law passed in July which prohibits NASA funds from being used to participate or collaborate with China in any way. [Ian Sample, The Guardian (UK), Oct 4] NASA was invented to escape from the military security into a purely civilian peaceful venture into space. But at least one influential politician could not resist the urge to pander to protectionism.
Pressure, unimaginably light. Under a proposed new [SBA] directive, advanced SBIR grants would be subject to a new "commercialization benchmark" to ensure that companies are following through on efforts to develop markets for the technologies those grants underwrite. ..... As currently drafted, the new rules would apply to any company that has landed 16 or more Phase II awards over a 10-year period. Those companies would have to generate $100,000 in any combination of commercial sales or investments for each award, on average; or secure patents representing at least 15 percent of their Phase II awards. [Alexander Soule, Boston Business Journal, Oct 1] No matter that no smart investor would touch any business prospect that could generate so little revenue, and practically no profit, for zero or less ROI, the SBIR advocates are weeping over harsh pressure. The real problem is that the agencies are funding stuff with no commercial potential in companies who revel in repeated Phase II contracts that require only "best efforts". Of course the SBA requirements (derived from the SBIR law) are too stiff for such contracts and contractors. If you had invested $16M (16 Phase IIs at $1M each) in a company, would you settle for $1.6M in revenue and probably no profits? The next challenge for Congress is to invent some excuse to allow the handouts to continue with only some delusionary ROI. But Congress is busy battling over a real program with real incentives and potential - economic and political - Obamacare. In that world there's no energy to hassle the mythically beloved small businesses over peanuts. So, if you a business with real potential, realize that you have to compete with mediocre businesses that can do the kind of straightforward work that their government R&D machine wants. And with sequester and other budget pressures squeezing the big SBIR mission agencies, they will try even harder to put their SBIR money into short term predictable results with no concern whatever for economic success of the company. Eventually, a long way hence, Congress may honestly face up to the question of what SBIR is for.
Fed up and sitting tight. Americans also are pessimistic about the course of the country, with 68 percent saying it’s headed in the wrong direction, the most in two years. [Mike Dorning, Bloomberg, Sep 26] Not to worry, though, they are even more than 68% likely to re-elect their Congresscritters. Complaining is labor-free, actually doing something is a lot of trouble.
Shutdown. The political power struggle will shut down the non-essential part of the federal government at midnight for lack of authority to spend money. Already funded contracts will continue unaffected. Federal people will be barred from performing their duties and even being in their offices. Stay tuned for the eventual resolution which could take quite a while. And, no, SBIR is not essential. The big sticking point is the Republican effort to strangle Affordable Care in its crib.
Profit first. the U.S. Senate passed, by a vote of 97-2, the Responsible Helium Administration and Stewardship Act to authorize the Bureau of Land Management to continue to sell helium from the nation's stockpile. [AAAS, Sep 26] They don't make helium; the earth's initial supply is the earth's final supply. Profit from birthday party baloons that have no economic value will eventually exhaust the world supply and foreclose on who-knows-what new and importantapplication. The Congress should know better than to spend an non-renewable supply for no serious purpose. But watching Congress's pandering to special interests give no confidence that they can see past the campaign contributions for the next election.
John Cridland, director-general of the Confederation of British Industry, warns that the state should intervene no more than is necessary to solve market failures. [The Economist, Sep 21] Good philosophy but hard to convince a politician that "market-failure" does not include a desire for more businesses in the constituency.
Leaders of bioscience and medical technology companies met with U.S. Rep. Chris Collins (R-Clarence) to discuss how they can position themselves for future growth. ..... The biomed industry (including pharmaceutical, biotech and medical device sectors) directly employs 73,300 New Yorkers. But company leaders contend that this impact can only be sustained by policies that support investment to create new technologies and jobs. [David Bertola, Buffalo Business First, Aug 26, 13] Motherhood stuff that only means something in the details because every Congresscritter is for new technologies and jobs. Just what did these leaders want that could survive the Tea Party assault on government? And what did the Republican tell them about prospects for recognizable help for their cause?
Liberty and small government for science. One-half of all papers are now freely available within a year or two of publication, concludes a new study sponsored by the European Commission. That means so-called open-access publishing has reached a "tipping point" and will now accelerate, suggests Éric Archambault, the lead author of the study and president of Science-Metrix Inc. in Montreal [Jocelyn Kaiser, Science, Aug 23]
When politicians "invest". City leaders gambled in 2010 that Elona Biotechnologies (Greenwood, IN; no SBIR) would give this suburb a niche in the growing drug-manufacturing marketplace. That gamble never paid off and a new batch of city leaders hope Friday’s auction of Elona’s building, equipment and patents will salvage a large fraction of the $9.5 million the firm owes taxpayers. .... Michael J. Hicks, director of the university’s Center for Business and Economic Research, said the deal on the empty laboratory building likely will bring in another company that could create jobs. [Vic Ryckaert, Indianapolis Star, Sep 24, 13] Let's guess the hoopla that surrounded the announcement of the "investment in the city's future."
In another state, more political investment. A German chemicals company will add 37 workers to its 97-person payroll in Wallingford, [CT] Gov. Dannel P. Malloy’s office announced, in exchange for $6 million in subsidized loans at 2 percent interest. The state will allow BYK USA to keep $4 million without having to pay it back if the job creation total is met. The state money, which will be paid for by bond borrowing. [Mara Lee, Hartford Courant, Sep 24]
Don't wanna know no bad news. North Carolina’s environment agency has taken the unusual step of returning a federal grant to study streams and wetlands that could be harmed by hydraulic fracturing for natural gas. .... the former Division of Water Quality is [to be] absorbed by the Division of Water Resources, a move mandated by state legislators who complained that environmental regulations kill jobs. The environment department under the McCrory administration declares it will no longer be a “bureaucratic obstacle of resistance.” [Bruce Henderson, Raleigh News & Observer, Sep 24]
[Moretti] also takes a welcome stand against those policies, still sadly popular in political circles, to fight the “tides of history” by subsidizing or protecting manufacturing. Manufacturing’s decline had some terrible consequences—just walk around Detroit—but policies to revive manufacturing employment seem both quixotic and distortionary.[and demanding of taxes to pay for the subsidy] Successful manufacturing firms in the United States have become so capital intensive that helping industrial firms does not guarantee any meaningful increase in manufacturing employment, especially of less skilled workers. ..... is claim “that innovation has become America’s new engine of prosperity,” reflects a view, which I share, that America’s comparative advantage lies in producing new ideas, and that innovation will remain a labor-intensive activity. [E Glaeser reviewing Moretti's The New Geography of Jobs, J Econ Literature, Oct 2013]
Autumn is upon us again, time for more government finance follies as the irresistible forces meet the unmovable objects.
Open season on optimists. federal legislation goes into effect to allow “emerging growth” companies — essentially, small start-ups — to ask for equity investments publicly, such as through social media sites or elsewhere on the Internet, without having to register the shares for public trading. [Jenna Worthan, New York Times, Sep 23]
As badly as one might think markets work, the government, with its intrusive alternative-energy policies, is worse. If the government were effective at promoting alternative energy sources, today you'd have driven your hydrogen car (having recently traded in your cellulosic ethanol-fueled model) from your all-electric home powered by a breeder reactor to your office lighted by Carter-era synfuels. The government is terrible at picking alternatives, and this short list should be a vivid reminder of how costly its missteps can be. Just to be clear, we aren't against clean-energy startups. We oppose government support of these companies. [Douglas Holtz-Eakin, Wall Street Journal, Sep 23]
Needless subsidy. An affiliate of ABC for Health Inc., a public-interest law firm in Madison, has received a $1.2 million [NIH SBIR] grant from the to develop software to help hospitals and clinics determine whether patients are eligible for government health programs. The three-year grant is the second from the NIH SBIR for My Coverage Plan Inc, a for-profit affiliate of ABC for Health. [Guy Boulton, Milwaukee Journal Sentinel, Sep 20, 13] And where is the "market failure" of software with no technical uncertainty whatever? Such software can be developed by any of two zillion private software firms with only a business risk that the market will buy a competitor's product. In effect, the government has inserted itself with a needless subsidy to a market competitor. No worry, though, the SBIR advocates will cheer that money was passed out, and the local politicians will applaud the NIH wisdom in funding a local vendor. The loser is any number of small biotech firms with high tech new innovations that won't get funded as NIH cries about its science funding being cut by sequester. The case reeks of politics. BTW, this sort of thing by NIH goes back to the mid-1980s when it did an SBIR for a video on stopping smoking.
Less budget means less money. NIH Director Francis Collins expressed concerns for further dips in the already record low NIH success rates as a result of budget cuts caused by sequestration and a greater-than-expected number of grant applications. The success rate could dip as low as 14 or 15 percent, Collins told ScienceInsider. In the past decade, NIH has gone from funding roughly one in three grant applications to less than one in five. He also said that if Congress passes a continuing resolution freezing spending at FY 2013 levels, NIH will lose about $600 million and several hundred more grants. [AAAS, Sep 18] Research grants produce PhDs who then apply for their own grants [what else have they learned to do?] , etc, etc, in a chain that requires ever more research money. The world gets more and more science which produces more and more medical capability that needs more and more money to apply all the great things to patients. Where and how does the game reach a steady-state?
Eventually and eventually. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement that those entitlements will need to be dealt with to rein in government costs. “However you cut the numbers, we are on a path we simply cannot afford and will eventually need to come to terms with the growing costs of Social Security, Medicare and Medicaid,” she said. [Robert Schroeder, Market Watch, Sep 17] Not to worry in the short term as the political system will find a way to give everybody what they want, while promising to lose weight next week. And the SBIR advocates will continue to beg for a bigger share of any shrinking pie.
All that tax poor-little-rich-guy talk. Countries that made large cuts in top tax rates such as the United Kingdom or the United States have not grown significantly faster than countries that did not, such as Germany or Switzerland. ... By and large, the bottom line is that rich countries have all grown at roughly the same rate over the past 40 years—in spite of huge variations in tax policies. [Alvaredo et al, J Economic Perspectives, Summer13]
A survey done for the American Society for Biochemistry and Molecular Biology shows that federal budget cuts are having a major impact on research. [Gary Gerew, Albuquerque Business First, Sep 5, 13] The competition for federal government money has intensified since some in Congress want less of everything federal (except for "my District"). The ugly fact is that the people don't want to pay for all the good things everybody wants, including great science. So, we demonstrate our maturity coefficient by engaging in competitive tantrums over the choices for getting and spending the available money.
Loved your money; we're outta here. In the seven years since [Massachusetts] increased a tax break to Intel almost tenfold, to as much as $300 million, the computer chip giant has cut more than 600 jobs at its facilities in Hudson and now plans to eliminate another 700 when it closes a factory in town next year. Officials said they are reviewing whether to end Intel’s tax break early because of the pending plant closing. However, it does not appear the state can force Intel to repay any of the tax benefits it claimed during the period it was cutting jobs, as the state law that authorized the deal at the time did not provide for so-called claw back provisions, except in cases of fraud. [Todd Wallack, Boston Globe, Sep 13]
The state of Ohio has given $250,000 to the Hamilton County Business Center startup incubator to help develop fledgling tech companies, the Cincinnati Business Courier reports. .... will provide support for mentors for 51 startups at the center, one of 11 Edison Technology Incubators across Ohio, including TechColumbus locally. [Doug Buchanan, Columbus Business First, Aug 22, 13]
Startech, a San Antonio-based technology commercialization center, has quietly shut its doors permanently. .... founded in 2003 with funding from the City of San Antonio .... was seen as a major factor in driving the local technology sector which has had an estimated $16.3 billion annual impact on the local economy. But the organization was never able to become fully self supporting and after the city funding ended it began to lose its status in the industry. [Mike Thomas, San Antonio Business Journal, Sep 5, 13] The classic subsidy value-added question: Why pay for support if the results would have happened anyway? SBIR has dodged that question for three decades.Didn't get our share, cry the handout recipients. SBIR Insider Rick Shindell reports a recent GAO report shows that 9 out of 11 federal agencies with SBIR programs are not in compliance with their SBIR funding allocations. And what's more in a snit, we are hearing from more and more companies that in spite of SBIR reauthorization, small businesses are questioning the value of continuing to participate in the program due to increased programmatic read tape, new burdensome regulations, and a perceived reduction in success rates.
Meanwhile, SBA has trotted out a policy that would shut out SBIR companies for a year who don't commercialize well enough. Congress is unlikely to let that stand because it would wipe out handouts for a huge pile of SBIR junkies. Stay tuned to SBIR Insider for developments.
Paying to play. Microsoft has given millions of dollars to a small business technology trade group over the past few years. The Center for Public Integrity reports Microsoft gave the Association for Competitive Technology nearly $2.5 million between July 1, 2011, to June 30, 2012, and also gave the group $1 million in the years 2009-2011.The trade group is "aggressively pressing Congress to ease key immigration law," according to the Center, and Microsoft's contributions are a huge percentage of the group's annual budget. [Portland Business Journal, Jul 17] You pay, Congress listens. Re-election is expensive.
the title of Chief Innovation Officer has picked up steam in localities and across states as leaders seek to brand their region as “the” place for innovation. [SSTI, Sep 4]
When money is no object and questions not allowed. The National Security Agency, working with the British government, has secretly been unraveling encryption technology that billions of Internet users rely upon to keep their electronic messages and confidential data safe from prying eyes, according to published reports Thursday based on internal U.S. government documents. [San Jose Mercury News, Sep 5]
Science writer Marshall Brain has concluded that America should phase in a government stipend for every adult to cope with a future of widespread, permanent underemployment [triggered by the onslaught of robots]. ..... now artificial intelligence machines can translate languages, understand legal documents, write news stories and read X-rays. ..... Soon robots will be building and repairing other robots, learning from their mistakes and each other as they go. Where does this leave humans? [Dan McSwain, utsandiego, Sep 1, 13] We innovation techies like to convince ourselves that, since the dawn of the Industrial Revolution, we created many more jobs than we killed. But the people losing jobs have the ultimate societal tool - unversal suffrage - that can force taxing the robot sellers to provide for the unemployed.They vote in the present, not the future.
Bless that government innovation. Apple’s success would have been impossible without the active role of the state, the unacknowledged enabler of today’s consumer-electronics revolution. .... The armed forces pioneered the internet, GPS positioning and voice-activated “virtual assistants”. They also provided much of the early funding for Silicon Valley. Academic scientists in publicly funded universities and labs developed the touchscreen and the HTML language. ..... the research that produced Google’s search algorithm, the fount of its wealth, was financed by [NSF]grant. pharmaceutical companies are even bigger beneficiaries of state research than internet and electronics firms. America’s NIH, with an annual budget of more than $30 billion, finances studies that lead to many of the most revolutionary new drugs. .... Ms Mazzucato says that the most successful entrepreneurial state can be found in the most unlikely place: the United States. [The Economist reviewing Mariana Mazzucato's book, “The Entrepreneurial State”, Aug 29].
DOD's latest SBIR solicitation issued a pre-release July 26. Closes Sep 25. Questions answered until Aug 25. Anyone contemplating a proposal for work on any specific topic should determine that (a) the technical approach has a reasonable chance of meeting the topic objective, (b) this approach is innovative, not routine, with potential for commercialization and (c) the proposing firm has the capability to implement the technical approach, i.e., has or can obtain people and equipment suitable to the task. The DOD agencies insist on (a) and (c), but have a slippery standard for (b). If they want what you have, they will believe your story about innovative and commercializable. Of course, if it is routine, you will have a lot of competitors.
Conservatives who aren't reflexively antigovernment can accept that government-sponsored basic research contributes to innovation-driven growth. .... an English economist, Mariana Mazzucato, suggests a more expansive understanding. In a pamphlet developed into the 2013 book "The Entrepreneurial State," she shows that U.S. government efforts such as SBIR and ATP have provided 20% to 25% of total funding for early-stage technology companies, far more than the amount invested by private venture capital. .... According to Ms. Mazzucato, private capital tends to be averse to making commitments when the odds of success cannot be assessed, opening an innovation gap that only entrepreneurial government can fill. [William Galston, Wall Street Journal, Aug 28] There is a legitimate government "market-failure" role for ideas with high technical uncertainty, but not for ideas that face merely business risk of whether they will sell. SBIR's problem is that the mission agencies, that control much of the money, don't like uncertainty. And Congress abets that attitude by wanting success numbers and criticizing tech failures. Show me a govedrnment innovation program with a high success rate and I'll show you a hyper-conservative.
The most recent background check of former National Security Agency contractor Edward Snowden was so inadequate that too few people were interviewed and potential concerns weren't pursued, according to a federal review following his leak of some of the nation's most closely guarded secrets. [ Brent Kendall and Dion Nissenbaum, Wall Street Journal, Aug 28] Which bothers you most - too little or too much government. Shrink government spending while demanding faster response and you get less service like security investigation, demand more government and you get the paranoia of the right. So, we have periodic elections where we display our schizophrenia and elect mix of attitudes that compete for power by press releases and handouts to favored groups.
the budget proposals now coming out of the House would gut programs for renewable energy and climate change. The Republicans propose cutting ARPA-E’s budget by 81 percent. [John Judis, the New Republic, Aug 21] The fossil fuel industry does not want renewable competition, and pays well for a seat at the table.On the otheer hand, we have no defensible quantitative estimate of the effect of research on the economy, just faith and myth.
Dodd-Frank has emabled an unprecedented government legal assault against U.S. financial institutions. [George Melloan, Wall Street Journal, Aug 26] Having created a monster communicable disease, the promoters complain of public health measures to prevent a repeat. Are the measures blunt? Of course, since there is little experience on which to base a perfect defense.
The John S. and James L. Knight Foundation has awarded Ben Franklin Technology Partners of Southeastern Pennsylvania a $345,000 grant to expand the Project Liberty Digital Incubator ... Since its inception, Project Liberty has incubated eight digital media companies, which collectively have raised $6 million. ..... Ben Franklin is a state-funded economic-development agency [Peter Key, Philadelphia Business Journal, Aug 7, 13]
Politics always has at least advocate for "anything goes".[EPA decided] to make it easier for oil refiners to meet biofuel quotas drew mixed reactions. It got praise from one refinery owner and a labor leader, but U.S. Sen. Pat Toomey, R-Pa., reiterated his position that the quotas should be repealed entirely. [Peter Key, Philadelphia Business Journal, Aug 7, 13] Especially staunch advocates for a return to the 19th century business "freedom".
Home cooking. the office of [NY state comptroller] plans to promote its investments in two technology companies, RebelMouse [social networking aggregator] and CoopKanics [focused on mobile], as part of its initiative to invest in New York businesses. ... part of the comptroller’s In-State Private Equity Program, which meant to support native New York businesses while also generating hopefully solid returns. Last year, the comptroller’s office boasted that the program over all had yielded an internal rate of return exceeding 30 percent. .... It currently has about $278 million invested in New York City start-ups, and since 2011 has set aside an additional $60 million for early-stage investments. [New York Times, Aug 20, 13] Why should a government invest public money in enterprises that can compete for private investment? Aren't these investments being made in companies that are failing at attracting private investment because their business prospects are only mediocre? Should government even be allowed to compete with private capital? How did the state raise the capital for such investments from the taxpayers? If there is a "market failure", what is it?
“Economics is a highly sophisticated field of thought that is superb at explaining to policymakers precisely why the choices they made in the past were wrong,” [Ben Bernanke said] “About the future, not so much.” [Morgan Korn | Daily Ticker, Aug 19]
Classic bureau does SBIR.
DOE issued their 2014 SBIR/STTR Phase I Announcement
http://science.energy.gov/sbir/funding-opportunities/
showing several
hoops to be jumped through before they will even read your proposal.
Submit a letter of intent by September 3 (only they know why), obtain a
Dun and Bradstreet
Data Universal Numbering System (DUNS) number, register with the System
for Award Management (SAM), and register with Grants.gov. Those
applicants not registered with SAM and/or Grants.gov must understand
that it may take up to 44 days to
complete these requirements. DOE has always been proud that
their SBIR train runs on time, but they have lost the Congress's intent
that the process be simple and direct for beginners. DOE like the
other mission agencies prefer experience to innovation. An agency
that wanted innovation and entrepreneurs would take a concise 5-8 page
proposal, pick out the innovators, and turn them over to the
contracting people to work out the details with the agency technical
expert(s). The technical experts are not the faceless dupes that
the Republicans pretend to grind the government gears.
Don't forget though that the agency has a pile of money they must award to
SBIR qualified companies.
Once and still dependent on government After cutting its teeth manufacturing [RFID] tags to track military equipment, Savi Technology (Alexandria, VA; $2.5M SBIR, almsot all in a single 1991 Navy SBIR) is moving beyond hardware and embracing data analytics, particularly hoping to attract more commercial work. The shift reflects the need for technology companies to continually reinvent themselves as their products mature. ...has been owned by three defense contractors: Texas Instruments from 1995 to 1997, Raytheon from 1997 to 1999, and Lockheed from 2006 to 2012 ... Lockheed sold it last year to affiliates of a private-equity firm as the military continued to draw down operations overseas. ... government still makes up about 85 percent of its revenue. ... Now Savi also is readying a much larger shift, moving into data analytics related to its tags. .... Savi may face challenges in moving into commercial work, said Raghu Das, chief executive of British market research firm IDTechEx, which has been tracking RFID technology for 14 years. The company had great success winning the military market, he said, but simply hasn’t put the same emphasis on commercial industries. [Marjorie Censer, Washington Post, Aug 16, 13] Savi was the Navy's SBIR poster child of 1991, with its RFID technology that was already technically mature. But Navy loves predictable results. It was much more business risk than technical risk that Navy was reducing. Savi is an all too common case of a government tech contractor having trouble graduating into commercial markets, despite government blather about SBIR commercialization. But 20 years of defense sales qualifies as a commercial success as defined by DOD, and 20 years of sales is no small accomplishment.
SBA Boo-bird. Congress created the Small Business Administration in 1953 to fix a specific problem: Lenders allegedly were turning away large numbers of small businesses that, if given a loan, would generate untapped economic growth. It is questionable whether this problem ever existed. However, there is plenty of evidence that today the SBA hurts more small businesses than it helps, wastes taxpayer money and distorts economic activity. .... The SBA wrongly assumes that every high-risk borrower has the potential to succeed. .... More than 150 years ago, French economist Frederic Bastiat noted that many economic fallacies persist because the beneficiaries of government actions are easily visible, while the victims are harder to identify. [Veronique de Rugy, senior research fellow at George Mason University, Wall Street Journal, Aug 19] SBA Cheerleader. Small businesses created two of out three net new jobs in the U.S. from 1993 to 2009. About half of the people who work in this country are employed by a small business. [Barbara Kasoff, CEO of chief executive of Women Impacting Public Policy, a public-policy organization, Wall Street Journal, Aug 17, 13] The cheerleaders seldom answer the comparative economic questions, and merely tot up the totals of money distributed to winners. Since politicians love winners, and the costs are diffused, government subsidy programs proliferate.
A test too far. NC Gov. McCrory vetoed legislation that would have required some recipients of cash welfare benefits to undergo drug screenings, calling it a financial boondoggle that had proven ineffective in other states. "This is not a smart way to combat drug abuse," McCrory, a Republican, said in a statement. "Similar efforts in other states have proved to be expensive for taxpayers and did little to actually help fight drug addiction. It makes no sense to repeat those mistakes in North Carolina. [Reuters, Aug 15] It's refreshing to see real world data being used to inform lawmaking even on subjects exploited mostly for their political appeal. Now if states could also learn from each others' experiments in seeding tech industries.
The crowd-sourcing approach popularized by websites such as Kickstarter could give Wisconsin businesses a fresh source of funding, under a bill being drafted by three Republican lawmakers. [Jason Stein, Milwaukee Journal Sentinel, Aug 13] New opportunities for picking little pockets by entrepreneurs with a narrative.
The rising mountain of student debt, recently closing in on $1.2 trillion, is forcing some entrepreneurs to abandon startup dreams and others to radically reshape their business plans. [Ruth Simon, Wall Street Journal, Aug 14] Welcome to capitalism. Having maxed out on debt for Project 1, they need some other investor to fund Project 2. Government program needed? Paid for by whom? Not everything bad should be illegal, and not everything good should be done by the government.
The ghost cop movie, “RIPD,” starring Jeff Bridges and Ryan Reynolds, received nearly $27 million in state film tax credits last year on its way to becoming one of this summer’s biggest flops at the box office. ..... The movie, filmed in Boston, Raynham, and Providence, accounted for more than 70 percent of film tax credits issued by the state last year and 17 percent of the nearly $160 million worth of transferable tax credits — which can be bought and sold — issued or awarded, according to a report released by the state Department of Revenue. [Boston Globe, Aug 13] Governments have well-honed skills for subsidizing losers. And business has a skill for getting politicians to sign up for stuff that won't pass muster by serious investors. They give "market failure" an new definition. But then, why shouldn't we have the best legislation that money can buy?
Rand Paul is dead wrong. Milton Friedman would have supported the Fed’s bond buying. [James Pethokoukis, aei-ideas.org, Aug 13] Pethokoukis unearthed a Friedman quote on Japan's similar situation of low growth at near-zero interest rates: It’s very simple. They can buy long-term government securities, and they can keep buying them and providing high-powered money until the high powered money starts getting the economy in an expansion. What Japan needs is a more expansive domestic monetary policy. When a politician makes an economic claim, demand proof. Verify, do not trust.
A $1 million prize in DNA analysis from [DOD] has yet to name a winner, but some top contenders are already saying that the contest is unfair. The Defense Threat Reduction Agency's (DTRA's) Algorithm Challenge tasked competitors with finding a radically faster and more accurate way to identify the species and genes in raw DNA to spot potential bioterror threats. ..... roughly 2700 people signed up for the challenge, and 103 competitors submitted work .... The three qualifiers have now uploaded all of their code for final evaluation. ... If no team meets the requirements, some of those who had been disqualified may be considered, [Christian Whitchurch, the project manager] says. [Science, Aug 2] Learning as they go for both contestants and agency. DOD agency DARPA has already run prize contests for robotic vehicles. Prize contests get away from leaning on academic credentials "for best efforts" work, by going directly to measurable results.
The debate [on sharing publicly funded] scientific data is likely to accelerate next week when federal agencies are expected to file proposals for how they would “support increased public access to the results of research funded by the federal government. [John Markoff, New York Times, Aug 12] Where would the long term archives be, and who would pay for their maintenance? And Congress says there's no new money for federal agencies to do it.
The IRS is questioning small-business owners. Thousands of small-business owners have received letters questioning whether they are underreporting their business income, a harbinger of a broader initiative aimed at boosting federal tax receipts. The IRS sees the failure by some businesses to report all cash sales in order to minimize tax bills as a widespread problem. [John McKinnon and Siobhan Hughes, Wall Street Journal, Aug 10]
Inequality and disruption. Politicians and bureaucrats do not just confuse entrepreneurship with things they like—technology, small business—they also fail to recognise that it entails things that set their teeth on edge. Entrepreneurs thrive on inequality: the fabulous wealth they generate in America makes the country more unequal. They also thrive on disruption, which creates losers as well as winners. Joseph Schumpeter once argued that economic progress takes place in “cracks” and “leaps” rather than “infinitesimal small steps” because it is driven by rule-breaking entrepreneurs. It might be nice to think that we could have growth and job-creation without a good deal of Schumpeterian cracking. But, alas, some thoughts really are worthless, impossible and stupid. [The Economist, Jul 20] One problem with SBIR is that the federal mission agencies don't really want inequality and disruption; they want what fits their plans and their operational dogma.
Subsidies become monsters. The rice subsidy was classic Thaksin populism. ... government would buy unmilled rice directly from farmers at about twice the market rate ... Since Thailand was the world’s biggest exporter, the government would be able to cash in later by selling its stockpiles of grain at a profit. So much for the weird theory. ..... Unable to find buyers, the Thai government has been forced to stockpile 18m tonnes of the stuff and counting—equivalent to nearly half the annual global trade in rice. Buying rice from farmers is ruinously expensive ... [cutting the subsidy] That only angered rice farmers, her chief constituency. ..... Meanwhile, daily revelations of incompetence and corruption surrounding the rice scheme take their toll . [The Economist, Aug 10]
Lavabit (no SBIR) The email service reportedly used by surveillance whistleblower Edward Snowden abruptly shut down after its owner cryptically announced his refusal to become "complicit in crimes against the American people. [Spencer Ackerman, The Guardian, Aug 8] .... "without congressional action or a strong judicial precedent, I would _strongly_ recommend against anyone trusting their private data to a company with physical ties to the United States. [Ladar Levison, Owner and Operator, Lavabit LLC, Aug 8, 13] Silent Circle, co-founded by email security guru Phil Zimmermann, has [also] pulled out of the secure email business. [David Meyer, Gigaom.com, Aug 8]
Cracks Appearing in Congressional Support for Sequestration? ... House Appropriations Committee Chair Harold Rogers (R-KY), who said the bill's failure was a sign that low transportation spending levels under sequestration were politically untenable, adding, "Sequestration -- and its unrealistic and ill-conceived discretionary cuts -- must be brought to an end." [AAAS, Aug 7] Cuts are palatable and necessary sacrifice only when taken from someone else's bowl. Tech magic needed to create cuts that don't; maybe an SBIR grant.
The five certified business incubators established in New Mexico are proving their value by producing a return on investment that exceeds the national average. According to a report by the Legislative Finance Committee, a recent analysis shows that the state invested $549,000 in business incubators between 2007 and 2010 and received $32 million in tax revenues from the business activity generated. Local governments received another $20.5 million. ... The 57-1 return from the state’s investment in incubators exceeds the national average of 30-1. [Gary Gerew, Albuquerque Business First, Jul 22] Another economic claim without a control group. What would those entrepreneurs have done if there were no incubator? Was the state expense necessary? What percent is the incubator of all that type business creation? How many jobs and tax revenues were lost in the technology that was being replaced by the new enterprises? The Legislative Finance Committee report answers none of these questions. On balance, the report serves a political audience with data on only one side of the equation. One look by Syracuse University at the economics of incubators, with control groups, concluded that When the performance of incubated firms was compared with a control group of unincubated firms, the National Census of Business Incubators and their Tenants found marginal benefits due to incubation: Boon or Boondoggle? Business Incubation as Entrepreneurship Policy. .
Long Island seeks a new future. Long Island's laboratories have recently amped up efforts to encourage scientists to launch their own startups rather than license their discoveries to big corporations. In 2010, for instance, scientists based at Cold Spring Harbor Laboratory started a company, Mirimus (no SBIR), that genetically engineers mice for scientific research. .... Canon U.S.A. would consider locating a research and development facility on Long Island, because the division's headquarters are already there and the company could draw on a growing base of science and engineering talent. ... Stony Brook University, located on Long Island's North Shore and considered the flagship of the State University of New York system, houses sprawling incubators for information-technology and life-sciences companies. ... Liabilities include a lack of the venture capital [Will James, Wall Street Journal, Aug 5, 13]
Tax cuts and Obamacare repeal ... are the answer ... to every economic problem. part-time employment jumped almost twice as large as the rise in full-time jobs. Republicans immediately seized upon these figures, attributing them to the imminent arrival of Obamacare, leading employers to shift workers from full-time to part-time in order to avoid having to give them health-care benefits. (The cut-off for the employer mandate is thirty hours a week.) To put it mildly, there’s not a lot of evidence to support this theory. Evidently, the main reason part-time employment is rising is because a lot of the new jobs are being created in places where part-time work has always been common, such as restaurants and bars. [John Cassidy, The New Yorker, Aug 2]
Connecticut lawmakers approved Gov. Dan Malloy’s proposal to create a $200 million fund to spur bioscience R&D as part of a broader economic development agenda ... Connecticut Innovations (CI), a quasi-public venture development organization, over 10 years will provide capital to early stage companies with the goal of driving efforts toward commercialization of new businesses and products. CI also plans to focus funds toward translational research and riskier investments for helping university faculty and students to commercialize bioscience research and ideas, reports the Hartford Business Journal. [SSTI, Jul 17]
Florida enacted a measure that creates a seed fund to encourage private-sector investment in startup companies. The enacted budget included $5.5 million [SSTI, Jul 17]
Not good enough for the major leagues? major capital efforts in New York and Georgia intended to build local capital ecosystems and help bridge the funding gap for promising companies unable to tap into the national venture capital market. In New York, a $50 million fund will support new companies, particularly startups associated with the state’s new incubator network and university-affiliated tax-free zones, as reported in the April 3 issue. Georgia Gov. Nathan Deal has authorized a $100 million fund, though as of yet, it remains unseeded with actual dollars [SSTI, Jul 17] What is generally missing in these public seed venture programs is an honest evaluation of their value-for-money. Beyond the political value of making announcements.
Research costs mucho dinero.The Spanish National Research Council, Spain's flagship research agency, has run massive deficits for several years. If the government—which has made drastic cuts in research funding the past few years—doesn't pick up the tab, it may go into bankruptcy before the year is over. [AAAS, Jul 31]
The state-created Biofuels Center of North Carolina issued its own obituary, saying it has begun winding down its operations and plans to shut down permanently by Oct. 31. [John Murawski, Raleigh News & Observer, Jul 29]
Can't solve the economy dilemma? Do something for your political base that has no economic impact whatever, even though it undercuts claims about limiting government and preserving liberty. A Republican favorite: North Carolina Gov. Pat McCrory signed into law tougher regulations for abortion clinics [AP, Jul 29] Whoever said politicians have to be consistent?
Deals don't bind rulemakers. Google and 3M are among the top patent-holding companies that agreed two years ago to pay higher fees if Congress let the U.S. Patent and Trademark Office use the funds to address a work backlog and improve application scrutiny. Congress instead held back as much as $148 million in fees due to automatic federal spending cuts under a process known as sequestration -- and the companies are crying foul. [Susan Decker, Blloberg, Jul 29] Beware dealing with anyone that controls the rules.
Good news, everybody: The U.S. decision to delay the employer mandate just saved Florida companies $146 million-$218.6 million next year. [Abraham Aboraya, Orlando Business Journal, Jul 3] Which, of course, delays the insurance mandates, and shifts the burden of paying for that $200M care onto public facilitesi paid by the taxpayers. But hey, it's a business journal.
SBIR Insider Rick Shindell is back online. He's pro-SBIR with a big swallow of the Kool-Aid.
Which President ruled out additional spending cuts or a reduction in the number of government ministries from 39, saying the benefits of such measures to spur economic growth would be minimal ... that all possible measures to contain budget expenditures have been taken and that trimming the number of ministries might hamper the government's efforts to reduce social and economic inequality. [Reuters, Jul 28] Champions of austerity as an economic remedy don't make a convincing case in the struggle of governments to improve the nation's economy. Answer: Brazil.
Florida enacted a law that it thinks will help attract more seed funding for technology startups in Florida. .... adds a $4.5 million cash infusion to the Florida Institute for the Commercialization of Public Research [which] provides matching loans to Florida startups that commercialize technology developed at state universities, colleges and research organizations. In order to use the fund, startups must secure a one-to-one match by attracting private-sector third-party investors. About 20 tech startups have used the program since is was created in 2010 [Carole Hawkins, Jacksonville Business Journal, Jul 9] The states all have great hopes for seeding tech startups, but have a hard time proving that their programs make any econoimic difference. No matter, they sound good to the politicians who love kissing small biz babies.
The Ohio Third Frontier Program has established three new funds that will help provide some capital for tech companies that may otherwise have trouble finding funding. ... • A Commercial Acceleration Loan Fund of $500,000 to $2.5 million to invest in technology companies to help with developing products and services where they may otherwise have difficulty securing funding due to the risk associated with technology development. • The Technology Commercialization Center, a program to create a new $25 million center, which will be self-sustaining after four years, to commercialize research from universities, medical center or nonprofit organization and move it to the marketplace. • A Technology Asset Grant for shared infrastructure projects for new technologies. It will offer up to $5 million per project for up to three years which can go toward facilities or equipment that will benefit at least two Ohio-based companies if it is deemed essential to commercializing technology. [Tristan Nivera, Dayton Business Journal, Jul 1]
Government innovation: Is Obama's goal an oxymoron? President Barack Obama kicked off a new effort to use technology to make government "smarter, more innovative and more accountable." .... Don't expect Apple-like innovation at the U.S. government, however. .... The fact the president points to such plain-vanilla services as innovations shows just how clunky government is. [Kent Hoover, Silicon Valley Business Journal, Jul 8, 13] Government makes an inviting target for snarky commentary since it cannot sue for libel. But government is notsupposed to be instantly innovative to keep up with market competitors. It provides a steady machine for stability and order. And the politicians who make its rules don't want sudden changes that threaten their bonds with the electorate. If politicians wanted efficiency, they would for example, re-write SBIR to focus on economic payoff and not just spoon money into small biz mouths with no standards for return.
The Senate went to the verge of nuclear war and all businesses got was more regulation [Kent Hoover, Atlanta Business Chronicle, Jul 16] Complain, complain, conplain, about political consequences of elections. Business always wants a freer hand, but the nation as a whole voted for a Senate that favors public limits on business operations. Business has had three centuries to demonstrate that the profit motive will take every opportunity to dump its costs on the public.
Public funding for scientific investigations should largely be limited to basic research or proof-of-principle experiments—which can be justified on the grounds that they are public goods. Federal research also should follow recognized experimental methodologies and focus on nontrivial questions or problems. [Henry Miller, Wall Street Journal, Jul 18] Dr. Miller is a research fellow at Stanford University's Hoover Institution. Free marketers carry on "Golden Fleece" attitude that appears regularly in conservative anti-government talk.
Today was another bad day for the Internal Revenue Service: Victims of its targeting of conservative political groups got to tell their stories at a House hearing, [Kent Hoover, Austin Business Journal, Jun 4] What a great deal: Congress writes tax laws and appoints IRS as scapegoat for the laws' execution. Then people re-elect the politicians who beat up the appointed servants. Ah, well, the servants' compensation during and after their careers is not stingy, and the entertainment- sublime.
Sequester bites SBIR advice and advocacy. Due to budget constraints at Pacific Northwest National Laboratory, we will cease publication of the free SBIR Alerting Service at the end of this fiscal year. The final issue will be September 20, 2013. [SBIR Alert]
[A] new Innovate Rhode Island Small Business Incentive Program. Qualifying businesses can receive grant and loan funding for the costs associated with applying for Phase 0, Phase I and Phase II SBIR/STTR proposals. Companies can receive up to $3,000 for Phase 0; up to $100,000 for Phase I; and up to $300,000 for Phase II. Budget language notes that Phase I funding is for matching grants and funding for Phase II is in the form of a matching loan. [SSTI, Jul 10]
InnovatePA will auction off $100 million in tax credits to generate state revenue that will be invested in the funding of tech and biotech startups. .... Of these auction proceeds, $37.5 million, or roughly 50 percent, would go towards funding Ben Franklin Technology Partners, which provides funding and support for tech and biotech companies across the state. Another $33.75 million, or roughly 45 percent, would support the Ben Franklin Technology Development Authority's Venture Investment Program, which provides loans to in-state venture capital and angel firms. [SSTI, Jul 10]
Soothsayers stumbling. For decades, hubris has been the common currency of the economic policy world. It is killing the economics profession. In the 1960s and 1970s, for example, liberal economists believed they could eliminate all poverty. In the 1980s, conservatives thought tax policy could permanently raise the savings rate. It turns out other factors also influence a person’s decision to save. ....For decades, despite a variety of fiscal and monetary stimuli under both parties, middle-class wages and salaries in real terms have stagnated. [David Smick, The Weekly Standard, Jul 8]
Mustn't tell stories. Diederik Stapel, the former Tilburg University professor who fabricated dozens of research studies, has reached a settlement with Dutch prosecutors to do 120 hours of community service. [AAAS, Jul 5]
The Republican-controlled House unveiled cuts to the budget of the IRS. [Reuters, Jul 9] It's an old story: The rich want fewer tax collectors and the burglars want fewer police. But the burglars cannot easily pay off lawmakers.
The first day of furloughs for about 650,000 Defense Department civilians begins this week. [Foreign Affairs, Jun 8]Maybe, sorta.
In the past month, officials at the Defense Dept. and the National Institutes of Health have announced that their commercialization regulations will be finalized by the end of this year, putting the impetus on small companies to move away from early-stage research and into more product-focused ventures. The law establishes commercialization benchmarks and allows for companies that have won multiple early-stage awards to be dropped from the program if they are not following through on developing products for use. [Karen Klein, Bloomberg, Jun 14] Yeah, right. Believe it when you see it, as long as the federal agencies have autonomous control over who gets the SBIR money. Some fudge can always be found to let the game continue. At a minimum, the owners of the "commercially delinquent" company can fold up and start a new company, same people, same place, for the price of a new biz registration. Contracts are with for-profit companies, not with people. Congress has had 25 years to set demanding rules for downstream payoff and has done almost nothing except let some adult VC money into some companies, with great political theater.
It’s kind of funny, actually: right-wingers love to praise the power of free markets and declare that the private sector can deal with any problem, but then turn around and insist that the private sector will just throw up its hands in despair and collapse in the face of new environmental rules. The actual lesson of history — for example, from efforts to protect the ozone layer and reduce acid rain — is that business can generally reduce emissions much more cheaply than you think, as long as regulation is flexible to allow innovative solutions. [Paul Krugman, New York Times, Jun 28] As always, where you stand depends on where you sit. Every innovation has opponents. At one time, not that long ago, innovation was a slur.
Chinese publicly traded companies received $13.83 billion in government subsidies last year, up 23% from a year earlier. ..... China's central and provincial governments have long fed its major state-owned and private companies a steady diet of subsidies to boost growth, support jobs and create national champions. .... "There doesn't seem to be any end in sight," says Usha Haley, co-author of the book "Subsidies to Chinese Industry" and director of the Robbins Center for Global Business and Strategy at West Virginia University. [Dinny McMahon, Wall Street Journal, Jun 24] Nor is there any end in sight for US subsidies as politcians struggle for local news headlines.
Where did Facebook chief security officer Max Kelly go after he left the social network in 2010? To the NSA, according to the New York Times, which says it’s the first to report that tidbit. Also previously unreported, says the NYT, is that Internet-call provider Skype developed a program to make it easier to cooperate with law enforcement and the government. [Levi Sumagaysay, Silicon Beat at San Jose Mercury News, Jun 20] Why would a successful private executive go where salaries are highly restrained and lie-detector tests regular?
Investors in 63 early-stage companies received $12.1 million of tax credits from the [Wisconsin] state in 2012 under a program designed to spur funding for young, high-tech companies, according to a report by the Wisconsin Economic Development Corp. Those tax credits, in turn, helped the companies raise $164.7 million during the year, the report says...... The high-tech companies that are certified for the tax credits are typically the ones that also bring federal research grants into the state, Johnson said. The 160 companies certified under the program pulled in $37.1 million of grants in 2012, she said. [Kathleen Gallagher, Milwaukee Journal Sentinel, Jun 19] No one knows how much the angels would have invested without the tax credits. But politicians like post hoc, ergo propter hoc announcements. Certainly, the tax credit would affect only investments in marginal companies, just like the kind that most of SBIR funds.
The [Wisconsin] Legislature overwhelmingly voted to provide $25 million in taxpayer money to start-up companies .... "I do not want to lose these entrepreneurs," she said. "I do not want to lose these smart kids with all their great ideas." She and others said they hoped to put more state money toward venture capital in the next year or two. [Patrick Marley, Milwaukee Journal Sentinel, Jun 18]
The long slow arm. A federal court has ordered United Technologies Corp. to pay $473 million plus interest for overpricing F-15 and F-16 jet engines it sold to the U.S. Air Force from 1985 to 1991. ...The Pratt case was initially filed with the federal court in Dayton, Ohio, in 1999 after a government investigation. [Brian Dowling, Hartford Courant, Jun 18] Note: government procurement isn't like private contracting in that you are not allowed to keep an ill-gotten gain by over-pricing your product.
Start-up Wisconsin. A start-up [NitricGen] with a patent pending on a portable device to treat chronic diabetic foot ulcers won first place in the Wisconsin Governor's Business Plan Contest. .... founded in Madison in 2011 by Duncan Bathe, Frederick Montgomery and two others. Bathe and Montgomery previously created a Middleton medical device company called Sadasis LLC (no SBIR) that they sold to Ino Therapeutics (no SBIR), which was in turn bought by Ikaria (no SBIR), a critical-care company based in New Jersey. The pair has 19 patents and seven medical devices in use, Montgomery said. [Kathleen Gallagher, Milwaukee Journal Sentinel, Jun 5, 13]
a coalition of local [St Louis, MO] leaders from both the public and private sectors will unveil plans to raise $100 million over five years to invest in and support local startups. The effort is the latest in a series of steps intended to revive an entrepreneurial culture that even local boosters acknowledge has faded over the generations. ..... But it isn't clear how cities can best foster entrepreneurship—or even whether it's possible to do so. Even success stories haven't necessarily been the result of government policies, Mr. Glaeser said. [Ben Casselman, Wall Street Journal, Jun 12] Ideas and theories abound on what induces an innovation culture. America is full of test cases for interstate competition without a lot of obvious understanding of how business innovation and economics really work. Politicians under pressure to do something, do ... something that they think people will believe. St Louis is just one spot in a nation adjusting to global competition with little political recognition that the world has changed.
The Syracuse Post-Standard and the New York Post have stories on Gov. Rick Perry’s upcoming visit to New York state and Connecticut, where he plans to tout Texas’ low taxes, lack of regulations and red tape, and limits on litigation, to businesses, including those in the pharmaceuticals, gun manufacturing and financial industries. [Albany Times-Union, Jun 11] Texas talk not likely to pluck many heartstrings in New York.
Just doing his (Republican earmarking) job for the .... nation. U.S. Rep Mike Turner, R-Dayton, has included several provisions in the latest version of the National Defense Authorization Act that stand to benefit southwest Ohio. The full House Armed Services Committee approved the act [Joe Cogliano, Dayton Business Journal, Jun 6] Austerity is for the politically weak.
private employees with permission to plug directly into National Security Agency systems have unprecedented access to highly sensitive information [Siobhan Gorman and Dion Nissenbaum,Wall Street Journal, Jun 11] The Republicans' love of pretending to cut government has shuttled government work and money into private business as an alleged efficiency measure, and a way to reduce federal employment of Democratic voters. The result is a loss of control and devotion to governing.
Don't tax you, don't tax me. Internet sales tax opponents rally House staffers to keep Republicans in line [Kent Hoover, Puget Sound Business Journal, May 31] Tax talk is good for raising political contributions despite the evidence that tax rates and growth don't seem to be correlated: The fastest job growth in the post-war era came in the late 1970s when the top corporate tax rate was 48%, instead of the 35% that prevails today. The second highest job growth was in the early 1950s, when the statutory rate was 52%. [Rex Nutting, Market Watch, Jun 6] Every politican needs to find some public enemy to be against, and taxes are an easy choice. And if there is no public enemy, one will be conveniently invented.
Connecticut in 2012 was the only state to see its economy shrink. .... The most dour view of all is that we're in an inevitable decline brought about by too much entitlement — for the poor, with federal supports; for the middle-class, with rising health and retirement needs; and for the top 10 percent of earners, who are amassing a dangerously large share of wealth without adding jobs. In this view, the whole American empire will slowly fade, starting with rich places like Connecticut, where growth is naturally slowest. [Dan Haar, Hartford Courant, Jun 7] Anyone for a cold dose of economic reality on public finance? Or just another dip in the subsidy pool?
Researchers in Wisconsin over the next two years will strive to bring down the cost to produce energy-saving LED lights, under a pair of federal projects awarded funding Tuesday. Eaton Corp. has been awarded $2.4 million to develop a new manufacturing process to streamline the design of LED light fixtures. The Department of Energy awarded the funds, which will be matched dollar-for-dollar by Eaton and the other four recipients of $10.1 million in funding. The two-year research projects aim to bring down the cost of manufacturing light-emitting diodes, or LEDs. Cree, that bought Ruud Lighting and BetaLED of Sturtevant in 2011, was awarded $2.3 million. [Thomas Content, Milwaukee Journal Sentinel, Jun 4, 13]
Ben Franklin Technology Partners claims that it returned $3.60 for each $1 invested by PA. Pennsylvania's tech-based economic development program, released a joint study by the independent Pennsylvania Economy League and KLIOS Consulting, which determined the economic impact of the organization between 2007-2011. ... In total, the activities of the organizations have resulted in 7,485 new jobs in client firms and an additional 12,715 indirect jobs as a result of these clients' activities, for a total of 20,200 jobs. [SSTI, Jun 6] Standard claims for public investment programs which usually ignore the other effects of subsidizing private entities. The business the new entity gained came from existing or potential new competitors with some unknown net addition to the state's economy. But the US economy is so complex that no single source can be identified as a major contributor, Ben Franlkin included, despite all the blather by political entrepreneurs of right and left. Small biz political entrepreneurs typically count only new jobs started by the subsidy, jobs that often last only as long as the subsidy. Read the report Executive Summary. Venture capital by contrast uses a different metric: total Return on Investment to the investors, with no attempt to measure total effect on any economy. Their metrics are auditable and a basis for taxation.
Good news for politicians. Shrinking near-term federal deficits, slowing health-care cost increases and partisan gridlock have all but wiped out the likelihood for a deal this year to reduce long-term deficits, perhaps delaying a compromise until after the 2014 midterm elections. [P Nicholas et al, Wall Street Journal, Jun 3] Let's wait until after the next election to tell our base the ugly economics.
No such control subject. For the first time ever, the U.S. government is giving money to a drug company to help pay for its research. And it's not even an American company. British drug giant GlaxoSmithKline will get about $200 million over the next five years from American taxpayers to assist in its search for new antibiotics. .... Under then-FDA Commissioner David Kessler, a group of FDA statisticians decided that it was important to have better "statistical power" for trials, especially when comparing new antibiotic candidates with older ones. One such idea—and there were plenty of other bad ones—was to require a control group of patients in clinical trials that had never taken any antibiotics. Good luck finding such a person. [Josh Bloom, Wall Street Journal, May 31]
Lighter baggage. A bipartisan pair of [Wisconsin] lawmakers sought to jump-start a stalled $25 million venture capital bill by removing the state's troubled jobs agency from it. [The pair] said the leading venture capital bill didn't provide enough dollars to draw national investment firms into Wisconsin and said they would introduce their own legislation on Thursday that would provide $208 million over six years to boost venture capital funding, other investments in early stage companies and accelerator centers ..... Venture capital legislation died in the last legislative session [Jason Stein, Milwaukee Journal Sentinel, May 29]
More money, same old controls. $50 million in new funds to provide grants to technology companies for research and commercialization activities under the Emerging Technology Fund (ETF). A bill to address accountability and transparency of the fund was passed in the House, but later removed from the Senate calendar despite controversy surrounding the decision-making authority of the grants. [SSTI, May 29] Evaluation not mentioned because passing out money is easy and fun while economic evaluation is hard and ugly.
Win some, lose some; uncertainty is why government plays the game at all. The Department of Energy's guaranteed loan program has made headlines as automotive company Tesla paid back over $450 million in federal loans nine years ahead of schedule. Tesla's move highlights the potential of federal loan programs to support the growth of renewable energy industries by investing in companies that are developing new technologies such as lithium batteries and electric cars. [SSTI, May 29] Even with two bankruptcy killing $500M in loans, the program currently is producing 0.8 jobs for every $1 million of tax dollars spent. $1.2M per job makes one wonder how politicians balance their checkbooks. It's not too surprising since if the company and the idea were competitive, the private sector would do it gladly and suggest that government go away.
The Pentagon began to deliver furlough notices this week to more than 650,000 DOD civilians. .. They face 11 days of lost wages between July 8 and Sept. 30. [Foreign Policy Situation Report, May 30] If you were a furloughed worker at home, would you work gratis on SBIR because it is so valuable to the nation?
Two austerity stories: a US Congresscritter elected fron SC in a Tea Party atmosphere notes how many things in his district have his predecessor's name on them as he cannot deliver such bacon while demanding government austerity [from the Washington Post], and the Skagit River bridge in Washington (state) reminds of of the Reaganite government austerity attitude of "it if ain't broke, don't fix it," as the NTSB tells us that 15% of the nation's bridges are in equal danger of collapse because of a design compromise when constructed. And yes, government R&D investment will also be hit by austerity.
Politicians defend their power. Lt. Gov. David Dewhurst has killed a bill that would have stripped him, Gov. Rick Perry and House Speaker Joe Straus of the power to award certain Emerging Technology Fund grants, the sponsors of the legislation confirmed ... Dewhurst did not allow the Texas Senate to vote on House Bill 3162 after he removed it from the Senate calendar, said state Rep. John Davis, R-Houston, who authored the bill that he said would “take the politics out of the process.” [Laylan Copelin, Austin American Statesman, May 23] Unlike federal subsidy competitions, states can write their own rules about who decides and on what basis. Texas seems to have a particular problem with handing out uncompeted awards. But both state and federal subsidizers have little incentive to economically evaluate their subsidy programs. If the recipients are happy, why rock the boat.
[Florida Gov] signed into law a bill that eliminates state sales tax on the purchase of new manufacturing equipment, the Jacksonville Business Journal reports. ... gives manufacturers a three-year break on paying the 6 percent tax . [Orlando Business Journal, May 20] Got an economic goal? Cut a tax and declare success. Politicians never have to prove economic success, just claim credit for anything good that happens thereafter. Don't blame them, we elect them and reward their fantasies. And a society that does not educate itself will have no rational basis for deciding what is good policy.
Where you stand depands on where you sit. A Tennessee congressman who supports billion of dollars in cuts to the food stamp program is one of the largest recipients of federal farm subsides, according to new annual data released by a Washington environmental group. [Ron Nixon, New York Times, May 22]
535 would-be presidents.A key Senate committee overwhelmingly approved legislation that calls on the U.S. to provide small arms to moderate Syrian opposition groups, underscoring growing sentiment among lawmakers for a change in the U.S. approach to the conflict. [Wall Street Journal, May 22] They would also be Secretaries of State and dabble in foreign policy for which few have the qualifications and the tone.
Capitalism rules. The Obama administration cleared the way for broader natural-gas exports by approving a $10 billion facility in Texas, a milestone in the U.S. transition into a major supplier of energy for world markets. [Wall Street Journal, May 18] Natural resources are for selling - NOW. For all our preening about innovation, America got a large measure of its wealth by selling what nature provides: non-renewables like iron, oil, copper, silver, timber, and renewables like grain. As far as capitalism is concerned, the cost of a product is its extraction cost (with as many externalities as possible dumped on the public).
Understandably, government typically tries to the fund projects most likely to succeed, especially if a metric of success is whether the subsidy yielded a payoff. But in that case, government risks basing funding decisions on the same criteria the private sector would use. If that happens, the program as a whole may appear to be successful, but if government funding simply replaced private funding then the program was not effective at all. In part for that reason, direct government funding of commercializable industrial research has a mixed track record, at best. The first step in making those programs more successful would be designing them in such a way that they could be rigorously evaluated. Such evaluations would mean, at a minimum, tracking projects and firms that did not receive subsidies as well as those that did, and in the best case, introducing evaluation tools such as randomization. However, government has shown no interest in rigorous evaluation of corporate subsidies in the past, and no evidence suggests it will in the near future, either.[Scott Wallsten, Technology Policy Institute, Sep 2011] In other words, subsidies other than for basic research (how does nature work?) R&D are just about politics.
Classic pandering. The Supreme Court rules that states cannot do A, but a lot of people in the state want to do A. So the politicians pass a law for A which the governor vetoes as unconstitutional. The politicians override the veto with a super-majority. Weeks later the regional federal court strikes down the law as unconstitutional. The politicians give hue and cry as they collect more votes and contributions in the coming election cycle for the kind of politician who will serve the state's people. Latest example: Arkansas.
If government did not exist, we would have to invent it. And then we’d have to reinvent it, because it would be lousy and everyone would hate it. Since the founders chucked the Articles of Confederation, Americans have been reinventing government, reimagining structures and rules, tinkering to make their union just a little less imperfect. These projects get caught up in the political fights of their times, of course [Carlos Lazada, WaPo, May 20] As long as we have people, politics, and elections, government will always be imperfect, but probably the best attainable government.
Both sides cite polling — there’s enough polling these days for everyone to find something that suits them — that prove their point. [Chris Cillizza, Washington Post, May 20] We also have tons of data, especially economic data, enough to "prove" almost any assertion if carefully couched. The difference is that data are facts, and polls are mere opinion.
Reality for science. The president of the Kansas Bioscience Authority said the agency is looking at a new way of conducting business in the state, The Lawrence Journal-World reports. President Duane Cantrell said the KBA is shifting away from feeling "entitled" to state funding and instead has learned that it needs to earn the state's support. Cantrell said the agency will now focus on reaping a return on its investments instead of looking more grants to be awarded, the report says. [Kansas City Business Journal, May 1] What a novel idea - sci/tech funding should show a return on investment.
Political science.Kansas Gov. Brownback proposed to divert more than $1.2 million from the state’s bioscience investments to instead fund the Midwest Stem Cell Therapy Center at the [UK] Medical Center. Brownback signed a bill earlier this month establishing the center at the urging of anti-abortion conservatives. It would focus on producing clinical-grade stem cells from adult tissue and cord blood, rather than embryos. [Brianne Pfannenstiel, Kansas City Business Journal, Apr 30] When the political goals override the science, top class scientists would seriously question any public commitment to the non-political pursuit of scientific truth. Kansas at least wants their public employees to feel safe on the job by passing a law allowing Kansas employees of public schools and colleges to carry concealed weapons, the Lawrence Journal-World reports. [Kansas City Business Journal, Apr 18] Kansas politicians cater to public idea that nobody gets abortion and everybody gets guns.
On the Top Ten Competitive States of 2012 list, Texas led with 414 points, followed by Indiana (411), Georgia (409.5), Tennessee (403.5) and North Carolina (385). Atlanta-based [magazine] Site Selection determines the list based on 10 factors, including new and expanded facilities, new jobs, state tax climate and career-readiness certificates per 1,000 residents, among others. ... highlighted Texas’ tax climate in particular, focusing on Gov. Rick Perry’s $1.6 billion tax-relief proposal. [Olivia Pulsinelli, Houston Business Journal, May 7] Low taxes are loved by politicians, but business needs a lot more out of a place.
[Texas Gov Perry] has requested a federal emergency declaration for McLennan County following the explosion at a fertilizer plant in West, the Texas Tribune reports.[Apr 19] "Cut taxes, and send us federal money" challenges basic government math. But math, like evolution science, is different in Texas.
Homeland Security latest Phase I SBIR award list emphaiszes security of accomplishing the task by funding what sound like rather straightforward engineering and awards to companies with much, much SBIR experience, occasionally in many tens of millions of SBIR dollars "invested". In typical mission agency style, they buy what they need and with little risk of failure. If you have bleeding edge non-life-science technology with a great future, take it to DARPA.
Energy Dept,usual stuff for the usual suspects in the latest list of Phase II SBIR winners for a nominal $1M (few ask for less than the max and the Department has only two judgment stamps - YES or NO). Almost all winners have already had many SBIRs and the brief description sounds like a short stretch from what the company already sells as either government R&D or small scale commercial.The companies are not making headlines even in the local booster press.
POTUS signed a new executive order requiring that future data generated by the federal government be made available in open, readable formats to the public. Details to be messy and controversial by the for-profit journals that have traditionally archived research results. [SSTI, May 8]
Louisiana's Senate backed off on a proposed law that would open a door to creationism in science class rather than just in religion class which is not allowed in public schools. But the creationists will certainly not stop probing for openings. Those who "truly believe" see a moral duty to force-feed those beliefs in the public space.
Didn't get all the SBIR you asked for? Try to sue the government for breach of promise. SolarCity lawsuit that alleges [that] some of the taxpayer-funded grants it received weren't as big as originally promised. .... a federal grant program that has paid out about $4.1 billion to solar projects since the 2009 economic-stimulus law created it. .... The government is looking into whether SolarCity and other firms misrepresented the fair-market value of solar systems in order to boost the value of the grants they received. In its suit, SolarCity says two of the company's subsidiaries received smaller-than-expected grants. The company doesn't say exactly how much funding it applied for originally, but it says the final grants issued by the Treasury Department were $8 million less than was proper under the law. [Cassandra Sweet and Ryan Tracy, Wall Street Journal, May 7] Sounds like an old story: grantee or contractor asks for and receives funding for a project with boilerplate terms that allow the govetrnment to stop funding, although usually with a damage clause for a unilateral government decision not based on failure by the grantee. Taking government funding with a prospect of future continuation has always been an uncertain proposition.
FBI agents who raided the home of a former suspect [since released and another suspect arrested] in the ricin-laced letter case brought along a mini throwable robot [with cameras] made by ReconRobotics (Edina, MN; no SBIR) ... Benjamin Wittes, a senior fellow at the Brookings Institution, identified the robot — seen resting on an agent’s knee in a photo [Katherine Grayson, Minneapolis / St Paul Business Journal, Apr 24, 13]
the Missouri Innovation, Development and Entrepreneurship Advancement (IDEA) program, makes equity investments into Missouri startups. ... established with federal funding that was part of Small Business Jobs Act of 2010. ... had $21 million of funding and is now down to $3.4 million .... [vested interests] in the state pushing for $15 million in annual funding. [Amir Kurtovic, St Louis Business Journal, Apr 19, 13] Of 33 companies on the benficiary list, only one company had SBIR - Vasculox (St Louis, MO; $400K SBIR). SBA hyped the federal law as the most significant piece of small business legislation in over a decade. ... providing critical resources to help small businesses continue to drive economic recovery and create jobs with provision for $21B in SBA lending. In practice, the amounts and the loan structure are insufficient for technical validation of new technology with high economic potential it it works as envisaged. Instead, the money seems earmarked to kiss huge numbers of SBs and pretend to do something of notable value. Naturally, the Iron Triangle - law makers, administrators, and beneficiaries - will all see something of quite notable value, while Tea Party libertarians complain about government intrusion and growing debt creation.
Watering the dead plants. Corporate welfare for speculative business ventures is a dismal way to go about reviving the economic fortunes of [Arkansas]'s rural areas, however. But Arkansas legislature passed a law that will take $125 million from state taxpayers to subsidize the flagging steel industry. .. an industry with a world over-capacity ... It also is no time for state politicians to pose as venture capitalists when they could more productively be making the business environment hospitable for every industry. Arkansas ranks near the bottom in the nation—at 40th—for its lack of regulatory freedoms [Carrie Sheffield, Wall Street Journal, May 2] Politicians love the publicity stage of subsidy programs for favored constituents, including SBIR, and will invent whatever excuse necessary to continue them.
Austerity as default. Keynes’s anti-austerity ideas had their day of course—and a very successful day it was, lasting from the mid-’30s to the mid-’70s. But austerity ideas never went away because, as outlined above, they are rooted in an entire philosophy about the state and public debt that is not subject to disproof, especially among the conservative forces and big economic interests who embrace it. As a result, when Keynesian economics appeared to falter in the 1970s, austerity-based economics came roaring back and dominated economic thinking for decades. [Ruy Teixera, The New Republic, May 1] The present debate among taxes, growth, debt, default, unemployment makes for great theater with dozens of think factories cranking out demanded theories that favor the establishments paying for the thinking.And there are enough data to feed all theories simultaneously.
A provocative new book* by Usha and George Haley, of West Virginia University and the University of New Haven respectively, points to another reason for [the coutnry's] industrial dominance: subsidies. ... Worse yet, the bosses of [the busineses] are not in business principally to make a profit: they are often encouraged by the government to pursue other goals, such as resource acquisition, foreign policies and technology transfer, regardless of cost. .... The unhappiest consequence of [the country's]subsidy policy may be that it has created beasts too powerful to rein in. [The Economist, Apr 27] What businesses in what country, do you think? Not an easy question since governments the world around seek competitive advantage for home cooking. Evne little subsidy programs like SBIR, which are more directed to internal constituent advantage, throw in international competuition in the justification. Free markets as idelized by political conservatives exist almost nowhere, even in America the conservatives angle and get substantial subsidies through tax breaks and market distortions like marketing orders. SBIR has contunied for three decades with no showing of any economic gain that wouldn't have occured anyway. Usha and Haley got the universal picture with their analysis of China's state-owned enterprises.
Can't keep spenders down. consumers spent 3.2 percent more on an annual basis in the January-March quarter than in the previous quarter — the biggest jump in two years. ... Consumers have shed debt. Gasoline has gotten cheaper. Rising home values and record stock prices have restored household wealth to its pre-recession high. And employers are steadily adding jobs, which means more people have money to spend.. [Christopher Rugaber, AP, Apr 29] Before austerity even got biting in the US, Europeans are rebelling against it. Good life now, payments in the future by people who don't yet vote. With no threat from an economic god, laissez les bon temps rouler. Don't worry, the politicians will not stand in the way of a consumer bandwagon.
DOD is on the SBIR street again with a pre-solicitation in which you get to quiz the topic writers. Propoals by June 26. You can ask whatever you want and they will answer the reasonable questions that give you no advanatge over your many competitors. Remember that they do not see themselves as investing in you, only buying your knowledge for their pruposes, after which they own the technology for any government use.
Keeping the trains on time. The one and only time that Phase II proposals based on the 13.2 Phase I awards may be submitted by Phase I awardees from the 13.2 is during this 13.2 Phase II solicitation window. Advantage goes to well organized companies thoroughly familiar with government procedures. Disadvantage to new companies with new and exciting ideas and no government experience. Which agency, that sees itself as on the bleeding edge of military technology for a nearly impossible task of hitting a bullet with a bullet a thousand miles away, would have such a rigid policy? The one that wants to trains to run on time. Missile Defense Agency. Do you feel that the MDA is giving itself the best shot at capturing new technology breakthroughs with their SBIR program?
chairman Lamar Smith (R-Texas) suggested that every NSF grant include a statement of how the research "would directly benefit the American people." [AASA, Apr 25] He represents the state that wants to attract science and tech business to the state. Why would a smart person of science want to depend on the good opinion of politicians with such an attitude?
Former President Bill Clinton joked at the dedication ceremony that the Bush library "was the latest, grandest example of the eternal struggle of former presidents to rewrite history." [Alan Greenblatt, npr.org, Apr 25]
The New Mexico State Investment Council approved $10 million for Sierra Ventures of California. .... will invest in 15 to 20 startups, although only some of them will be in New Mexico, the Journal reported. [Gary Garew, Albuquerque Business First, Apr 24] Apparently ROI will take precedence over local job creation in new industries.
State gives subsidized loans .. The announcement included laudatory quotes from politicians. ... Connecticut will borrow the money to fund the 10-year loans. [Hartford Courant, Apr 24, 13] Government competing with private capital for pure business risk investment - must be a Democratic state, although any money pushed to constituents will elicit laudatory comment from politicians.Poaching. Texas Gov Perry is taking his message of “low taxes, predictable regulations, fair courts and a skilled workforce” to the Windy City. .... just two months after he launched a radio promotional program inviting California business owners to check out Texas’ strong jobs climate. [W Scott Bailey, San Antonio Business Journal, Apr 15] Perry may well not have mentioned creationism, the Civil War, Enron, drought, nor the political dominance of oil money.
Stand by to go nowhere. FAA says unavoidable furloughs of air traffic controllers will mean frequent flight delays of up to 2-3 hours. Politicians will try to shift the blame to anybody else available that cannot fight back, like FAA management. Federal furloughs mean that advantage goes again to SBIR firms near the flagpole or with established connections to agency technocrats. Since total SBIR will shrink by up to 10%, and the management ability will also shrink, and the big SBIR agencies favor experienced service firms, the chances for really inovative firms and ideas will shrink by at least twice the 10%. Shrinking government has consequences. Many more such stories will appear that challenge tyhe politicians to find a lower balance point in government services and the revenue to pay for them. Some myths are going to be exposed.
Experience counts. NASA picked 295 SBIR Phase I winners from 216 conmpanies of which maybe two were first tine SBIR awards. The April 3 press release doesn't talk about such stats. A lot of the firms are easily recognized by long-time SBIR watchers.
We want to stop our addiction, just
not yet. Over
the last 30 years, a significant proportion of economic growth and the
wealth
created relied on borrowed money and speculation. Since 2001, borrowing
against
the rising value of houses contributed to around half the recorded
economic
growth in the US. [Satyajit Das, Minyanville.com, Apr 15]
Abandoning the debt powered prosperity is not easy. Resistance to
pursuing austerity as the cure for Europe's debt crisis grew
as the French government said it would slow its deficit-reduction
efforts to avoid tipping the economy into recession. [David
Gauthier-Villers, Wall Street Journal, Apr 18] If total employment is
roughly proportional to total economic activity, cutting debt would
proportionally cut total employment unless you believe the small
government fantasy that private capital would step in to create at
least that much new wealth.
Cut somewhere and somebody else. Eighth District U.S. Rep. Austin Scott says a new request for a Base Realignment and Closure Commission is not likely to gain traction in Congress, the Macon Telegraph reports. Scott, a Republican from Ashburn, serves on the House Armed Services Committee, which would have to approve it, [Carla Caldwell, Atlanta Business Journal, Apr 13] Government efficiency and responsible spending are for talking purposes only.
I predicted last year that the biggest economic story of the year would be the end of full-time employment in the retail service industry. The nation's largest movie theater chain has cut the hours of thousands of employees, saying in a company memo that ObamaCare requirements are to blame. Regal Entertainment Group, which operates more than 500 theaters in 38 states, last month rolled back shifts for non-salaried workers to 30 hours per week, putting them under the threshold at which employers are required to provide health insurance. The Nashville-based company said in a letter to managers that the move was a direct result of ObamaCare. [Coyote blog, Apr 16] Employers get to dump their employee health insurance costs on the government as the price for getting more people any insurance at all. As always, the present losers in any political move shriek louder than the future winners. In this deal the winners are the companies and the potential losers are the employees who will have to switch from company to private insurance, which at least they are guaranteed to qualify. We should remember that since employee health programs wee invented a dodge against taxes and limitations on wages, they arenot a factor in economic productivity.
Texas Republican solution: cut biz taxes Gov. Perry endorsed $1.6 billion in tax relief for 109,000 Texas businesses, including allowing 85,000 small- and medium-sized businesses [less than $20 million in gross receipts] to deduct the first $1 million in gross receipts from their franchise tax bills. [Laylan Copelin, Austin American Statesman, Apr 15] If you ask a true-red Republican for a solution to any problem, expect a tax cut suggestion.
Nationalism sees the nation as eternal and essentially unchanging; it fosters an undifferentiated approach to the past that is tantamount to the denial of history. Discontinuities and contradictions are transcended to produce a seamless linear national narrative.-- Peter Makridge, British Academy Review, Jan 2012
Political leaders today likewise find it pays to think no more than two years ahead, disregarding long-term consequences. ‘We borrow capital from future generations, with no intention or prospect of repaying’. Our descendants ‘can never collect on our debt to them, [for they] do not vote; they have no political or financial power’ [World Commission on Environment and Development, 1987] 25 years later, even larger debts. Because the future still does not vote in the present and our "must-haves" are endless.
A bigger hole needed filling. The Life Sciences Discovery Fund announced plans this week to distribute more than $2 million in grants, demonstrating an ongoing decline in state funding for the organization created to drive Washington state’s life sciences industry. The fund was formed in 2005 with the intention of using the state’s tobacco settlement money. But after the economic downturn, the state Legislature drained the fund, redirecting millions to the general fund to close a massive budget deficit. [Valerie Bauman, Puget Sound Business Journal, Mar 12,13] Since its tough for state investment schenmes to prove thier economic value (beyond their political value of getting started announcements), the spirit is soon diverted to more directly measured spots.
Don't cut us, we're special. More than 50 Nobel laureates are urging Congress to spare the federal science establishment from the looming budget cuts known as the sequester, saying that research has endured years of budget reductions and that additional cuts could endanger “the innovation engine that is essential to our economy.” [William Broad, New York Times, Apr 9]
So why do so many governments still subsidize energy so much? Because their populations are hooked on subsidies and don't grasp their downsides, energy producers and other vested interests defend them, and because they are seen, incorrectly, as primarily helping ther poor. [David Wessel, Wall Street Journal, Mar 28] Concentrated beneficiaries and diffused payers. Who, except the university researchers, outside the federal agency sees themselves as payers for SBIR, for example?
In its Economic Review of 1968, the [British Trades Union Congress] stated that Britain stood "on the threshold of a great leap forward, if, and only if, the opportunity offered by devaluation is fully grasped." [Benjamain Choo, paper in Economic History 2013 Annual Conference, Apr 5] Instituions have their pet self - serving ideologies that the members want to hear regardless if the economic facts of life. When the devaluation happened with only minor effects, new scapegoats and rationalizations were invented. Governments, even democratic governments, listen to such ideologies at their peril.
New York state lawmakers approved in the FY14 budget startup funding for a new statewide incubator program that provides grants for the incubators and tax incentives for client companies. .... Other innovation-focused initiatives approved in the recently enacted budget include a $50 million innovation venture capital fund, a third round of funding for the SUNY 2020 program, and $55 million to launch the CUNY 2020 challenge. [SSTI, Apr 3]
New Jersey has provided more corporate tax breaks in the past three years than in the entire previous decade, yet the state's economy continues to lag, according to a [new] report [by New Jersey Policy Perspective, the liberal think-tank] .... The report said that the state should focus more on economic development funding for education, infrastructure and job-training programs. [Hillary Russ, Reuters, Apr 1] No matter the problem, one ready conservative solution is tax breaks with no subsequent accountability for provable economic effect. For liberals, the answer is more and better public infrastructure, including education that hires more teachers. Myths, not facts, rule.
Louisiana still in thrall to religion. For the third year in a row, New Orleans-based state senator Karen Carter Peterson has a bill to repeal the Louisiana Science Education Act, which calls on education administrators to help promote "critical thinking...of scientific theories being studied including, but not limited to, evolution, the origins of life, global warming, and human cloning," and which allows teachers to use supplemental materials to help students "understand, analyze, critique, and review scientific theories" if allowed by their local school boards. [AAAS,Apr 3] That's a world where aggressive devotion to religion myths wins over intellectual standards for evidence - based policy. State efforts to attract scientists have little chance of moving the best scientists in their direction.
NIH recently posted notice of the
launch of their new Twitter
Feed on their SBIR/STTR News Flash Page at grants.nih.gov/grants/funding/
The Missouri Supreme Court on Tuesday struck down a state incentive fund for science andtechnology businesses, ruling legislators had illegally linked it to an unrelated economic development bill. ...a lawsuit by the Missouri Roundtable for Life and other groups concerned the fund could have been used to pay for human embryonic stem cell research. [St Louis Business Journal, Mar 20, 13]
DOD R&D likely down 9% for FY13 (thru Sept 30), says AAAS. SBIR newbies may be losers as agencies favor predictable SBIR junkies with known track records. FY14 game still dealing political wild cards.
Congressional robots. Last week a multi-sector group of researchers presented a new robotics report (PDF) to the Congressional Robotics Caucus. The report outlines the potential for robotics research to "transform the future of the country," and "identifies both near-and long-term applications of robotics technology. [AAAS, Mar 27]
Lower taxes, more education, and economic pixie dust. A business group is calling on the Legislature to more fully fund higher education and tech training after its study showed there are 25,000 unfilled high-skill jobs in Washington. [Katherine Long, Seattle Times, Mar 26] Doesn't the state exist to supply what business wants?
Why DOD dislikes foreign SBIR workers. a Chinese citizen who worked at L-3’s space and navigation division, was sentenced in federal court to five years and 10 months for taking thousands of files about the device, called a disk resonator gyroscope, and other defense systems to China in violation of a U.S. arms embargo. [Peter Finn, Washington Post, Mar 26]
the Michigan Economic Development Corporation announced its new Michigan Venture Match Fund, a $5 million pot of money from the Michigan Strategic Fund for early-stage companies in the state that have already gotten funding commitments from at least one venture firm. The fund just invested $2.76 million in six companies across a variety of sectors: Stik (social networking website, no SBIR), Livio (internet car radios, no SBIR), Amplifinity (manage advocacy programs; no SBIR), Gema Diagnostics (Ann Arbor, MI; no SBIR, human embryo screening), nanoRETE (Lansing, MI; no SBIR, real-time detection of pathogens), and Tissue Regeneration Systems (Ann Arbor, MI; no SBIR, bone reconstruction). [Sarah Schmid, xconomy.com, Mar 12, 13]
The U.S. government’s fiscal predicament has many causes. But if you had to reduce them to one sentence: “Congress responds to the short-term demands of particular groups, not the long-term needs of the nation as a whole.” Case in point: the seemingly unstoppable growth of medical benefits for former military personnel under Tricare, [Charles Lane,Washington Post, Mar 26] Congress is the sum of all wants from separate interest groups. After all, we elect our representatives (one House member and two Senators) to do what we want: give us something and get someone else to pay for it.
Raise taxes for stimulus. With much of the global economy apparently trapped in a long and painful austerity-induced slump, it is time to admit that the trap is entirely of our own making. We have constructed it from unfortunate habits of thought about how to handle spiraling public debt. .... the spending cuts only worsen the problem. This is the paradox of thrift: Belt-tightening causes people to lose their jobs, because other people are not buying what they produce, so their debt burden rises rather than falls. ... Some form of debt-friendly stimulus might ultimately appeal to voters if they could be convinced that raising taxes does not necessarily mean hardship or increased centralization of decision-making. If and when people understand that it means the same average level of take-home pay after taxes, plus the benefits of more jobs and of the products of additional government expenditure (such as new highways), they may well wonder why they ever tried stimulus any other way. [Robert Shiller, Slate, Mar 25] Again myths, elections, and public education standings don't promise such realistic policy will ever be adopted. The people with money to be taxed have big megaphones, the politicians need money from them to get and stay elected, and the average public knowledge of economics can't be good if we look at the products of our public high schools.
Fast Track, dead track. DOD says its last Fast Track SBIR award was two years ago. And a large number of "third-party" investors for the 300 awards ever made in 15 years were a DOD agency. Fast Track was an interesting answer to company complaints that the government was too slow in funding project with time-sensitive market appeal. The people who invented it from a DOD Process Action Panel (a Clinton administration device) were given an Al Gore Hammer Award (anyone remember that?) The reality is that DOD does not care about commercialization and third-party investment and economic goals. It buys what it wants for its own purposes, as clearly allowed by the law's handing the agencies unilateral authority for selection of awards. DOD does do matching award funding to extend Phase II projects (as started by SDIO in 1991), after enough success was shown to attract buyers, as opposed to Fast Track's commitment before Phase II starts. About 400 since 1999. Almost all of the "enhancement" goes to match money from DOD agencies. The National Academy even ran an extensive Best Practices project, as a substitute for true economic evaluation, where the Navy and others, demonstrated adoption of SBIR technology by Navy forces. The original SDIO plan favored co-investment from private sources that provided third-party validation and real market potential. Congress doesn't concern itself with lack of economic impact because the extra money goes to its political targets - small biz.
The Georgia Senate overwhelmingly passed legislation calling for the creation of a $100 million [over five years] venture capital fund. .... Of every $1 invested in venture capital in Georgia, 92 cents comes from out of state, he said. “With the exception of Alabama, all our sister states have such funds,” [state Senator and chief bill sponsor] Golden said. “Other states, because of these funds, are raiding Georgia companies after we get them established. [Dave Williams, Atlanta Business Journal, Mar 5] Maybe if Georgia changed its attitudes, it might atract industries in which the new companies can succeed in Georgia. More state investment by politically controlled "investors" isn't the way to build industries. Can a state whose politicians hate government make smart government investment choices? Even the people who love government don't do a very job at it.
San Francisco Mayor Ed Lee has fought hard to keep startups from leaving the city as they grow, and some say his plans to raze a 30-acre area for housing and office space would complement, not compete with, efforts in other parts of Silicon Valley. ... reshaping a 30-acre stretch of freeway and rail yards into high-density housing, shops, restaurants and more than 2 million square feet of high-rise office space. [George Avalos and Peter Delevett, San Jose Mercury News, Mar 20]
as many as 800,000 DOD civilians will be forced to take unpaid leave between now and September, equating, typically, to one day off per week for 22 weeks [Foreign Policy Situation Report, Mar 19] For SBIR that means Contracting Officers, COTRs, CO assistants, DCAA, finance and accounting processors of vouchers, proposal reviewers, etc, etc, etc.
Wisconsin, which lags much of the nation in venture capital funding, on Tuesday saw the creation of a new $30 million early-stage venture fund focused on information technology. The new Madison-based fund will be jointly capitalized by the Wisconsin Alumni Research Foundation, the patenting and licensing arm of the University of Wisconsin-Madison, and the State of Wisconsin Investment Board, which manages the assets of the Wisconsin Retirement System and other state trusts. It will be called "4490 Ventures" and "focus on early-stage companies primarily in Wisconsin," ]John Schmid, Milwaukee Journal Sentinel, Mar 19]
The steady growth of the 7-year-old Pennsylvania Biotechnology Center of Bucks County is paying off in jobs and economic activity both locally and across the state. A report shows the biotech center and its affiliated organizations generated $579 million in economic impact and 573 jobs from July 1, 2009, through Dec. 31, 2012. [John George, Philadelphia Business Journal, Mar 8]
Good politics (for some), but no economic value. there’s no clear evidence that lower tax burdens have helped the United States grow faster than other advanced industrial nations with higher tax rates and much heavier tax burdens .... While high taxes do have an effect on variables that affect growth, many other factors are much more significant and overshadow whatever taxes do [Eduardo Porter, New York Times, Mar 13] We live by a collection of myths that don't stand up to serious economic evaluation: low taxes, patents, SBIR, diets. Since low taxes are a political wish for the wealthier Republican supporters, Republican political wannabes have no choice but to advocate them. We have a democracy that runs on votes and money, not on economic truths.
Cut taxes and government, and send us more money. In a classic Republican state, Six Indiana counties (around Kokomo) are joining forces to spur economic development and bring more federal money into the state. [AP, Mar 11] How many SBIR recipients make speech for lower taxes and less government?
Sticking to the story. Republicans are losing elections they could win by slavishly clinging to untenable solutions for skyrocketing health-care costs that voters reject. .... Conservatives believe seniors could shop for health insurance, as they do for groceries, ... Already, large employers operate in a similar market space -- free to negotiate with health insurance companies -- and even they have not been able to harness rising health insurance premiums. .... Similarly, it is doubtful that the states, acting individually, can do a better job of negotiating reimbursement for Medicaid services for the poor than does the federal government. In fact, the Ryan solution could drive up prices because providers could play off states against each other. [Peter Morici, utsandiego.com, Mar 13] As long as the big donors want to hear the story, the politicians have little choice than to keep flogging it. Myths. in rich and poor alike, die hard. One long term solution is to de-politicize House Congressional re-districting to force politics toward the center.
On Saturday, the first-inventor-to-file provisions of the Leahy-Smith America Invents Act, a new patent reform law, go into effect, putting a priority on the person who first files a patent application. The law is a contrast to the expiring system, which awards patent claims to the person who can show he or she invented a concept first.The changes, which are the most significant to the patent system since 1952 [Virginia Bridges, Raleigh News & Observer, Mar 11]
Today, the [Massachusetts] state government is kicking off its new MassTech Intern Partnership, which promises to reimburse qualifying companies for half the cost of their interns’ salaries.[Curt Woodward, xconomy.com, Mar 11]
"From highway bills to homeland security, small states make out like bandits." SARAH A. BINDER, a political scientist at George Washington University, on the voting power of less populous states in the Senate. --[New York Times, Mar 11] The 1787 Constitutional compromise at work.
So what the bad predictions [about market doom resulting from Obama administration economic policies] tell us is that we are, in effect, dealing with priests who demand human sacrifices to appease their angry gods — but who actually have no insight whatsoever into what those gods actually want, and are simply projecting their own preferences onto the alleged mind of the market. [Paul Krugman, NewYork Times, Mar 8] Earlier this week David Brooks skewered the predictions by Michael Boskin, dogmatic conservative economist who told Republican presidents what they wanted to hear. Warning: conventional theories about US economics usually miss the nation's adaptability to change. Believe them at your peril.
Growth Escapism. The hesitancy to embrace even this minimal amount of austerity raises the question of when will the U.S. begin to cut costs and thereby stave off the eventual financial collapse of our nation. Small changes now can have a huge impact later. You may be thinking that the answer is found in a 4% growth rate. I have heard this answer espoused by both sides of the aisle, but neither proponent has offered a plan as to how this would be accomplished except by government enablement. Here is a quick reality check: the average growth rate over the last 20 years is 2.6% (adjusted for inflation). Waiting for a 4% growth rate to take care of our national balance sheet is simply refusing to deal with reality. [Alan Beaulieu, Industry Week, Feb 21] Hey, the myth worked for Reagan and his supply-siders. Even the venerable Cheney proclaimed that "Reagan proved deficits don't matter." (Maureen Dowd puts several spears through the venerable Cheney's pretensions in today's New York Times op-ed.)
Should Congress support President Obama's plan for a $1 billion network of 15 manufacturing innovation institutes? *Yes, *No *Not Sure. Vote now at http://www.industryweek.com.
Slicing grants. NSF expects its overall budget will be cut by five percent. ... existing grants will be largely unaffected, but new grants will take a major hit—a thousand fewer will be funded this year.... NIH plans on [salami slicing] passing the cut on to every grant renewed during the coming fiscal year. [John Timmer, Ars Technica, Feb 27] Of course, until Congress enacts appropriations, all bets are tentative. Congress could also nip professors' salaries by 5% in the grants. After all, what's 5% in government? ... unless it's your salary getting nipped.
Air Force (USAF) selected Sierra Nevada (Sparks, NV; $1M SBIR, founded 1963, 2500 employees) and its partner Embraer (Brazil) Defense and Security for its Light Air Support (LAS) program. ... deemed the A-29 Super Tucano aircraft, and the overall solution offered by SNC, to be the superior choice for this critical mission. The initial $427.5 million delivery order is to supply the USAF with 20 A-29 Super Tucano aircraft. ... for. light air support, reconnaissance and training capabilities to the Afghanistan military. As such, it is a vital element of the United States’ Afghan withdrawal strategy .. work will be in Jacksonville, FL [company press release Feb 27, 13] over the years it has gathered up companies: Space Dev (Poway, CA; $5M SBIR) ;MicroSat Systems (Littleton, CA; $11M SBIR) ; Straight Flight (Denver, CO; no SBIR) ; Waveband (Torrance, CA; $17M SBIR); Aviation Resources Delaware (no SBIR); Inter-4 (San Francisco, CA; no SBIR); Turtle Mountain Communications (no SBIR) ; Plano Microwave (Plano, TX; no SBIR) ; Spectral Systems (Beavercreek, OH; no SBIR) ;Advanced Countermeasure Systems (Sacramento, CA; no SBIR) .
Once a spy, never trusted. The concerns arose over Kim’s service as a director of the External Advisory Board at the CIA from 2007 to 2011 while he was president of Bell Labs. He also served as a director at In-Q-Tel, an Arlington venture capital firm set up in 1999 with CIA funding. [Thomas Heath, Washington Post, Mar 4] Kim was trying to be different things to different people, running for a senior post in the South Korean government, even saying he would surrender his US citizenship.
[ARPA-E's] mission of pursuing potential breakthroughs hasn’t changed. But four years after launching, it’s increased the emphasis on commercialization, says deputy director Cheryl Martin. “We believe big ideas are important but only if they make a difference,” .... Bringing some business savvy to energy researchers can certainly help produce the technology home runs ARPA-E was created to produce. .... This week the agency announced that 17 projects, started with $70 million, have attracted $450 million in follow-on funding. Twelve were launched as new companies and over ten partnered with other government agencies for additional investment. [Martin LaMonica, MIT Technology Review.com, Mar 1]
Because of budget pressures and looming sequester cuts, .... Federal R&D spending will decline sharply as a share of GDP. ... Many economists agree that private companies tend to under-invest in basic scientific research, because it’s hard for one firm to reap the full benefits from those discoveries. So the federal government, which now funds 60 percent of all basic research in the country, is likely irreplaceable here. What’s more, studies have found that many types of government R&D spur companies to do their own research. ..... some federal programs are so focused on demonstrating to Congress their usefulness that they stick with “safe” research that the private sector would have done anyway. [Brad Plumer, Washington Post, Mar 3] When R&D spending is politically driven, expect low returns.
Worried and irate. The Congress is getting an earful about the big spending cuts beginning to hit government services from worried and irate constituents, including one senator's own spouse. .... said his wife, "my most important constituent," asked him, "Why can't you guys get your act together? [Thomas Ferraro, Reuters, Mar 2] Cut somebody else! No doubt the SBIR advocates will be adding thier chorus.
Sequester Day is here and the axe is falling. SBIR Insider Rick Shindell reports that the SB Tech Coalition (a lobby group of SBIR beneficiaries) has drafted a don't-cut-me letter to the political worthies urging them to take steps to ensure that small businesses are not disproportionately and unfairly targeted by the upcoming cuts. .... asking every technology-oriented small business to read this letter, and if you agree with it, add your company’s signature. Complete details are available at: http://www.nsba.biz/content/4610.shtml
[White House says] as many as 12,000 scientists and students would be hit by cuts to research and innovation; ; and small businesses may see $900 million in reduced loan guarantees." [AAAS, Feb 27] And the Washington Monument will no doubt close.
[The administration] called for scientific papers that report the results of federally financed research to become freely accessible within a year or so after publication. The findings are typically published in scientific journals, many of which are open only to paying subscribers..... The agencies have six months to submit plans for how they would carry out the new policy. [New York Times, Feb 22] Public money, public exposure.
Jet noise is the sound of freedom. says bumper stickers in Sumter SC as budget cuts threaten a nearby airbase. [Tamara Keith, NPR] The freedom loving, anti-government Republicans there make an exception for their money flow from Uncle Sugar. Ain't democracy fun? A range of companies have raised alarms about the potential impact of the sequester, but most say they have no clear sense what the precise impact would be. [Wall Street Journal, Feb 23] SBIR companies should expect no mercy, and writing your Congresscritter will gain nothing. States are increasingly alarmed that they could become collateral damage in Washington’s latest fiscal battle, fearing that the impasse could saddle them with across-the-board spending cuts that threaten to slow their fragile recoveries or thrust them back into recession. [Michael Cooper, New York Times, Feb 23] In other words, the states want their Congresscritters to invent a fantasy scheme that cuts government spending somewhere else and keeps federal money pouring into their state. Our problem? We keep electing the politicans that promise the biggest free lunch.
White House has released a document detailing the administration's manufacturing strategy. The strategy includes the formation of a new national network of Manufacturing Technology Acceleration Centers (MTACs), which will focus on moving technology into the products and processes of small- and medium-sized manufacturers. NIST's Manufacturing Extension Partnership program would oversee the initiative [SSTI, Feb 21]
Republicans head into the next budget battle torn between two long-standing goals: Strengthening the military and cutting federal spending..... A split within the GOP could occur if the cuts have drastic implications, particularly in communities that rely heavily on military spending. There are already signs that some Republicans from such districts might be willing to break from party leaders' pledge not to raise additional tax revenue. [Wall Street Journal, Feb 22] It's the same story in every part of government: cut and tax somebody else.
At the national level, Republicans have a winning message for a nation that no longer exists. [Michael Gerson, WashPo, Feb 22] Is SBIR similarly relying on a 1970s small biz investment climate that no longer exists?
Anadigics (Warren, NJ; $600K SBIR 25 years ago, 540 employees) down 14% [Feb 20, 13]
Be practical, guv, they're offering money. Another Republican governor decides to take the federal healthcare money for Medicaid instead of standing on political principle that we're broke and over-governed.
Key senators are exploring an immigration bill that would force every U.S. worker—citizen or not—to carry a high-tech identity card to prove a person's legal eligibility to work. [Wall Street Journal, Feb 21] Libertarians alert: another national ID card debate coming up.
A strange and disturbing new [American] social pattern: growing dependence on government handouts ... the old counter-cyclical relationship between the unemployment rate and dependence on government entitlement transfers has apparently broken down. In good times or bad, evidently, America's dependence on government largesse is now always on its way up [Nicholas Eberstat, AEI, author of A Nation of Takers: America's Entitlement Epidemic (2012), Feb 20] AEI represents the economic class with the wealth they want to keep in the family. Of course, SBIR beneficiaries, especially the companies living on it, don't see themselves as lunching on entitlements, despite no evidence ever presented that SBIR had any effect on the US economy by diverting government biz from open competition to sheltered and entitled competition
If sequestration does come to pass, AAAS estimates that we would lose $54 billion in federal scientific R&D funding between now and the year 2017 [AAAS, Feb 19] AAAS implores everyone to Speak Up for Science, as if any serious ctiizen one was against science.
About 87 percent of startups nationwide are hiring, but the same proportion of startup execs say that it is "somewhat or extremely challenging" to find the talent they need to fill those jobs, according to a new report.Silicon Valley Bank's annual startup outlook report surveyed 758 executives of startup companies with less than $100 million in annual revenue and fewer than 500 employees [Lauren Helper, Silicon Valley Business Journal, Feb 15] The report sounds less like an analysis of small biz and more like a political polemic for immigration of cheap engineers.
Gov. Scott Walker is setting aside $25 million in his two-year budget bill to boost venture capital investment in the state, but isn't putting forward a plan for how such a program would work. The amount of money the governor is recommending and the lack of details provided differ dramatically from his $400 million venture capital proposal in 2011. That effort failed after getting bogged down by political disagreements and the use of out-of-state investment managers with questionable track records. [Jason Stein and Kathleen Gallagher, Milwaukee Journal Sentinel, Feb 18] A big state operated investment program invites political favoritism in handing out the money, as in Texas. Politicians also conveniently over-estimate the ROI from government investment in specific businesses. They typically write glowing press releases at input time, and then ignore any economic evaluation which would only occur after a couple of intervening elections when a lot of the program initiators are out of office.
Pharmaceutical and biotech companies axed something like 150,000 workers from 2009 through 2012. Now guess what? Those same companies are now complaining, in a recent report from the consulting firm PwC, that they are unable to find enough qualified workers to fill key positions they need to grow. ....To me, this report raised more questions than it answered. What is the industry doing to develop its own people to fill these jobs? .... Is this part of some lobbying push to get Congress to allow more H1-B worker visas, so that more skilled foreigners can come to the U.S. and do these jobs for lower wages? [Luke Timmerman, xconomy.com, Feb 18]
Bloomberg says that defense contracts fell 67% last month. Stand by for big trouble with SBIR contracts.
America’s free-enterprise system is what enables our manufacturers to be the most innovative. No one is suggesting that the government pick winners or losers. Some bets on new companies, such as Solyndra, are bound to fail. But such failures should not deter the government from investing in DARPA, or ARPA-E, which can propel innovation, new technologies and new industries. We also must help keep manufacturers at home through tax incentives, attract immigrants and better prepare a skilled workforce. And we must continue the collaboration between government and business that helped make America an economic superpower. [Ro Khanna, Washington Post, Feb 17] Remember that an innovation program with no failures is a failure of imagination. SBIR has the structure to start new innovation ideas, but its capture by the federal agencies' mainline managers has practically nullified its potential. The basic problem is that politicians cannot invent a subsidy program that will not tbe captured by the Iron Triangle of legislators, beneficiaries, and managers. And SBIR is no exception.
Texas fights money with money. Biotech companies, Lowe said, “incinerate cash.” Many venture capital firms, seeking to reduce risk, wait to invest later in a company’s lifespan. So why should taxpayers invest early? “The venture capital perspective is strictly financial,” Lowe said. “We’re losing the ability to take all this (cancer) research and turn it into new medicines. That’s a role for government to play.” Texas’ Achilles has been a shortage of venture capital compared to the West and East coasts. “Yes, the attitude is that there’s only two places to set up a biotech company — California and Massachusetts,” Lowe said. “CPRIT financing has gotten people’s attention.” .... Texas's answer to the brain-drain is another Texas institution — the Cancer Prevention and Research Institute of Texas [CIPRIT}, the $3 billion cancer-fighting fund. ... CPRIT spends the bulk of of its money on research and prevention programs, but there is a debate at the Capitol over how much it should dedicate to commercializing research into marketable products. It hasn’t helped that the state agency is under criminal investigation and legislative review because it mishandled at least three of its largest grants, totaling $56 million [Laylan Copelin, Austin American Statesman, Feb 18]
A recent academic article from NIST research analyst Gregory Tassey suggests that a major overhaul of U.S. economic policy is needed to ensure the country's long-term economic growth. A set of policies based on strategic investment in technology development and commercialization could boost the nation's productivity and help reverse the trend of falling incomes. These investments should not focus simply on short- and middle-term research missions, such as national defense or renewable energy, but on a wide variety of technology areas with the potential for long-term growth. [SSTI, Feb 13] In-house government economist, whose normal mission is economic rationale for NIST programs, opines on politically loaded subject.
The embattled Texas Emerging Technology Fund received a lot of praise at the committee meeting [of the state House Committee on Technology ] .... After investing $184 million, Boswell said, current asset capital is valued at $186 million and $5 million has already cashed in ... The ETF has also attracted criticism due to investing in companies that failed. Two company CEOs appeared before the committee and explained how ETF investments enabled their companies to grow, generate jobs and succeed. [James Jeffrey, Austin Business Journal, Feb 12] Of course, some of the complaints were that a few companies failed, by the people whowant to uinvest in brand new ideas thathave been thouroughly rested. Any emerging company fiund that has no faliures is itself a failure of enterprise. Teh cited return numbers are certainly not impressive from a venture investor. Texas has the same problem as any government investment program - conflict of politics and capital. Politics is not about Return On Investment.
Tooth-fairy economics.The sequester, along with the tax increases, would slow growth for a quarter or two, perhaps to 1%. But thereafter the slower growth in government debt levels and less uncertainty attached to fiscal policy would lead to greater private investment, increased economic growth and substantially reduced deficits. [John Makin, AEI, Wall Street Journal, Feb 14] Sounds like a unprovable political claim as economists would have a hard time making a cause-and-effect correlation for so vague an input condition as market confidence after a reduction in economic activity in an economy as powerful and diverse as America's. The politicians are having a hard time selling any "solution" to restore the economy to a desired annual growth rate, and more important, a "satisfactory" level of employment and simulltaneously restoring stability to the government's finances.In the past three recoveries from recession, U.S. growth has not produced anywhere close to the job and income gains that previous generations of workers enjoyed. The wealthy have continued to do well. But a percentage point of increased growth today simply delivers fewer jobs across the economy and less money in the pockets of middle-class families than an identical point of growth produced in the 40 years after World War II. ... Many lawmakers have yet to even acknowledge the problem. [Jim Tankersley, Washington Post, Feb 14] Unfortunately for the politicians, the problem is too complex for sound-bites in a cacophony of competing vested interests. And advances like Twitter and YouTube have reduced the national attention span to hours. For entertainment, watch the politicians scramble to keep up.
Every state does it. In 2011 Connecticut paid Alexion Pharma (Cheshire, CT $1.7M SBIR) $46 million to commit to hiring 200 new employees. At $230,000 per job, this still far exceeds the threshold for a sound investment in the state's economy. .... Oklahoma's Small Business Capital Formation Incentive Act provides a 20% tax credit for investments in Oklahoma small businesses. In 2009, reported the Oklahoma Tax Commission, the program cost the state $17 million but generated only 21 new jobs. .... Politicians want to be re-elected, and a solid record on nominal job growth—regardless of the cost—tends to be more important to officials' re-election prospects than is the prudent management of public funds. That is one reason most such programs are structured to yield job creation immediately while deferring the cost of the incentive into the future—preferably when other politicians will be in office. [Tom Foley and Ben Zimmer, Wall Street Journal, Feb 9] Mr. Foley, the 2010 Republican nominee for governor of Connecticut, is founder of the Connecticut Policy Institute, of which Mr. Zimmer is executive director.
SBA launched a website and blog to educate small-business owners about the Affordable Care Act. (Obamacare, which the Republicans may regret calling by that name).
If your SBIR handlers in the government seem distracted and can't quite meet your expectations on processing your stuff, remember that they are worried about a furlough - fedspeak for layoff - especially in DOD which would be hard hit by the sequester. They are also probably facing commands to hold SBIR "money" until the sequester smoke clears.
The debt ceiling law as it stands today places a fixed-dollar limit on the level of federal debt. It originated a century ago as a reasonable limit on borrowing for specific (micro) programs, but gradually morphed into an absurd limit on the entire (macro) budget. For decades it has been a self-imposed financial weapon of mass destruction, and its only effect so far has been to enable political opponents of the party holding the White House to grandstand for the cameras [Steve Conover, The American (AEI), Feb 7]
Asking hard questions. The [Texas] Legislature has temporarily zeroed out the [Emerging Technology] tech fund’s budget as lawmakers study the fund’s performance..... Companies funded by the Fund have done a better job of attracting outside investment dollars than of creating jobs, the fund’s 2012 annual report shows. [Leylan Copelin, Austin American Statesman, Feb 4, 13] Politicians love to talk about big input but have trouble finding great output tales. And it's really hard to find job creation beyond the jobs paid for by the government money. Never mind, SBIR will keep riding the political small biz myth.
Texas Gov. Rick Perry quietly came to San Diego last week to lure biotech companies seeking to escape from higher income taxes under Proposition 30 to the Lone Star State. [Jonathan Horn and Bradley Fikes, utsandiego.com, Jan 31] If taxes were all that mattered to business, Florida and Texas would dominate the world. But New York, Massachusetts, and California dominate because .... you name them. Taxes are the price of civilization.
Half of the sequestration would apply to the military budget, an area where most cuts would probably enhance rather than damage future growth. Reducing the defense budget by about $55 billion a year, the sum at stake, would most likely mean fewer engineers and scientists inventing weaponry and more of them producing for consumers. [Tyler Cowen, New York Times, Feb 2] SBIR would take a hit also, which means several small companies will have to exit the government gravy train and create something that makes wealth. Meanwhile, the SBIR junkies who live on that dole will be advocating higher award amounts. There's no interest like a vested interest. What the big SBIR dog, DOD, with a smaller SBIRremains to be seen.
Safe, ready, and reliable. NASA needs things that go into space and work there for a long time without maintanence. So, its SBIR plan is obviously to fund safe and reliable technologies that can be engineerd into flight readiness (which requires much, much, testing and reviews). Its latest Phase II SBIR list (for FY11) sounds like good work for level-headed engineers with no chance or risk for a technology leap. Leaps are seen as just too dangerous. It's also the kind of stuff that only a government could love with no chance for noticeable wealth creation.
Training academies only need apply. North Carolina Gov. Pat McCrory is pushing for state funding of higher education to be based on the success that community colleges and universities have at placing their students in the job market. I don't want to subsidize (a course) if that's not going to get someone a job ... it's the tech jobs we need right now, stated McCrory on the nationally syndicated Morning In America radio broadcast. North Carolina recently was recognized by the Brookings Institution and The Atlantic for its SuccessNC Initiative that establishes curriculum-based college and career pathways for the state's community college system. The initiative was put in place to support the state's goal of doubling the number of students completing career credentials by 2020. [SSTI, Jan 30] And the bright kids who don't yet know what they want to study will have to go elsewhere that welcomes bright students? Will the best history and English faculty follow them? Will only NC jobs count as success? Or is the Guv just pandering again?
Increased immigration would boost the U.S. economy. Immigrants are 30 percent more likely to start new businesses than native-born Americans, according to a research summary by Michael Greenstone and Adam Looney of The Hamilton Project. They are more likely to earn patents. A quarter of new high-tech companies with more than $1 million in sales were also founded by the foreign-born. A study by Madeline Zavodny, an economics professor at Agnes Scott College, found that every additional 100 foreign-born workers in science and technology fields is associated with 262 additional jobs for U.S. natives.> [David Brooks, New York Times, Feb 1] But since many immigrants can't vote, the political system can ignore the economics and pander to US business appeals for government handouts.
Don't cut you, don't cut me, cut that guy behind the tree. The future of science is uncertain as we continue to await action by our policymakers on the proposed across-the-board budget cuts. It seems inevitable that there will be reductions in federal spending, but will these cuts be allocated in a way that devastates science research and education, threatens future economic growth, and erodes America’s competitiveness in the world? [AAAS, Jan 30]Every government beneficiary has the same story of tragic loss from budget cuts.
How silly can they get? As the stats show a sickly econ for the latest quarter,our representatives spring into action. McConnell added, “Why is the federal government funding Chinese studies on pig manure, and research into the smoking habits of Jordanian college students and reality TV shows in India? Are Democrats prepared to cut this kind of waste?" If the government cut such research for any reason at all, the economy would suffer a proportional decline. The politicos pretend fantasy math that cutting spending will magically increase national total economic activity. Unfortunately, magical math feeds political ideology and has nothing to do with real economics. The more likely basis for the decline: “Federal defense purchases declined at an annual rate of 22.2 percent in the fourth quarter of 2012, the largest quarterly decline in 40 years,” Krueger said. “The decline in government spending across all levels reduced real GDP by 1.33 percentage points in the quarter.” The war drawdown and sequestration imminence meant great savings for defense spending and less money going into buying stuff for the war machine. Hurricane Sandy slowed a lot of economic activity, but not to worry, the re-building will boost economic numbers as disasters boost GDP growth as they destroy physical capital. Just don't expect partisan politicians to sound rational. Meanwhile, will the people of Kentucky find their Senator insulting their intelligence? Unfortunately for emlightening debate, the White House is mouthing some of the same juvemile "gotcha" stuff.
Imagine that: too much early capital for the companies' good while SBIR slogs on with the fanatasy claim that small high tech firms are starved for early government capital. The problem is not lack of early capital but a competitive culling of new technology to what the markets can profitably absorb. Government just wastes capital by funding companies and ideas with no realistic business prospects even if the technology works. Why? It's just politics.
Smell a competitor, go political. In statehouses around the country, some of the nation’s biggest biotechnology companies are lobbying intensively to limit generic competition to their blockbuster drugs, potentially cutting into the billions of dollars in savings on drug costs contemplated in the federal health care overhaul law. .... “We’re still dealing with chaos,” said Craig A. Wheeler, [CEO]of Momenta Pharmaceuticals which is developing biosimilars(generic act-alikes). [Andrew Pollack, New York Times, Jan 29, 13]
Silicon Valley has long prided itself on avoiding the lumbering relationship between big government and most industries, but somehow it has become one of the top lobbyists in Washington. The Center for Responsive Politics reported last year: "Tech firms have doled out more and more lobbying money even as the amount spent on lobbying by all industries has decreased since 2010." Google has a former congresswoman, Susan Molinari, running its Washington office. [Gordon Crovitz, Wall Street Journal, Jan 28] Politicians in their unending quest for financial support foster government intrusion in the marletplace. Firms respond with seeking the best deal, including begging for subsidy or tax favoritism. As a result, we get the best Congress that money can buy.
States intrude in markets also. The Connecticut Bond Commission authorized state borrowing of $9.5 million, which will be lent to a manufacturer, a kitchen cabinetmaker/installer and an investment research firm at subsidized rates. The 10- to 12-year loans will be partially forgivable if companies meet their employment growth targets. Beneficiareis of cheap loans are: Hedgeye Risk Management LLC, Express Countertops, Kitchens and Flooring LLC,APS Technology. [Mara Lee, Hartford Courant, Jan 25] One commenter says: Here’s a wild and crazy idea, how about letting these businesses borrow this money from banks just like everyone else. Business have done everything in their power to destroy good decent government and then comes crying for State and federal dollars. Give them Mitt Romney’s address and let’s see if Mitt’s going to write them a check. After all, he’s in the business of making money. If he doesn’t deem them good enough for a loan, why should we?
Many advanced economies are continuing to live at the expense of future generations, while all central banks have achieved by flooding the world with liquidity is to push underlying problems further down the road. “We are trying to keep a speed for our economies which is simply unsustainable,” he said. Quite so. .... Though the likes of Weber and Weidmann condemn loose money and currency wars, they are perfectly prepared to accept the advantages a depressed currency does to the German economy. Everyone speaks with forked tongue on these issues [Jeremy Wagner, The Telegraph (London), Jan 24] Everyone is for growth, but no one has a sure answer how to get it at an acceptable price. The voters want the politicians to promise growth while they grumble over every recipe.
As politicians consider ways to use [Wisconsin] state money to fund high-potential start-ups, the former director of the [NIH] Elias Zerhouni, who is now president of R&D for the large pharmaceutical firm Sanofi, said the system for developing new drugs is broken and requires a more open, smarter innovation network that includes scientists and others from industry and academia. Five years ago, there were 500 venture funds that would invest in biotech companies, Zerhouni said. Today, there are fewer than 200, and only 10 or 15 of them fund very early-stage research, he added. [Kathleen Gallagher, Milwaukee Journal Sentinel, Jan 22] The discussion talks only of input, not of results from Wisconsin's or any other state pseudo-VC programs.
DOD Deputy Dog authorized a civilian hiring freeze and termination of temporary employees, .. and other nibble stuff. ... DOD currently stands to lose more than $6.5 billion a year in R&D funding under sequestration [AAAS, Jan 16] Everybody's still wishing for miracle math (or politics) to avoid the knife in their backs. But no economist has promised them such miravles as politicians ignore and ridicule economists anyway who don't tell them what they want to hear. Think tanks all over DC have their home-cooked economists to breathe wonderful numbers in the sponsors' ears that their ideas deserve full funding (or tax avoidance). The economy has so many numbers and economists that any combination of numbers can be baked into a great looking cake.
most of the academic literature is supportive of high long-run returns to infrastructure and research and development spending on private-sector productivity and economic growth). Nevertheless, the declining level of trust in government since the 1970s is a fairly close mirror for the growth in spending on social insurance as a share of the gross domestic product and of overall government expenditures. We may have gone from conceiving of government as an entity that builds roads, dams and airports, provides shared services like schooling, policing and national parks, and wages wars, into the world’s largest insurance broker. Most of us don’t much care for our insurance broker. [Nate Silver, New York Times, Jan 16] R&D is clearly an economic growth investment, but its return is too long term for the political competition. So, naturally, the government's R&D structure is tainted by political needs, which do things like target geography and interest groups, rather than ROI, for "investment."
those who don't want to fix Medicare, the heart of the nation's deficit problem, have a continuing excuse - don't take anything away from the elderly, continue borrowing a trillion or so a year, and above all don't do anything to harm the limping economy. [Ron Haskins, Real Clear Markets, Jan 14] All the politicians are groping for new magic math that will tame the deficits without invadng anyone's comfort zone. They don't understand what we learned in science, every system has only a limited number of degrees of freedom, which once specified, must leave the rest of the variables to the math. A simple three variable system: Keep Medicare + cut the deficit = recession. Keep Medicare + avoid recession = bigger deficits. Cut deficits + avoid recession = cut Medicare. Two degrees of freedom in a three variable system.
SBIR Eligibility Webinar On Wednesday January 16, 2013 the SBA will host a special webinar explaining the new final rule on SBIR/STTR size regulations. This includes but is not limited to items such as: a) When SBA Determines Size and Eligibility; b) Certification of Size and Eligibility; c) If a business concern can self certify its size and eligibility status; d) Size protest or request for a formal size determination; and of course, e) The VC/Hedge Fund/Private Equity issue. This one hour webinar will start at 1:00pm EST, Wednesday January 16. Virtual attendance is "somewhat limited" [SBIR Insider, Jan 13] The real issue is how to deal with the question of VC ownership under the new SBIR law.
The EU will pick two futuristic computer modeling research proposals and shower them with up to €1 billion each. Six candidates for super-model: massive data mining for planetary simulator; graphene; guardian angel sensor network; simulate human brain; personalized model for 500 million Europeams; robot companions. Like most research, modeling can absorb any money thrown in its direction. [Science, Jan 4]
Fearing that Congress and the president may not reach a deal on spending and the deficit, the Pentagon’s leadership is freezing civilian hiring, limiting maintenance work and delaying approval of some contracts.[New York Times, Jan 11] SBIR is sure to be on the list of wait-and-see contracts because (1) they are not mission critical work, and (2) the mangers and contract officers may be on furlough. Longer term, the SBIR is likely to remain as law, but in the scramble to re-adjust operations, SBIR would naturally take a low priority for attention. DOD may even go further in pushing SBIR work into mainline support contracts.
Connecticut Innovations announced that it will underwrite up to $250,000 in stipends for high-tech startup founders this spring in Stamford, with guidance from two men with startup experience. Eight to 10 teams will get $20,000 to $25,000 in exchange for 6 percent equity in their businesses. To be eligible, they must be working full time on the concept, have at least one technical expert, and have been working for three months or more before their application. [Mara Lee, Hartford Courant, Jan 8]
Economists across the ideological spectrum will cheer [Bruce Bartlett's] rebuttal of the myth that individual income tax cuts from current levels raise revenue, a fallacy that remains surprisingly and disturbingly widespread in the popular and political debate. [AD Viard reviewing Bartlett's The Benefit and the Burden: Tax Reform ..., Journal of Economic Literature, Dec 2012] Supply-side tax ideas, like most new tax proposals. start with the objective of justifying lower taxes for the author's group. Tax fairness, like beauty, is in the eye of the beholder.
Hatteras Venture Partners of Durham, N.C., has been chosen as the first firm to receive an investment from the [SBA] Early Stage Innovation Funds initiative. Hatteras is eligible to receive as much as $50 million from the SBA to invest in seed and early stage companies. The firm has already raised $88 million from outside investors, said Dennis Byrne, an SBA spokesman. [Kathleen Gallagher, Milwaukee Journal Sentinel, Jan 8]
Most experts think the global recession was caused by a collapse in demand -- and so, in good Keynesian fashion, they want governments to ramp up spending to compensate. But the West’s recent growth was dependent on borrowing. Going even further into debt now won’t help; instead, countries need to address the underlying flaws in their economies. ....But the U.S. economy will emerge from its trauma stronger and widely restructured. [Roger Altman, Foreign Affairs, J/F13]
Because fights attract contributions.> The new Congress convened Thursday to an all-too-familiar backdrop of looming fiscal showdowns, leaving incoming members to ready themselves for the same kind of divisive battles faced by the last Congress. [Sara Murray and Patrick O"Conner, Wall Street Journal, Jan 4] Only voters and contributors can discipline a representative democracy.
iRobot up 11% [Jan 2, 13]
2013
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2012
Kicked the austerity can again. The parties played to their bases and made a short term deal for some taxes and deferred austerity pain for another day when ther Republicans can trumpet slogans for their base on the debt limit. We can thus expect the same theatrics in two months. Critics abound; lobbyists and fund-raisers rejoice. .... We expect more absurd policies, motivated by political pain aversion, to be floated, tested, and implemented over the next few years that will increase systemic risk and geopolitical tensions. [Global Macro Monitor, Dec 31]
SBIR Insider Rick Shindell reports on SBA's "final" SBIR rule making. More complexity in proposing and agency management although the enterprise still does not have to exist until funding agreement signed. Explaining the new eligibility by VC-owned companies will take more effort. If you are wholly US owned and a majority by individuals, you are clear to propose.
Tax and cut somebody else. The “war on success” waged by the guilty rich and labor unions will have a slow and detrimental impact.[Robert Nelson, VC, Dec 31] The economists pretty puch say that income tax rates have little or no effect on GDP. But, of course, everyone with a personal vested interest in tax rates cries havoc at any rise, no matter what the larger story for government finance. The ugly present fact is that VCs are doing better than they might have done if we had had responsible fiance for the last forty years instead of pumping the cononmy with deficits. They also don't give themselves enough credit for their ability to adapt to whatever system they find themselves in.
A handy subject. Income taxes stir up strong feelings among voters because of concerns about fairness — and politicians exploit those emotions, whichever party they belong to. As a result, the broader budget discussion keeps getting diverted to focus on tax rates, which actually play only a small role among the causes of current U.S. financial troubles. [Michael Sivy, TIME, Dec 26]
Beware the axe. an e-mailed memo on Thursday from agency heads to employees. The cuts would be “significant and harmful to our collective mission.” Furloughs “or other personnel actions” — layoffs — remain a real possibility. [Lisa Rein, Washington Post, Dec 25] Remember that SBIR is a low priority for federal agencies which would easily surrender SBIR managers and workers in a funding crumch. The theater of the fiscal-cliff is still wide open.
If they get a fiscal deal done in the next few weeks, do you really think it will result in a sensible tax system, or bring long-term health-care spending under control? Are we going to invest more in education? Will we really have a frank discussion about what kind of social-insurance programs we want, and how to pay for them? [Simon Johnson, Bloomberg, Dec 23] Political theater is easier than serious allocation of public capital.
Can't be good for the economy. Shrinking the credit card shrinks the standard of living. No fiscal-cliff plan that would actually accomplish anything has a good result except in the minds of the advocates. The Tea Party deficit hawks want debt shrinkage for the long term stability of the national finances. The tax cutters make up their own economcs to justify their passion at the debt cutters' expense. The recipients of federal money (defense contractors, pensioners, etc) wnat the money to keep flowing. The middlers want something done about rhe shrieking. But any solution that reduces the deficit, and eventually the debt, will reduce economic activity and thus employment. Live with the discomfort of the national medicine in your long term interest. Unfortunately for that idea, politics doesn't do long term. Look for doing nothing costumed as doing something, and eyewash like Obama is appointing the chief executive of bond giant PIMCO as chairman of a presidential council created to help spur private-public partnerships and global economic development. [Wall Street Journal, Dec 26].
[SBA] is taking applications from experienced early-stage fund managers who could receive up to $50 million each to invest in high growth potential start-ups. The SBA has committed as much as $1 billion to an Early Stage Innovation Fund program, which it is operating with Startup America. Applicants must have experience in early-stage investing, and must invest at least half of their dollars in early-stage, small businesses. They would have to match the SBA funding with privately raised money. [Kathleen Gallagher, Milwaukee Journal Sentinel, Dec 19] Hey, the federal agencies have had thrity years to do the same thing, but only SDIO/BMDO/MDA did it and only then when Dwight Duston ran the Innovative Science group. All the rest ignored the company and just funded the technology they liked.
A new anti-evolution bill has been prefiled in the Texas House. would alter the state's education code. ... In Indiana, state senator Dennis Kruse, an advocate of teaching creationism, says that he plans to introduce a bill allowing students to challenge teachers on their lessons. [AAAS, Dec 19] Next, the defense of magic, crystal balls, wizards, and whatever to put the supernatural into teaching nature, and then try to recruit good scientists into the state.
Yet another government innovation program.Two organizations have in recent weeks called on the United States to create a national federal office of innovation to help focus and concentrate innovation across the country. Following the election, the Information Technology and Innovation Foundation (ITIF) announced its policy recommendations for the administration in their weekly news publication as part of their "Winning the Race 2012" series. Among other recommendations to improve the country's competitiveness, innovation, and productivity, ITIF calls for the creation of a National Innovation Foundation. Similar in scope and organization to the National Science Foundation, the National Innovation Foundation would support companies and other organizations in innovation activities. [SSTI, Dec 13]
Cascading austerity.<.Amid the economic uncertainty surrounding fiscal cliff negotiations, and what it means for states, some governors are erring on the side of caution when it comes to funding recommendations for the upcoming year. At the same time, several state budget officers are projecting significant revenue shortfalls in the current fiscal year or biennium as a result of lower than expected tax collections. States could lose an estimated $7.5 billion in federal funding if the automatic spending cuts take effect for 161 grant programs, according to a recent analysis by the Associated Press. States with heavy defense spending, such as California, Texas and Virginia could also take a hit with $33.6 billion in cuts slated for military and defense contractors. In the coming months, governors from across the nation will present their State of the State addresses — a key time to unveil new and expanded TBED programs. But for some states, shoring up budgets and preparing for worst case scenarios is the top priority. [SSTI, Dec 12] All the fine talk of getting the nation's finances in order usually overlooks the reality of what federal austerity would mean. Favored programs sliced at both federal and state level. The advocates make implicit assumptions that they can engineer some escape mechanism for the things they like while sticking other programs for the bill. The other main escape is the idea the growth will solve the problems, if only they had any realistic program to get the growth beyond platitudes about liberty and free markets.
Austerity. Everybody wants it and nobody wants to pay for it. Taking a trllion or so out of the economy will certainly reduce economic acitvity in any combination of more tax, less spending, and more private debt pay-down. We're a long way from national debt paydown, and the next tinme we get there, another GW Bush figure will arise to tell us we should be getting our money back. Not to worry, some day we will get the hang of responsible self-government. Meanwhile, the theater continues as each party plays to its base and House members have no pressure to compromise since most are gerrymandered into secure seats where the only challenge would come in the next primary election where most of the voters are the avidly committed.
Big prize, big temptation. Journal Sentinel report on Sunday that financier Stephen Einhorn and his wife donated $25,000 to Gov. Scott Walker a month before Einhorn's Milwaukee firm won a contract to manage $1 million of taxpayer money, potentially triggering federal "pay-to-play" conflict of interest rules. [Jason Stein and Kathleen Gallagher, Milwaukee Journal Sentinel, Dec 11] Civil service was invented to handle merit-based decisions that could be poisoned by politicians.
Hamilton, who served as secretary of the Treasury in Washington’s administration from 1789 to 1795, was certainly well-prepared to handle the new government’s financial problems. He had run a merchant house in the Caribbean as a teenager, and he was incredibly smart—smarter than any of the Founders. He could read a paragraph and extract its meaning faster than anyone, and he could write a meaningful paragraph faster than anyone as well. ... Even someone as learned and widely read as Jefferson had no understanding of banks, and he consequently hated them. .... We may not know what we are doing with our own public finances, but perhaps we may take some comfort in the fact that the Founders, two centuries ago, did not know what they were doing, either. [Gordon Wood, reviewing McCraw's The Founders and Finance, The New Republic, Dec 7]
The sceptics argue that technology has exhausted its growth-enhancing potential, that innovation is now mostly about social media, entertainment and silly games, with no ability to boost living standards. In a recent provocative piece, Robert Gordon (2012) has argued that the recent waves of technological innovations are simply not as transformative as those of the industrial revolution, and Martin Wolf of the Financial Times commented: “Today’s information age is full of sound and fury signifying little.” [Marco Annunziata, voxeu.org, Dec 7]
Serve the highest bidder, drain America first. Alaska's governor will introduce legislation allowing the state to provide $355 million in seed money for a liquefied natural gas project that promoters hope will eventually ship North Slope natural gas to Asian markets. [Yereth Rosen, Reuters, Dec 8] customers are lining up. Japan’s Sumitomo and another Asian buyer have signed long-term agreements to buy LNG from Cove Point; those contracts include guarantees that enable Dominion to line up financing.Short term profits trump strategic independence. [Washington Post, Dec 9] Private firms are neither nationalists nor philanthropists.
Silly season continues after election. The negotiating of a fiscal-cliff deal brings out the silly rationales for shifting the burden of re-balancing USG finances to someone else. From having the poor pay some income tax just to remind them of their duty to arguing that higher taxes on the richest will destroy small biz and capital investment. Most of the politically appealing ideas are economic nonsense. Unfortunately, we are still in the denial phase of thinking we can have our economic cake while someone else pays for it.
Fingers pointing and waggingA bankrupt battery manufacturer that was a cornerstone of President Obama’s effort to make the United States a global leader in clean-energy technology could end up in the hands of a Chinese company when it goes on the auction block Thursday. Congressional Republicans call the company, A123 Systems, which received $133 million in federal stimulus grants, a textbook case of how the Obama administration wasted taxpayer money trying to nurture new industries. Administration officials say the stimulus money was used to build a new manufacturing facility in Michigan that could remain open under new owners, even if they turn out to be foreign. [Washington Post, Dec 6, 12] Sensible people should ask what the Michigan Republicans thought when the administration sent the big money to Michigan.
Five Milwaukee area universities have received a five-year, $1 million matching grant from the U.S. Economic Development Administration to form a coalition that will support entrepreneurs and start-ups. The Wisconsin Center for Commercialization Resources must match the funding with another $1 million [Kathleen Gallagher, Milwaukee Journal Sentinel, Dec 5] The politicians will like the news story and then will ignore evaluating it.
Vote Republican for free enterpeise and energy security. Shipping some of the newly abundant U.S. natural gas overseas would benefit the nation's economy more than keeping it all at home, according to a long-awaited government study that has the potential to reshape the global energy market. [Keith Johnson and Tennille Tracy, Wall Street Journal, Dec 6] For all the political blathering about energy independence, when profitable exports call, private frims in a free-market economy ignore national security.
Recently, a few writers, including internet entrepreneur Peter Thiel and political activist and former world chess champion Garry Kasparov, have espoused a fairly radical interpretation of the slowdown. In a forthcoming book, they argue that the collapse of advanced-country growth is not merely a result of the financial crisis; at its root, they argue, these countries’ weakness reflects secular stagnation in technology and innovation. As such, they are unlikely to see any sustained pickup in productivity growth without radical changes in innovation policy. [Kenneth Rogoff, project-syndicate.org, Dec 5] What's a free-market government to do? Tax the private economy to supply funds to private and public entities tio do productive R&D? If so, how is the government to decide where to allocate such capital better than would be done if the profits were left in the hands of private firms to invest for wealth creation? Which investor si more likely to create more economic activity that, in turn, creates more investment capital?
Watervliet Arsenal, through the Arsenal Business and Technology Partnership, will receive $300,000 [from New York State] to continue its role as a research and manufacturing facility. [Business Review (Albany) Nov 30]... New York announced that $2.9 million in grants have been awarded to help local municipalities and community organizations support and strengthen New York’s military installations in the face of looming defense cuts in Congress.[state press release] Rome Lab got $1.2M.
DOD SBIR put out a pre-solicitation. Proposals due Jan 16, 2013. You can talk technical to topic authors, the most influential voices in the reviews, until Dec 17. No, they won't tell you whether your proposal will win, but they may tell you not to waste your time and money writing it at all. If you haven't got the very best new thing in your field, or you are not long time friends with the agency, your chances are poor. And don't believe all the political blather about how great small biz is at creating jobs for America. The Congress is forcing the agencies to do SBIR unwillingly, but Congress will not intervene on behalf of your proposal(s).
UNITED STATES OF SUBSIDIES States, cities and counties are giving up more than $80 billion a year to attract or keep companies and the jobs they provide. But officials and governments rarely track how many jobs follow, and many do not know the value of all their awards. ....Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid. .... The Times analyzed more than 150,000 awards and created a searchable database of incentive spending [Louise Story, New York Times, Dec 2] [Connecticut] Gov. Dannel Malloy has overseen a 70% increase in state assistance to retain or bring new companies to the state during his less than two years in office compared with the previous eight years combined, a Wall Street Journal analysis shows. [Joseph De Avila, Wall Street Journal, Dec 3] Politics giveth, politics looketh away. Biggest subsidizer,$19B, by the free-market champion - Texas.
Two small grant programs and a minor reorganization of related functions within the [SBA] are the aims of a [new federal entrepreneurship] bill. ... "Today's Entrepreneurs are Advancing Mentorship Act of 2012," or the TEAM Act [SSTI, Nov 28] Politicians want to be seen doing something for small biz [as well as for motherhood, the flag, and apple pie] What's missing is any evidence of market failure that calls for government intervention. But there is plenty of evidence of capital ready to invest in potential economic winners although that capital is not dstributed proportionally to number of voters.
The scorpions circle each other. Mating of animals that would naturally eat each other is tricky business. The Democrats and the Republicans are doing a scorpion mating dance to find a happy medium that will reduce the deficit and foster growth while sticking the blame for inevitable failure on the other party. Each thinks the public is dumb enough to believe the story line of either party. Do you think there is a middle ground that can fool the basic laws of economics?
Don't cut us, we're special. “It would absolutely devastate the American scientific community exactly at a time when other countries are investing tremendously,” says Alan Lesher, CEO of AAAS. A ride over the fiscal cliff would cut science by 8% Join the lone queue of "we're special" pleaders against austerity. But since science investment is an act of faith, rather than an ROI investment, they can only talk about the hoped-for science that won't be done until next year with no specific harm. Congress, in a budget brawl for survival by multiple pleaders will ignore grand pronouncements by potenital future successes in favor of protecting present voters and contributors.
We will most likely undergo a recession when we wean ourselves off the unsustainable deficit spending of the last four years. The choice is not recession or no recession. The choice is recession now or recession later.[Jeffrey Dorgfman, Real Clear Markets, Nov 26] Make that ten years since we plunged into undertaxing and overspending. Tax cuts to wipe out the nasty surplus and then Medicare Part D, Iraq, Afghanistan, TARP, and stimulus. Of course we can afford it; we're the world's richest nation and we own the money supply! Happy Day, we could say yes to everybody with a bright government idea. Small biz need a handout? Divert it from the big government contractors who will never miss it. Spend, spend, elect, elect.
government has shown no interest in rigorous evaluation of corporate subsidies in the past, and no evidence suggests it will in the near future, either. [Scott Wallsten, Technology Policy Institute, Sep 2011] In politics, it is sufficient to pass out the goodies. You can tell you've done good by the happy, grateful looks [from Lloyd Weber's Evita]
Fear the fear. Supposedly, any day now investors will lose faith in America’s ability to come to grips with its budget failures. When they do, there will be a run on Treasury bonds, interest rates will spike, and the U.S. economy will plunge back into recession. This sounds plausible to many people, because it’s roughly speaking what happened to Greece. But we’re not Greece, and it’s almost impossible to see how this could actually happen to a country in our situation. ... For we have our own currency — and almost all of our debt, both private and public, is denominated in dollars. So our government, unlike the Greek government, literally can’t run out of money. [Paul Krugman, New York Times, Nov 26]
Science, religion, politics. Charles Darwin received nearly 4,000 write-in votes in Athens-Clarke County in balloting for the 10th Congressional District seat retained Tuesday by five-year incumbent Republican Rep. Paul Broun, reports the Athens Banner-Herald. A campaign asking voters to write in Darwin’s name in the 10th Congressional District, which includes half of Athens-Clarke County, began after Broun, speaking at a sportsmen’s banquet at a Hartwell, Ga., church, said evolution and other areas of science are “lies straight from the pit of hell,” the Banner-Herald said. [Carla Caldwell, Atlanta Business Chronicle, Nov 9] Meanwhile, Georgia politicans make inviting noises to sci-tech to invest and locate in Georgia.
Competition Wanted. A coalition of entrepreneurs, investors and advocacy groups is pressing its campaign for a special visa that would allow foreigners who launch companies to stay in the U.S. ... People who would launch any type of business—from an Internet startup to a restaurant to a trash-hauling operation—would qualify for one of a total of 75,000 visas. [Vauhini Vara, Wall Street Journal, Nov 23] The idea pits economic conservatives against nativist Republicans. And it could be interpreted as a recognition that government programs for home-grown "innovation", like SBIR, are not doing well in fostering innovation that creates jobs and downstream economic activity.
ARPA-E has funded around 200 projects, all of them meant to be "transformative" ways to either help replace foreign oil or reduce emissions. The notion is that such projects are too speculative and risky to gain large investments from companies. .... However, last year some House members said the agency should be defunded because its projects are too commercial and sometimes replicate work already paid for by the private sector. [Martin LaMonica, MIT Tech Review, Sep/Oct 12] Politically targeable as either wasteful or foolish? Of course. The only good tech investments are those that win a war or put money into thye Comgressional members electorate.
the camp that thinks Romney was not conservative enough and did not fully articulate a conservative contrast to President Obama, except during the first presidential debate. [Paul Kane and Rosalind Helderman, Washington Post, Nov 20] It's an old line among policy advvocates: if a policy fails, we need more of it.
Connecticut Innovations announced an offer of up to $150,000 to small businesses that are willing to match that contribution and team up with academics to work on technology challenges larger corporations have posed. Up to five small businesses will be chosen to tackle: * the best way to integrate micro grids into the larger electric grid, taking into account metering and cyber security. * the most efficient biomass conversion for fuels, power or chemicals * rechargeable power for lightweight portable electronics. * manufacturing process improvements, including reducing heat treatment distortions, and moving from press to autoclave curing. .... Businesses and universities that are interested in participating should visit http://www.ctihub.com/show/challenge-grant. [Mara Lee, Hartford Courant, Nov 14]
Cities today have a productivity advantage for different reasons, to do with ideas rather than costs. When one firm in a city comes up with a new technique, product or design, nearby firms may quickly build on it or hire its creator. One firm’s innovation boosts its own productivity but also spills over to other businesses. Companies that prefer seclusion cut themselves off from these “knowledge spillovers”. [The Economist, Oct 13] If the government wants to subsidize winners in any economic subsidy program, it should focus on firms in cities. uNfortunatley, the politics of two Senators per state guarantee that won't happen.
Today starts the next fantasy economics carnival as everyone tries to wangle a bettter deal in the dismal science of re-balancing national finances. Almost all the arguments being made are self-serving, economically wrong, and supported by captive analysts/pundits. Don't raise our taxes, don't cut our government contracts, don't cut our government jobs, let growth balance the budgets, .... . Eventually politics will rule the outcome with the most likely first step being to kick the can farther down the road because the constituencies are not yet ready for pain.
According to the Robotic Industries Association (RIA), there are some 225,000 robots at work in U.S. factories today, putting the nation second only to Japan in terms of robot usage. However, this number represents only a fraction of the total possible market. "Many observers believe that only about 10% of the U.S. companies that could benefit from robots have installed any so far," RIA's President, Jeff Burnstein notes. "Among those that have the most to gain from robots are small and medium-sized companies." That market, says Visti, is exactly where Universal Robots (Denmark) is aiming.[Travis Hessman, Industry Week, Nov 9]
perhaps the most interestingJournal survey result is that only 6.9 percent of readers believed that government should "provide more financing" to small business, while in the NFIB survey, only 3 percent of respondents reported that financing was their top business problem. [Thomas Hemphill, Real Clear Markets.com, Nov 15]
Most of the [SBA]'s loans go to aspiring restaurant owners and hotel franchisees, not companies that come up with ideas that can reshape the global economy. .... New research from the University of Chicago finds that 75% of small-business owners aren't aiming for growth at all. They're basically just looking for a steady job as their own boss. [Aaron Chatterji, Wall Stereet Journal, Nov 14] Government investment in private business should follow the market failure criteria: the societal return is much greater than the return that can be captured by private investment. Restaurants do not qualify.
take an initiative like [SBIR], which awards over $2 billion in grants to help businesses commercialize innovative research. For years, the program was closed to startups that receive the majority of their funding from venture capitalists. The idea was that these firms would have an unfair advantage over other small businesses. But the venture-backed companies are exactly the ones the government should be supporting—they've already been validated by outside investors and have the potential to grow and help the economy. [Aaron Chatterji, Wall Stereet Journal, Nov 14] If you want growth, you have to back the companies most lkely to produce it.
Congressional Budget Office (CBO) reprised its warning that the mix of spending cuts and tax hikes that make up the fiscal cliff would likely cause a mild recession in 2013. [AAAS, Nov 14] Subtract spending = recession. To get back to balance, we would have to cancel years 2001-2011 by reversing the Bush tax cuts, Medicare Part D, Iraq, Afghanistan, TARP, and the stimulus to recover from the financial crash.
Obama bids $1.6T. Obama will begin budget negotiations with congressional leaders by calling for $1.6 trillion in additional tax revenue over the next decade, far more than Republicans are likely to accept and double the $800 billion discussed in talks with GOP leaders during the summer of 2011. [Janet Hook and Carol Lee, Wall Street Journal, Nov 14] Get ready, everybody must share the pain of reducing the big balance on the national credit card as our politicians scramble to put the burden on somebody else. How many will tell their Members of Congress they they accept a fair share of the pain?
trickle-down economics is over. There was a time when a promise of a 20-percent tax cut would have ended the whole conversation in Romney’s favor. But all it accomplished this time was to raise questions—legitimate and never answered—about how he was going to pay for it. Romney had nothing to say to the middle class beyond cutting taxes and watching the magic happen. But voters have stopped believing in that magic. [Michael Tomasky, The Daiky Beast, Nov 13]
[Half the deficit] could be closed by ending all tax cuts, tax breaks and stimulus payments for everyone, according to the Tax Policy Center. But two-thirds of the burden would fall on the middle class — something both political parties want to avoid. All the proposed tax increases on the wealthy, however, even combined with the end of the payroll-tax cut, would raise only $295 billion. So unless there were spending cuts twice as big as the ones currently scheduled, the deficit would still be too large. [Michael Sivy, Time, Nov 13] Face the facts: cutting the deficit will reduce economic activity because private activity will not expand by the full amount of the federal spending and tax taking. No free lunch. The money government takes and spends goes directly into GDP; private assets will go partly into savings, which is good for investment capital but bad for immediate activity. Everyone who complains that cutting or taxing him will reduce growth is correct, but insufficient. Everyone enjoying the fruits should put up some water for the tree.
Simply delaying the pain is not an option, economists say. .... said Rep. Peter Welch (D-Vt.), a liberal who advocates compromise. “And the obvious is: There’s no grand bargain that will not cause political pain for all of us.” [Lori Montgomery, Washington Post, Nov 12] Nonsense. Our ever-responsive politicians will find a way to do almost nothing that sounds like something. They will invoke the happy solution - growth, which is like the proverbial story about two economists in a well: "assume a ladder." Hands will wring, fingers will point, oceans of ink will flow, and our house will not collapse, at least not right away.
“Oh no, we can’t do that,” Not long ago, a former senior official involved in the federal budget process told me that various senators used to meet with him periodically and argue for reducing tax expenditures. He would say that was a good idea, and then go down the list of large tax expenditures. At each one, the senator would say, “Oh no, we can’t do that,” and at some point the senator would repeat his proposition and the conversation would end. [Robert Rubin, New York Times, Nov 13] Where you stand depends on where you sit. Will small biz accept a share of the pain in re-balancing the federal finances? Not likely. Small biz has been finding all kinds of excuses for tax breaks and other econmic favoritism from politicians. And no matter how many economists debunk small biz myths, politicans cling to myths like a life preserver.
A massive U.S. Air Force contract has been awarded to a group of five small businesses that will share in the $851 million worth of work, according to Washington Technology ... sharing the contract: Abacus Technology (Chevy Chase, MD); EIS (Vienna, VA); Odyssey Systems Consulting Group(Wakefield, MA); P3I (Hopkinton, MA); and SpectrumS4 (Burlington, MA). [Dayton Business Journal, Nov 1, 12] No SBIR to any.
Markets are convulsing as lawmakers scramble to avert the higher taxes and slashed spending scheduled to kick in Jan. 1 [Wall Street Journal, Nov10] The politicians have to face the reality that they must pass out some pain as unlimited credit for public programs can't last much longer. The budget hawks are still in the mode that they can pass the pain to the bottom of the economy, even though Obama ran on a platform of higher taxes for the wealthy.
it’s time for the GOP to put it to bed [Romney defended tax cuts on the “rich” because so many small businesses pay the top tax rate.]. Implicit in it is that our growth emanates from small businesses. It doesn’t, plus it’s not a good message to an electorate that likes to think big. Small businesses are to a high degree vibrant because they cluster around big businesses. If this is doubted, readers should travel to Cupertino (Appleand Seattle Microsoft) and ask small business owners how much of their customer base is a function of those two very large businesses. [John Tamny, Forbes, Nov 11]
The big election is over and it is safe to return to regular life, away from the self-serving puffing by office seekers of their importance to your well-being. Our two party system swings regularly between the two parties with proposed revolutions regularly blocked or impeded. That two-party system can get on with adjusting the government financial system back into some sort of balance, of course with much screaming and shouting.
The U.S. tax code has a crazy-quilt of deductions, credits, exemptions and lower rates enacted by Congress over the years. .... Overhauling the tax code could produce a simpler and more efficient system, say economists in both political parties. [Wall Street Journal, Nov 2] If only! Tax efficiency always takes a back seat to vested interests, which is why we have the tangled structure and continuous noise about perfecting it. That noise usually has the message: let me pay less. The economists have pretty much punctured the idea that any particular tax structure has any demonstrable effect on economic activity. The wailing is all political talk seeking advantage.
The devil we know. On the economy, the most powerful argument in [Obama's] favour is simply that he stopped it all being a lot worse. ... That is a hard message to sell on the doorstep when growth is sluggish and jobs scarce; but it will win Mr Obama some plaudits from history, and it does from us too. ... No administration in many decades has had such a poor appreciation of commerce. .. The obstructive Republicans in Congress have certainly been a convenient excuse for many of the president’s failures, ... Obama has shown no readiness to tackle the main domestic issue confronting the next president: America cannot continue to tax like a small government but spend like a big one. ... Backing business is important, but getting the macroeconomics right matters far more. Mr Romney’s more sensible supporters explain his fiscal policies away as necessary rubbish, concocted to persuade the fanatics who vote in the Republican primaries: the great flipflopper, they maintain, does not mean a word of it. .... For all his businesslike intentions, Mr Romney has an economic plan that works only if you don’t believe most of what he says. That is not a convincing pitch for a chief executive. .... Obama has dragged America’s economy back from the brink of disaster, and has made a decent fist of foreign policy. .... stick with the devil it knows, and re-elect him. [The Economist, Nov 2]
Obama is the wiser bet for crisis-hit US [Financial Times, Nov 5] Although Europeans cannot vote in US elections, they do have well informed opinions, although a somewhat different attitude toward societal organization. Americans have a very much more everyone-for-himself approach despite the continuous news that a greater portion of the US population are losing their ability to compete in such a world. Meanwhile, the haves are fighting hard to do nothing about the have-nots.
Sell now? Many business owners—mostly founders who could gain a lot from a sale—are looking to close deals before next year, when the maximum tax on investment income is scheduled to rise from 15% currently to at least 23.8% on most capital gains, at least for higher-income households. Many sellers intend to convert their equity into retirement funds or just start anew. [John McKinnon, Wall Street Journal, Nov 1] Regardless of all the lies, distortions, and imaginary math of the political campaigns, we cannot get the national finances back into balance without more revenue. Although we do not know any details of the eventual deficit/ debt deal as all the vested interests angle for advantage, we do know that a lot of people are going to get less from government, and a lot are going to pay more for the privilege of living with a strong central government. Taxes, after all, are the price of civilization.
Dontcha love small biz subsidy? Championing small business is a bad idea. It’s not good to champion any particular group. You especially don’t want to champion small business relative to big business. Some small businesses are trying to grow into big businesses. It’s like favoring children over adults. Most of them are the same species. Putting small business at the center of the plan is a way to pander to people who think that the idea that small businesses create a lot of jobs means that subsidizing small businesses means more jobs. We shouldn’t subsidize anything. That’s the road to cronyism. [Russ Roberts, cafehayek.com, Oct 31]
Special interest? In all my years in Washington, I have never met anyone, even a professional lobbyist, who thought she was a special interest. That’s always somebody else, someone selfish whose interests are contrary to the national interest. Everyone always says, and may even believe, that whatever special deal they want or wish to preserve in the budget or the tax code is for the benefit of a broad segment of society or the economy. [Bruce Bartlett, New York Times, Oct 30]
As a business model, private equity has had a mixed record. As a political template, it is stunted in the extreme. Private equity is concerned with rewarding winners and punishing losers. But a democracy cannot lay off its failing citizens. It cannot be content to leave any of its citizens behind—and certainly not the forty-seven per cent whom Romney wishes to fire from the polity. .... The Romney-Ryan ticket represents a constricted and backward-looking vision of America: the privatization of the public good. [The New Yorker, Oct 29]
President Obama and his aides quietly chafe at the idea that Mitt Romney would be able to take credit for a recovery. Publicly, Mr. Obama has begun to emphasize the economic good news in recent weeks. Mr. Romney, for his part, has said he expects the economy to improve early in his presidency, not because of his policies but because of optimism about what he will do.[New York Times, Oct 28] Victory has a thousand fathers.
Scientists want science, and control. Thirty-three scientists resigned from a [Texas] state-funded cancer research institute this month, with some publicly complaining that political appointees were trying to improperly influence how its money was doled out. .... The dispute reflects a larger debate in the cancer-research world between groups who want to focus on scientific research to answer basic questions about the disease, and those who favor investment in commercial projects such as drug companies that can bring products quickly to market. [Wall Street Journal, Oct 25] The politically appointed oversight board approved a grant to a commercializing firm without vetting by the scientists. In Texas, who has the gold makes the rules.
Chief executives from some of the nation’s biggest companies are urging Congress to forge a bipartisan deal to address the national debt by raising taxes and cutting spending. [Beth Healy, Boston Globe, Oct 25] Everybody wants a solution as long as someone else pays. And these CEOs are among the best placed to arrange sweet deals in any solution.
If wishes were horses. Mississippi unveiled a comprehensive plan to capitalize on Mississippi's energy strengths and bring more energy jobs and research to the state. Endowed with diverse energy resources and a strong energy sector, the plan highlights energy-related activities possess tremendous opportunity for job growth and economic development in Mississippi [SSTI, Oct 24]
A fourth Texas high-tech startup that received taxpayer dollars through Gov. Rick Perry’s signature economic development fund has filed for bankruptcy in the $194 million portfolio’s biggest bust yet. The collapse of bioenergy producer Terrabon (no SBIR), which was awarded $2.75 million in 2010 and was backed by Perry political donors, is the second bankruptcy in the past four months for the Emerging Technology Fund, [Paul Weber, Lori Hawkins, Austin American Statesman,Oct 24, 12]
Mandate affirmed. "It's pretty clear that the president was re-elected," Boehner added. "Obamacare is the law of the land." -- John Boehner, Nov 12 The President and the House recognize the power of reciprocal veto in our competitive power Constitution.
If you want to kiss a government frog, you'll have to travel to the pond because the government cannot afford to travel on its new fiscal-cliff budgets. .... acting director of the budget office, issued a memo calling for all agencies to decrease travel spending by 30 percent starting in the new federal fiscal year. It capped spending at a single conference at $100,000 for each agency [Laura Dattaro, New York Times, Oct 24] And every dollar spent for travel is a dollar less for handouts. You have to pay for affordable government.
Democracy is a pathetic belief in the collective wisdom of individual ignorance. -- HL Mencken, courtesy of the unbalanced pro-market mob at AEI.
Politics overrides science. Faced with blame for not preparing for earthquakes, the political system found a scapegoat - scientists. Seven prominent Italian earthquake experts were convicted of manslaughter on Monday and sentenced to six years in prison for failing to give adequate warning to the residents of a seismically active area in the months preceding an earthquake that killed more than 300 people..... The court did not rule on whether earthquakes can be predicted. [Elizabeta Povoledo, New York Times, Oct 23]
If there’s one thing we know, it’s that even experts with fancy computer models are terrible at predicting human behavior. Financial firms with zillions of dollars have spent decades trying to create models that will help them pick stocks, and they have gloriously failed.[David Brooks, New York Times, Oct 23]
I wasn't planning on watching the debates, but my wife made me watch the first 20 minutes. Is this really what passes for political discourse in this country? I was particularly struck by the appeals to unnamed authorities -- both candidates said something like "I saw a study the other day [unnamed] that said my plan was great" or "your plan was bad." Seriously pathetic. [Coyote blog, Oct 3] Don't expect enlightenment from pure entertainment of he masses
When the medium is again the message. the Twitterverse, where America’s obsessive-compulsive, attention-deficit population holds the zeitgeist hostage with tweets and memes that infantilize political discourse and reduce the few remaining adults to impolitic fantasy. [Kathleen Parker, Washington Post, Oct 20] Good policy matters don't fit into sound bites. It's perfect for surface-feeding politicians and mobs.
When government "invests" Federal subsidies also created a network of green tech corporations hoping to benefit from taxpayer dollars. ... green technology grants were costing $2 million per job created ... [VP Al] Gore left public office in 2001 worth less than $2 million. Today his wealth is estimated to be around $100 million. Leonnig reports that 14 green tech firms that Gore invested in received or directly benefited from more than $2.5 billion in federal loans, grants and tax breaks. [David Brooks, New York Times, Oct 19] And how many permanent privately financed jobs have been created by SBIR? No one knows! But several companies learned to feed at the trough and build the nest eggs of their owners on government contracts at low but certain profit margins.
30% loss margin. The U.S. government wasn’t the only one investing in renewables. Governments around the world were also doing it, and the result has been gigantic oversupply, a green tech bubble. Keith Bradsher of The Times reported earlier this month that China’s biggest solar panel makers are suffering losses of up to $1 for every $3 in sales. Panel prices have fallen by three-fourths since 2008. Manufacturers will need huge subsidies far into the future — as Bradsher writes, “a looming financial disaster.” The U.S. share of the global market, meanwhile, has fallen from 7 percent to 3 percent since 2008. [David Brooks, New York Times, Oct 19]
Spend our way to security and prosperity. Romney is proposing to fully fund the four-year plan laid out by the Defense Department, and Mr. Obama’s former defense secretary, Robert M. Gates, in 2010. Mr. Obama scrapped that scheme this year to cut $500 billion from the Pentagon over a decade. Mr. Romney would restore that funding as well as an earlier round of cuts by Mr. Obama; he would also establish “a goal” of spending 4 percent of GDP annually on defense, compared to about 3.5 percent in Mr. Obama’s latest budget.[Washington Post, Oct 19] And where is the money to come from? Ask him and his allegedly deficit-allergic party after the election. Meanwhile, rely on the comforting assumptions that someone else will pay for our favorite policies. Vote for prosperity!
We need the money. The [mortgage-foreclosure settlement] agreement said the state money should be used "to the extent practicable…for purposes intended to avoid foreclosures," among other purposes. .... so far, less than half of the money has been designated for that cause—with much of the rest going to help close state budget gaps, says a report [Nick Timeraos, Wall Street Journal, Oct 18] Unless an agreement is legally binding, the state can do whatever it wants with the money, subject only to political control. The home-owners who won the settlement by paying for a lot of lawyers, get a lot less than they bargained for.
Take the money and hide. Publicly posted information on [Wisconsin]'s subsidies to businesses is severely lacking and getting slightly worse, a new report has found.... of 251 companies receiving subsidies in 2009 and 2010 and completing their contracts, full data was available for only two ... "Wisconsin taxpayers shouldn't have to be auditors to find out if the economic development subsidies we fund are delivering bang for the buck," said Bruce Speight, director of Wisconsin Public Interest Research Group. [Jason Stein, Milwaukee Journal Sentinel, Oct 15]
Wrestling Entertainment, Policy Vacuum. In every debate, whatever the format, whatever the questions, there is one and only one way to identify the winner: Who commands the room? Who drives the narrative? Who is in charge? [Jeff Greenfield, Yahoo News, Oct 17] No wonder we have distracted government! We score politicians on their entertainment value in combat.
R&D dashboard, a new beta website to scan federal R&D investments by NIH and NSF. Search and download data on grants (investments) and output (e.g., patents and publications) by state, congressional district and research institution.(for political purposes) and investments and outputs by select topic areas. the government plans the full version of the website to include all federal R&D spending. It also would expand information on outputs of federally funded research. Public comment sought http://rd-dashboard.nitrd.gov/.[SSTI, Oct 12]
A state of strong belief. In 2010 the Texas board of education managed to remove Thomas Jefferson, author of the Declaration of Independence, from the state’s list of important revolutionary figures, apparently because of Jefferson’s insistence on the separation of church and state. He was, however, swiftly reinstated. [The Economist, Oct 13]
Texas loves politics. At least seven scientists resigned in protest last week from Texas' embattled $3 billion cancer-fighting program, claiming the agency ... is charting a politically driven path that puts commercial interests before science. .... its chief scientific officer resigned in protest after it approved - without scientific review - a $20 million commercialization project. [AP, Oct 13]
Good luck figuring out whether Republican presidential candidate Mitt Romney would cut or raise your taxes if he's elected president. President Barack Obama promises tax reform, too, but precious little detail. [AP, Oct 13] Tax talk in campaigns is promise and myth avoiding as many unpleasantries as possible. Math and logic are abandoned to feed the voters' desire to hear what they want to hear. The result, of course, is we get the government we deserve and we will pay, one way or another, for every good thing we get from the government.
Big promises, short honeymoon. Just five months after electing President Francois Hollande, many French are now despairing that he cannot deliver on the vision they voted for. What's worse, some wonder if Hollande has a plan at all. [Eleanor Beardsley, npr.org, Oct 13] US pols may find the same screeching when they pretend to painlessly solve the fiscal cliff problem. Until then, we will hear more mythical math in campaigns before we vote for our favorite pretender.
Two things seem certain in modern presidential campaigns: Candidates will spend more time attacking each other than offering constructive alternatives, and one or both will attack China. .... If innovation is nurtured and a sense of optimism about the limitless possibilities of the future is maintained, then China represents only more of an opportunity for U.S. prosperity. [Zachary Karabell, Washington Post, Oct 14] Never mind the facts: politics needs competitive sound bites since people prefer stand-up entertainment to serious debate.
Two suburban Philadelphia legislators introduced a bill last week designed to generate at least $140 million for cash-strapped biotech firms and other high-tech companies in Pennsylvania.... [money source would be] the auctioning of $175 million of deferred insurance [John George, Philadelphia Business Journal, Oct 5]
Economists say the automatic cuts, known as “sequestration,” could slam NIH, eliminating up to 3,100 life science jobs in San Diego. An additional 1,400 industry support workers could lose jobs. [Gary Robbins, utsandiego.com, Sep 24] For all the political blather about jobs, cutting government means cutting jobs funded by government, and jobs that feed and house those workers. If you believe that the ;private sector will replace those jobs with even more jobs, you are a rock-ribbed conservative drinking the Kool-Ade.
What a deal, borrow more, pay less. The U.S. government’s interest expense fell to the lowest in seven years as yields on Treasury debt dropped to records even as debt soared beyond $16 trillion for the first time, [Daniel Kruger, Bloomberg, Oct 5] Thanks to having the world's safest currency, interest rates are low enough to indulge the electorate's dream of painless prosperity where somebody else, including our future children, pays to keep government services flowing on the national credit card. So politicians concoct fairy tale stories of magical economics.
Declaring that the nation is in a "jobs crisis," Republican presidential candidate Mitt Romney is charging ahead with his economic arguments [AP, Oct 6] which are political drivel without redeeming substance. His basic argument is that since the US has not fully recovered since the 2008 crash, we ought to elect him president. His reasoning sounds like the Pentagon's classic proof-by-assertion."
In science news around the world this week, prison terms are being sought for seven Italian earthquake experts who allegedly downplayed the risk of the deadly earthquake that struck L'Aquila in 2009, [AAAS, Oct 4] If inaccurate forecasting were criminal, we would all be in jail. Italy must be as flush with lawyers as we are.
Problem deferral 101. Let’s get this straight: Economists think our government should raise taxes and cut spending. They think the Federal Reserve should crank back its free-money policies. They think all of this should happen, oh, um, ah, eventually.And then they think: Gosh darn it. Do you know what’s holding back our economic recovery? Uncertainty in Washington. We sure wish we knew when they were going to do something. [Al Lewis, Market Watch, Sep 28] Too bad; until a crisis descends on us, we voters can find endless reasons to avoid any pain.
The Wisconsin Economic Development Corp. is negotiating with Chinese investment firm PiYi Investment Management Co. Ltd. to create a fund that would invest in state companies. [Milwaukee Journal Sentinel, Sep 28]
The number of federal contractors suspended or debarred in 2011 was up 73% from 2009. [Andrew Zajac, Washington Post, Oct 1] In SBIR, the government watches for common charades like billing for work never done, and/or submitting a research report that merely recycles data from previous work. Remember, too, that your competitors for SBIR contracts have an incentive to alarm the government when they suspect that your work is old stuff.
Federal money, state scheme. Two Wisconsin state agencies have failed to follow federal law and their own policies in issuing economic development grants, the U.S. government said in a strongly worded letter sent to Gov. Scott Walker's administration..... Among the most serious findings are that the state failed to perform required underwriting - the process of determining the financial soundness of a company - before giving $390,000 to Gilman USA LLC, a machining company in Grafton, and $1 million to Morgan Aircraft in Sheboygan. [AP, Sep 26] Look to Texas for what can happen when state politicians have their hands on money.
analysis of [NIH] grants awarded from 1975 through 2006 showed that a sustained 10% funding increase targeting a specific disease led to a 4.5% increase in the number of drugs targeting that disease entering Phase I clinical trials, with a lag of up to 12 years. In contrast, she found no evidence that changes in the allocation of funds across the NIH disease portfolio affect industry's decisions to invest in Phase III clinical trials for treatments for those diseases. Thus, NIH funding influences the early stages of drug discovery and testing but may not affect the later, more costly stages of drug development. [Brad Wible, Science, Jun 29]
New Public Opinion Poll on Sequestration, Medical Research. Research!America and United for Medical Research released the results last week of a poll of likely voters on the sequestration cuts and medical research. Slightly more than half of respondents said that across-the-board budget cuts are not the right way to reduce the federal budget deficit. Although 54% of respondents feel it is important for the U.S. to maintain its leadership in research, 59% are pessimistic about U.S. prospects to be a world leader in science and technology in 2020. Full results of the poll [AAAS, Sep 26] Magic political math for cutting the deficit: Don't cut anything, don't tax anybody, call in the growth miracles. Some day soon the politicos will have to hurt some actual constituents and dream machines.
The rich can afford legalists. Texas Attorney General has sued the federal government 24 times since President Barack Obama took office, the Associated Press reports. According to records, ... those suits have cost the state $2.58 million and more than 14,113 hours of staff and state lawyers’ time. [Olivia Pulsenilli,, Houston Business Journal, Sep 10, 12] Texas politics prepping a story for Texas governor as POTUS candidate.
NSF, in partnership with NASA, NIH and the USDA awarded nearly $50 million to grantees from universities around the country for the development and use of robots that cooperatively work with people to enhance individual human capabilities, performance and safety [SSTI, Sep 20]
The National Ignition Facility (NIF), a $3.5 billion laser
fusion lab in California, looks certain to miss its deadline at the end
of this month for achieving ignition, a self-sustaining fusion reaction
that yields more energy than was put in to make it happen. [AAAS,
Sep 20]
Action by Congress. the House of
Representatives passed by voice vote the Government Spending
Accountability Act of 2012 (H.R. 4631), which would set restrictions
and cuts to travel budgets for federal employees attending conferences.
The bill, introduced by Rep. Joe Walsh (R-IL), would prevent federal
agencies from spending more than $500,000 on a single conference, and
defines a conference as an event that an employee travels 25 miles or
more to attend, whether for consulting, education, discussion, or
training. [AAAS, Sep 12] Parkinson's Law of Triviality: the
time spent on any item of the agenda will be inversely proportional to
the sum involved. Like the company picnic.
The NSF's National Center for Science and Engineering Statistics has released a report, "Businesses Concentrate Their R&D in a Small Number of Geographic Areas in the United States," based on data in its Business R&D and Innovation Survey. [AAAS, Sep 20] Fortunately for the businesses not in those areas of R&D concentration, each of has two Senators to insist on "equitable" distribution of government subsidy. Many of those areas are represented by Senators from the party that pronounces that 47% of Americans are unhealthily dependent on the government.
Every new administration, not excluding ourselves, arrives with bright and benevolent ideas of using public money to do good. The more frequent the changes of government, the more numerous are the bright ideas; and the the more frequent the elections, the more benevolent they become. --- Winston Churchill, 1927 Can you think of any bright ideas for government that would benefit you, and by extension, the entire American economy?
The list of groundbreaking technologies that have been developed by US-funded research laboratories is long and illustrious: the Internet, global positioning systems, lithium ion batteries, and many wireless communications breakthroughs.Now Allied Minds Federal Innovations (Boston, MA; no SBIR) is tapping into this legacy of innovation with a new business to commercialize military technology developed at Department of Defense laboratories and research centers. [DC Denison, Boston Globe, Sep 11, 12] There are graveyards of investors with the same idea over the past few decades. It always sounded better than it paid.
Rule One: spend the money. Immunetics (Boston, MA; $9M SBIR) received a $3.7 million, two year [NIH] SBIR contract to support clinical trials of a new blood screening test for Babesia infection. “Babesia is among the top infectious threats to blood safety and, at present, there is no licensed test available. [company press release, Sep 10, 12] Multi-million awards in principle violate the law's provisions for award sizes. But Congress doesn't seem concerned because, after all, every award of any size has two Senators and Representative with great praise for a brilliant government investment in a constituent company. What Congress won't tolerate is the agency's not spending the legally mandated minimum SBIR total for the year.
Federal regulators[SEC] filed fraud charges against [Bio Defense (Boston, MA; no SBIR) that purportedly developed a machine to use radiation to kill dangerous biological agents, such as anthrax, sent through the mail. ..... with misleading investors while raising at least $26 million. .... Specifically, the SEC said the company falsely told investors that the company paid its employees and officers little cash, but instead employees were toiling solely or mainly for “sweat equity” shares that might later become valuable if the company went public or became profitable. In reality, the SEC said, the company’s largest expense was payments to employees, including $1 million in 2004 alone.[Todd Wallack, Boston Globe, Sep 10, 12]
Far too many businesses have been all too eager to lobby for maintaining and increasing subsidies and mandates paid by taxpayers and consumers. This growing partnership between business and government is a destructive force, undermining not just our economy and our political system, but the very foundations of our culture. [Charles Koch, Wall Street Journal, Sep 10]
Competing myths. "Democrats say: 'We're all in this
together,' " former President Bill Clinton told the convention this
week. "With the Republicans, you're on your own." All
formulations of this contest during an election season tend to be
overdrawn and misleading. Candidates tend to speak with reverence for
their own myth (the individual or the community) and its contributions
to our lives. Unfortunately, such reverence is too often accompanied by
contempt for the mirror-image myth of the other side. We embrace our
own preferred myth on faith (and call that a virtue) while assessing
another's myth with skepticism and derision. [Ron Elvin,
npr.org, Sep 6] Sadly, all the politicians are competing to tell
us myths rather than cold economic truth. We have become accustomed to
a life style beyond our means, with government closing the gap by
borrowing. When it comes to jobs, government programs create some jobs
for government workers but few permanent jobs in the wealth-creating
private sector, while the tax cuts for marginal upper rates create only
more savings for upper class incomes and the hope of trickle down boost
to jobs. The economists do not buy the cause and effect of such
job creation. Jobs are made by creating something to sell to
willing buyers for economic reasons. But cheap goods require cheap
workers. Someday, soon, we will recognize the myths for their
fantasies that pander to our dreams.
"The fiscal pain coming your way isn't even imaginable.
The
U.S. political system is in denial." from Willem
Buiter's Crystal Ball [Suzanne Kapner, Wall Street Journal, Jul 6]
"We're not going to let our campaign be dictated by fact-checkers," Neil Newhouse, the lead Romney pollster, told critics. Say what? [Tom Friedman, New York Times, Sep 1]
Caught between deficit and austerity. Beijing has until
now backed austerity across Euroland, but the severity of China's own
downturn has begun to rattle policymakers.Exports of electronic goods
to Italy crashed 43pc in July from a year earlier, and sales to Germany
fell 11pc. Caixin reported that processing trade to
Europe fell 21pc.The country's two largest shipping groups COSCO and
China Shipping both reported a drastic losses today. The Shanghai
composite index of stocks threatened to break below 2000 today, the
lowest since the Lehman crisis.[Ambrose Evans-Pritchard, The
Telegraph, Aug 30]
Mother, May I? [NSF] posted their FY-2013
STTR solicitation on their SBIR/STTR website (http://www.nsf.gov/eng/iip/
Home cooking. A Tokyo court has found Samsung
not
guilty of infringing Apple's intellectual property, in contrast to a
jury decision and a $1.05 billion damage award in Apple's favor in a
California court last week.[EETimes, Aug 31]
In my younger, more naive days, I would have drawn the following lesson from this story: "Never create a business plan predicated on subsidy checks from the government. They may stop at any time." I still think this is mostly true, as FirstSolar is finding out. But my sense is that a range of folks from GE to Kleiner Perkins still get their checks. So one may cynically rewrite the rule: "Never create a business plan predicated on subsidy checks from the government unless you are confident you have the political connections to guarantee and expedite the payments." [Warren Meyer, coyoteblog.com, Aug 17]
Should the government use higher taxation to forcibly extract additional money from the already-prosperous, then somehow allocate it back into the private sector as the bureaus and agencies see fit? Or would it be more effective to trust private-sector intermediaries—such as private equity firms—to select which specific entrepreneurs should be matched up with capital that the already-prosperous voluntarily make available through those intermediaries? [Steve Conover, The American, Sep 2] AEI's habitually preaches that the private sector can do all America needs for investment. Which is true for ROI on private capital for private gain. But does little investment for public gain, which is where "market failure" programs step in. Private investment won't build sewers and won't bet on fusion energy. Unfortunately for the neat picture, politics intervenes to capture public investment for special interest gain. Where money is on the table, the strongest hands will grab it. Conover also touts the AEI view at http://www.optimist123.com/
In politics, half-truths prevail. The problem with making small business owners the face of an anti-regulation argument is, most of the Obama administration’s new regulations … don’t apply to small businesses. And when they do, the nonpartisan Congressional Budget Office has found the costs to be negligible. .... [SB owner] Archuleta, in fact, said his business was already being dismantled, but only vaguely described how. And he left out the fact that he has benefited from government aid. According to Mother Jones, Archuleta’s company secured an $850,000 Small Business Administration loan guarantee to build an 11,700-square-foot building. [Elizabeth Dwoskin, Bloomberg Business Week, Aug 31]
the Kentucky Innovation Network has a new name and logo, a
tighter focus (whatever that means), and expanded
services. ... The [13] centers offer services such as
business mentoring, assistance to growth strategy and access to funding
and capital networks. [SSTI, Aug 29]
Spread
the net. [New York State] has started accepting applications
for the $25 million "Connect NY" program to promote and expand
broadband Internet access. The grants will be awarded to public-private
partnerships comprised of internet service providers, local governments
and economic-development organizations. [SSTI, Aug 29]
[The White House] announced the first class of “Presidential
Innovation Fellows” . Selected from an applicant pool of nearly
700 innovators from across the country, the 18 “Fellows” have
agreed to spend six months in Washington to work on five high-impact
projects aimed at supporting entrepreneurs, small businesses and the
economy, while significantly improving how the Federal Government
serves the American people. [White House press release, Aug
23] Maybe Romney can offer some more red meat by declaring that
he will kill this interventionist foolishness with an Day One Executive
Order. Unlike expecting something to happen by declaring China a
currency manipulator on Day One, he could actually kill this program.
Long-term U.S competitiveness is threatened due to a lack of progress in U.S. child development areas that are the best indicators of human capital development, according to a new report from the Center for American Progress. The report found that while U.S. human capital development and economic growth remain practically stagnate, the rest of the world — primarily China and India — have grown significantly in both aspects since 1980. To address this issue, the authors provide several recommendations including adopting best practices from across the globe. [SSTI, Aug 29] The loudest and most committed Republicans have an answer - defang the teachers' unions and get creationism into the science curriculum. Then we can go back to underpaid teachers teaching the little darlings to pray and read the Bible.
The Arsenal Business & Technology Partnership has signed a new five-year agreement to continue its role as the on-site manager and developer of the Watervliet [NY] Arsenal. ... will pay more than $15 million in rent and fees over the life of the contract. Tenants at the Arsenal include M+W Group, one of the largest builders of computer chip plants; Vistec Lithography, which manufactures electron beam lithography systems to etch computer chips; Extreme Molding LLC, a woman-owned silicones and plastics firm, and Solid Sealing Technology, which produces high-tech parts with air-tight seals for the semiconductor, nanotechnology, solar-energy and health care sectors. [The Business review (Albany), Aug 22,] No SBIR
67 more days to hear spin, half-truths, and a general disdain for cause-and-effect. Close your ears and open your mind to assess the nation's state in the global competition. And then vote for one party's ideas with the knowledge that most voters do not understand the economics anyway. The winner will find it's easier to talk about big plans on the stump than to actually implement them when the dirty details are exposed as Congress has to vote for pain.
Posturing before action.Each
of Europe's key political actors will exhaust all options in trying to
secure the best possible deal for itself before at the last minute
coming to an agreement. The result is a messy process, exacerbated by
the cacophony of voices within each country, which understandably
unsettles markets. The possibility of miscalculation will continue to
loom over Europe. But pressure from the financial markets will
ultimately prod the eurozone to find the way forward. And Europe's
overriding political imperative to preserve the project of integration
will drive its leaders to secure the euro and restore the economic
health of the continent. [Fred Bergsten, Foreign Affairs,
S/O21]
A U.S. federal court has found
that a stem cell therapy offered by a Colorado clinic is a
regulated drug. The ruling could spur a U.S. Food and Drug
Administration (FDA) crackdown on other clinics offering untested adult
stem cell treatments. Regenerative Sciences (Broomfield,
CO; no SBIR) uses stem cells extracted from a patient’s own bone
marrow to treat bone and joint injuries. The company calls its
treatment a medical procedure. But in a 2010 suit, FDA argued that
because the stem cells are more
than “minimally manipulated” and the procedure uses reagents that cross
state lines, the cells are an FDA-regulated biological drug. [Science,
Aug 3]
Automatic budget cuts due to take effect in January will drive
up
the cost of weapons systems and cut revenues for arms makers in the
longer term, but the full brunt of the cuts will not be felt for
several years, a top budget analyst said [Reuters, Aug
24].... Every entity dependent on government funding will be
making the same appeal, and the politicians will have a painful time
allocating the necessary cuts in government outlays. Look for another
kick-the-can solution.
The campaign isn't divulging fresh details of its economic platform, saying there isn't public demand for specifics that could be used as a weapon by the Obama campaign. [Wall Street Journal, Aug 27] Keep it abstract; the public can't stand to hear the details. Campaigns don't suffer in insulting the intelligence of the voters.
Another election year, another VC dream. Gov. Scott Walker has asked the state commerce agency to pull together a broad coalition in a new effort to develop venture capital legislation aimed at creating more jobs in Wisconsin. .... A Journal Sentinel analysis found that the 1999 program yielded huge returns for three out-of-state financial firms and their partners while netting just 202 new jobs for Wisconsin, at a cost of more than $247,000 per job [Kathleen Gallagher, Milwaukee Journal Sentinel, Aug 23] The perennial political dream that government can create a venture world that can succeed and confine results to a political domain. Governments are faced with the ugly choice of turning the investment decisions over to real VCs or picking the winners themselves. Texas and SBIR illustrate the problems with government decisions. Neither way is likely to work very well as the history of government investment sadly shows. The politicians don't seem to care much whether the enterprise wins or loses, only that they get the publicity in time for the campaign.
What happened to all the talk about jobs and the economy? [Joe Deaux, thestreet.com, Aug 17] Why all Medicare now? Because political campaigns have a logic all their own to keep ears and eyeballs on the candidates, and not on complex questions. Neither candidate has a good answer on jobs or the budget, just promises and platitudes, because there are no pleasant facts to tell. World competition requires us to bite bullets and suffer surgery to re-align our economy. And all the blather about SBIR as a job creator must also give way to the reality that SBIR has never created more permanent jobs than the same money spent by the government in open competition. We're all for competition, but only in name.
SBA released two Requests for Information (RFIs) on
amendments
to SBIR/STTR ... Although the SBA has already published the final
changes, it is requesting comments on the various amendments made.
Public comments are due October 5, 2013, for both the
SBIR RFI and
STTR RFI. SBA will hold two webinars on August 23 and 29, 2013
[SSTI, Aug 15] Another chance to whine about VC participation in
innovations with a future profit potential.
To accomodate the new VC participation rules, NIH says it is developing a SBIR/STTR reauthorization website that will have information about NIH implementation of the Policy Directives, timelines, FAQs, links to SBA information on reauthorization.
Field it fast. The Navy recently posted a BAA (www.fedbizopps.gov)
that may be of interest to the SBIR community. ... primarily for the
validation and transition of technologies developed by small biz that
directly support DoN needs and programs. ... up to $3M in Rapid
Innovation Fund funding; developmental efforts can be completed within
24 months; preference will be shown for technologies that can be
available to the operational Naval Forces within 12 months of
project completion. Funds available for awards are $50 million.
[SBIR alerting service]
The Connecticut State Technology Extension Program (CONNSTEP) received $1 million in July to help boost the growth, employment, and operating efficiencies of the states manufacturing industry. .... through its Hollings Manufacturing Extension Partnership (MEP) [Jim Schakenbach, Hartford Courant. Aug 17]- a Democratic dream machine that government can efficiently allocate capital to private for-profit enterprise. And how will the program be evaluated except for whether it dispensed all the money to grateful constituents? The politicians should remember that gratitude in politics extends only to what you're going to do for me next.
Pork only happens elsewhere. Farmers queuing for lunch
at
the state fair’s aptly-named Iowa Pork Tent declared that they wanted
the government out of their lives, yet stoutly defended subsidised crop
insurance. Others defended taxpayers’ money spent turning corn into
ethanol. .... if the thrifty swing state of Iowa is
anything to go by, those same voters like the idea of other people
footing the bill, long before they tighten their own belts. In that,
perhaps, this election is not so unusual at all. [The Economist,
Aug 17] What's ours is ours, what's yours is negotiable.
Larry Szrom, a registered Republican who supported McCain, is now leaning toward Obama. He dismisses Romney's claims that his business skills will get the economy moving. "He says, 'I know how to create jobs.' Guess what? He doesn't," Szrom says. "I don't think anyone truly knows what we need to create jobs." [Sharon Cohen, AP, Aug 18] Politicians regularly make economic claims because people want to hear them. After all, we elect politicians who tell us what we want to hear.
Andrews Consulting Group, a 38-year-old IT services firm, will receive $1 million from Connecticut Innovations, the state's quasi-public authority that gives state money to tech businesses to help them grow. The debt financing of a mature firm is a new tactic for CI, which generally has acted as an early funder of start-up firms that are too young and small to attract traditional venture capital. Andrews has more than 70 employees at its Cheshire offices. No details were released about the terms of the loan, but the interest rates vary between 5 and 10 percent for a three to six-year pay back. The deal also includes warrants, a mechanism that gives the agency a right to buy shares of stock at a set price in future years. The size of the equity stake will be smaller than the stake CI usually takes in its other fund programs. [Mara Lee, Hartford Courant, Aug 8] Where's the market failure the justifies the dodgy practice of government financing private firms for an equity share? Who will keep the politicians from exploiting the ownership for uneconomic purposes? And why is government competing with private finance? Are the prospects for economic return not as good as the company claims? Funding infant technologies with high risk novelties makes some sense, but a veteran IT services firm sounds neither infant nor high tech risk, only perhaps high business risk. Not everything good needs to be done by the government.
Politicians babble on money policy. Romney and Ryan don't approve of fiscal policy stimulus (unless it's tax cuts for the wealthy), and Ryan would take away the ability of the Fed to respond to unemployment as well. Basically, they are telling us that if a recession hits and they have their way, nothing will be done. Not a thing. No fiscal policy response (except perhaps austerity to make it worse), and no monetary response (except, if Ryan has his way, interest rate increases based upon a misunderstanding of how the economy works -- that would also make things worse). So it wouldn't just be the "you're on your ownership society" of Randian dreams, Ryan would have monetary and fiscal authorities making things even worse than they already are. Ryan is not a well-informed policy wonk with new, exciting ideas. He's a policy idiot. Don't let this guy anywhere near the policy levers. [Economist's view blog, Aug 13] Unfortunately, politicians have little choice but to dumb down economics to vague platitudes for an electorate that knows more about football and Facebook than economics.
On picking winners: "A desirable industry was, almost by
definition, one which could establish itself and thrive without special
assistance in ordinary market conditions." ---- Sir John James
Cowperthwaite, the Hong Kong financial secretary [Wall Street Journal,
Aug 14]
We want to get Washington out of the business of picking winners and losers. We want entrepreneurs to have the barriers removed from in front of them, so that people can work hard and succeed. [Paul Ryan, Aug 12] That sounds like ditching corporate welfare programs that hand public funds to otherwise uncompetitive companies. Could he mean SBIR? His Republican predecessors tried to ditch such programs but got swept out of office by a draft-dodging liberal womanizer from Arkansas.
Sen. Kirsten Gillibrand is
introducing a bill to create a $200 million fund to help biotech
companies move discoveries out of the lab and into the
marketplace. .... called the America Innovates Act,
[Richard D'Errico, The Business Review (Albany), Aug 9] Another
election year gambit would insert government into the marketplace with
no particular competence and no particular source of the money in a
deficit-avoiding climate. The speech said the money would come from
R&D but nothing about how it would be managed intelligently and by
what criteria. No matter, the Republican House is not about to bless a
Democratic suggestion to spend money for market intrusion.
political myopia. It can
afflict anyone who confuses what politicians do with what’s happening
in the country, or what they say with what is going on in the world.
Governments may be having a hard time of it, struggling with debt they
ought not to have taken on. Noisy pressure groups who seek government
funding may also believe that the sky is falling in. But a clear-headed
analysis of the facts reveals something rather extraordinary. The crash
has not even retarded, let alone halted, human progress. The world has
never been richer, healthier, freer or more equal than it is today. The
idea that the world is going to hell has been hard-wired into the
psyche of most political leaders throughout recorded history.
[Fraser Nelson, The Telegraph (London), Aug 10] News people can
tell you: if it bleeds, it leads.
Republicans object - to everything. A Chinese company’s preliminary agreement to invest in A123 Systems has ignited concerns that China could take control of the struggling Waltham battery maker’s advanced technology and spurred new criticisms by Republicans that the Obama administration squandered billions in stimulus money with investments in risky firms. ... Republicans quickly raised concerns about the potential loss to China of sensitive technology developed with the support of US taxpayers. .... "Obama borrowed from the Chinese to give taxpayer money to prop up green energy companies that the Chinese are now buying already.” [Todd Wallack, Boston Globe, Aug 9, 10] Don't fund it, don't let foreigners fund it. If Obama did it, it must be wrong. Let private US capital fund it, except US capital seems disinclined to do so with risky technology. Don't need electric vehicles anyway to compete with our darling petro campaign contributors.
An index of policy uncertainty
created by economists at Stanford and the University of Chicago backs
their view, showing that policy uncertainty has been much higher in
recent months than during the previous 25 years. ... After the
Supreme Court upheld Obamacare in June, Mitt Romney and Republican
congressional leaders promised to repeal it if they win the election in
November. ... It's similar with the fiscal cliff at
year-end: the killer combination of mandatory cuts in federal spending
and the expiration of the Bush tax cuts. Even assuming that Congress
averts a plunge over the edge, no one knows how it will happen.
.... The message to businesspeople: Don't count on anything that
passes without substantial bipartisan support. And little of
significance seems to be enacted that way anymore. [Geoff
Colvin, Fortune, Aug 8]
Is it truly "different this time"? In the weakest recovery since the Great Depression, nearly the entire reduction in unemployment since October 2009 has been accomplished through a significant drop in the percentage of adults participating in the labor force -- whether working or looking for work. [Peter Morici, thestreet.com, Aug 3] The economic and political debate on recovery seems to use a yardstick of recovery rates from previous post-wwII recessions. Which is convenient for the political challengers who have little interest in whether the comparison is relevant (because they cannot put any accurate number on the new phenomena and the voters don't understand such nuances in economics). But the employment world has taken on a new dimension: intense competition from worldwide low cost sources of labor, and a de-leveraging by consumers of their debt, and de-leveraging by state government, and potential de-leveraging by the federal government in response to Tea-Party shrieking.
It is a moral imperative to get the U.S. back to 4% growth.
How? Of course, the platitudes: Cut government spending;
Simplify the tax code; Drill and dig; Import the skilled; Let
technology transform education and health care; [Rich Karlgaard,
Forbes (where else?) , Apr 18] If only wishing could make the magic.
The cut government spending platitude assumes that the private sector
would step in and fill the public needs, despite the evidence that the
private sector would distribute its profits and simply squirrel away a
huge chunk of it while the public infrastructure deteriorates. And
where is there any hard evidence that a "simplified" tax code would
raise growth? Drill and dig means drain America first and get the
immediate profits from extraction and sale just above immediate cost;
good for short term profits but a questionable long term strategy.
Health care is already being transformed by technology; it costs a lot
more for all the new techniques that may prolong life but has not shown
up in overall health metrics as a function of money spent.
Unfortunately, the pundits of the establishment don't have a good
answer to the basic problem of intense international competition that
is limiting American growth expectations. Oh, never mind, talk is
cheaper than action that Americans don't want to face anyway.
Romney is
calling for "something dramatic" to help the economy recover, but he's
not saying exactly what. Good idea- what does he have in
mind? Romney said repeatedly this past week that his economic
policies would create 12 million jobs in his first term. Pushed to
explain how, Romney said in the interview, "That's what happens in a
normal process." [Steve Peoples, AP, Aug 5]
Fantasy economics, again. If wishes were horses, .... What are those
magical Romnian economic policies? More of the usual Republican
"Let business be business." private economics to resurrect the 19th
century. Or even the 18th. Everyone ready for sawdust in the
sausage? Just remember the solution for economists stranded in a
hole - assume a ladder.
Meanwhile, any chance for a compromise on anything is further
endangered on the right. [Kansas] Conservatives are feverishly
working to win the [Kansas] Senate and drive out the last remnants of
what they see as moderate Republicanism in a state with a deep-rooted
history of centrist Republicans in the mold of Bob Dole, Dwight D.
Eisenhower and Nancy Kassebaum. [John Eligon, New York Times, Aug
5] That widening divide has an effect on national business as Executives
at a wide range of companies fear paralysis in Washington will force
hundreds of billions in tax increases and budget cuts in January,
leading them to cancel new investments and put off new hires.
[Nelson Schwartz, New York Times, Aug 5] The politicans don't
seem to grasp that it is not taxes and budgets themselves that paralyze
investing; it is uncertainty of what those taxes and budgets will be.
As a nation, our regular elections drive us to not making up our minds
that better is often the enemy of good.
epic, historic collapses in market valuation, made all the
more
stunning by the assumption, so prevalent just four years ago, that
"clean" energy's time had come. How ironic it is that Barack Obama's
insistence that the United States invest government money into the
creation of so called "green jobs" -- which led to the debacle of
Solyndra and other wasted investments -- was predicated on the fact
that if the U.S. didn't do so, the industry of the future would be Made
in China. .... four years later, and China's solar energy
industry has become nothing less than a capital destruction machine,
with some of its most prominent companies now desperately flailing for
lifelines. .... the rout in solar is not limited to just
Chinese companies -- First Solar stock has plunged 87% in the
last year. [Bill Powell, Fortune, Aug 2, 12]
Half the counties in the US want federal emergency relief and half the
Republicans want to shut down the government. Nonetheless, Congress is
taking five weeks vacation from agreeing on almost nothing except their
re-election.
This isn't about legislating and this isn't even about budgeting: It's about politics. This is all election-year garment rending. [Gordon Adams, former Clinton budget official] Republicans, who passed a big defense budget cut in the abstract to relieve the deficit, now want to dodge the actuality by screaming. The bad news for all is that deficit cutting means the pain of slimming down life style.
Politics trumps efficiency A General Dynamics military plant in Taunton dodged a huge bullet when the Pentagon this week backed off a plan to cut hundreds of millions of dollars from a communications projects being developed there. The Defense Department’s proposal to cut $334.6 million from the project--a mobile communications system for military units in the field--met with stiff opposition in Congress, particularly from Sen. Scott Brown (R-Mass.). General Dynamics had said the cut would have led to layoffs at the Taunton plant. [Boston Globe, Jul 27, 12]
With enough assumptions. A new study by Ernst
&
Young concludes increasing taxes on higher-income Americans will hurt
economic growth and lead to 710,000 fewer jobs being created.
[Columbus Business Journal, Jul 23] Welcome to the ugly idea that
aligning government income with federal program spending requires
someone to give up something. If tax income doesn't rise, and budget
balance is required, some equivalent number of jobs supported by
government spending will also disappear. As in: Automatic
cuts in federal defense spending set to take effect next year, if not
adjusted, will create a lot of pain nationwide, including in San
Antonio. [San Antonio Business Journal] Unsurprisingly,
privately funded studies and think tanks conveniently ignore that part
of the economic picture. Not to worry, though, your Congress delegation
will be in the front ranks of don't tax us, don't cut us.
We don't need no federal government rules and programs, EXCEPT [Exemplary
Republican] Gov. John Kasich is asking for federal assistance to help
Ohio farmers recover from a drought that has plagued the state, the
Toledo Blade reports. [Columbus Business Journal, Jul
23] And who will be providing the taxes to pay for Ohio's
bailout? Why, no one, since federal money comes from a limitless
heaven. Oh, and yes, send us more SBIR money.
Too late smart. Having created a financial monster with huge incentives to cheat the system, and having extracted huge compensation during his reign and in retirement, Sanford Weill now endorses breaking up the banks with resurrection of the Glass-Steagel Act that would have prevented his enrichment and the banking monstrosities that caused the collapse. Thank you, Mr. Weill, for your courageous declaration. Why couldn’t you have made it a decade ago? [Roben Farzad, Bloomberg Business Week, Jul 25]
People often have unrealistic expectations of their governments. The role that local governments can play in revitalizing struggling communities is less extensive than most voters realize and most mayors would like to admit. .... Local governments can certainly lay a foundation for economic development and create all the necessary conditions for a city’s rebirth, including a business climate friendly to job creation, but there is no magic formula for redevelopment. ... The use of public funds to create jobs must be reserved for cases where there are important market failures and a community has a credible chance of building a self-sustaining cluster. [Enrico Moretti, author of The New Geography of Jobs, The American, Jul 25] Our current political debate over jobs is mired in outdated assumptions from the past to which we can never return. But since voters don't study economics or history, and politicians have little incentive to lead debates, the mire will continue. They have to realize that The past is a foreign country: they do things differently there. [LP Hartley, English novelist, 1953].
Univ of Washington health science institute won a five-year, $65 million grant from [NIH] to help researchers speed up the process of getting research from the bench to practical applications that can help people. The money is going to the UW Institute of Translational Health Sciences (ITHS), where researchers from any area will be able to apply for small grants. The funds can be used broadly, whether scientists need to collect early data for a study, get help finding clinical research resources or find expert partners for specific work. [Valerie Bauman, Puget Sound Business Journal, Jul 23]
The PCAST (a White House committee)
published a grand report on Advanced Manufacturing with the usual warm
and fuzzy recommendations for saving America's manufacturing
competitiveness. One specific: Foster a continuum of enhanced capital
access from start up to scale up −− Create a special “Phase 0” section
of SBIR [to] support for the critical pre-early stage funding
activities associated with testing the commercial potential of new
technologies—including early prototype development and market
development. Which sounds good until you realize that SBIR
agencies could have been doing that since the mid-1980s. Most did no
such thing as they re-capturied the money into their regular R&D
programs pointed to the agency's missions. Even DARPA and BMDO
that actually funded innovative stuff left any commercial spin-off to
private funding at the stage where Return On Investment could be
calculated and act as a basis for for-profit investment. It is also
beyond the competence and interest of mission agencies to dabble in
markets. Read
the report...
No news and no
money. The House and
Senate appear unlikely to pass many more appropriations bills for FY
2013. ... On July 12 approximately 3,000 organizations from across the
public-interest spectrum – including AAAS – sent a letter to Congress
asking for a responsible deficit reduction approach that does not
include further cuts tonondefense discretionary spending
(which includes the career pleaders for government money). [AAAS, Jul
19] Sometimes it's hard to remember that gridlock is your friend.
Little matter, since the Congress cannot let its friends or the
government starve, they will do CRAs as needed to buy time to make
their speeches before the election.
The Wisconsin Economic Development Corp. said it will give a $300,000 grant to VictorySpark Inc., a group that will make investments in young, veteran-owned businesses. VictorySpark is the first "seed accelerator" to use mentors and focus on veterans' start-ups, the commerce agency said. [Kathleen Gallagher, Milwaukee Journal Sentinel, Jul 17]
[The] company that makes a Bluetooth-enabled meat thermometer has received a $100,000 grant a $250,000 loan from the state in the latest round of Small Business Express aid packages iDevices (Avon, CT; no SBIR), launched the iGrill meat thermometer [that] can communicate with an iPhone or iPad through a wireless Bluetooth connection, and let its user know when the meat is ready. .... Grow Home Organics (Guilford, CT; no SBIR) which makes products for outdoor kitchens and gardens, is receiving a matching grant of $83,800, ... Connecticut Valley Bindery (New Britain, CT; no SBIR) is receiving a matching grant of $50,000. ....Wethersfield Offset (Rocky Hill, CT; noSBIR), a commercial printer, is receiving a matching grant of $55,721 ... Fire Alarm Specialty Design (Windham, CT; SBIR) which designs fire and security alarm systems for healthcare, educational, municipal, commercial, and industrial uses, is receiving a $100,000 matching grant and a loan of $100,000. [Hartford Courant, Jul 11, 12] Even though states complain of financial distress, they continue to put public money into private enterprise with little hope of economic return to preserve jobs. It's all politics. So what happens next year when the grants expire and such investment is still uneconomic for private investment?
if the government was handing
out
subsidies to manufacturers, the [Obama] aides worried that those with
the best lobbyists would get them — rather than firms with the best
business prospects. [Zachary Goldfarb, Washington
Post,
Jul 14] Subsidies are all politics, SBIR included. American
manufacturing befuddles politicians who dream of more and better jobs
for voters but have no credible way to make it happen. So, they
cling to convenient fantasies from vested interests. In SBIR, federal
managers cannot even spell manufacturing because it is not in the rice
bowl. A NASA or Navy R&D manager gets no bonus for creating an
industry that will create 4000 new well-paying jobs in Ohio.
Never before have so many
organizations and policy experts harmonized so clearly on the need for
a long-term manufacturing strategy. Time will tell if anyone in
Washington is listening. [Stephen Gold, Industry Week, Jul
11] What they cannot agree on is how any strategy would be
devised and installed in the real world where the interplay of
government and industry is so controversial.
the new satellite U.S. Patent
and
Trademark Office planned for the region is expected to streamline the
process of protecting innovative ideas that once again have turned this
region into a job-creating powerhouse. [Patrick May, San
Jose
Mercury News, Jul 12]
Hands off our handout.
SBIR Insider advises The SBTC
has created two letters, one to Congress (see http://www.nsba.biz/docs/sbtc_
Obama's new campaign fodder measures to help small biz: directing government agencies to pay their bills on an accelerated timeline to all prime contractors for the next year - within 15 days as opposed to 30 days; calling on Congress to let small businesses write off up to $250,000 in capital investments in 2013; SBA revamping its Small Loan Advantage program to raise the maximum loan amount from $250,000 to $350,000 and streamline the loan process. [Reuters, Jul 11]
At the core of the almost
universal admiration of small business is an assumption: that
ultimately it will be such enterprises that revive the economy and
create needed jobs. ... BUT however much everybody admires the small,
independent businesses in our neighborhoods and communities, big business remains the primary driver of
economic growth and job creation. ... as the New Yorker's
financial analyst, James Surowiecki, recently pointed out, the
countries with the lowest percentage of workers employed by small
business — Germany, Sweden, Denmark and the United States — are some of
the strongest economies in the world. ... there is ample proof of
their fidelity to limited government, free markets and traditional
morality, which they regard as the virtues and inducements of an
earlier way of life. [John Bunzel, LA Times, Jul 10] Of course,
since we are a representative democracy where politicians pander to
public mythology, they will continue to push goodies to small biz
regardless of the reality of low economic impact. And a minority of
those businesses will plead for special handouts, which is how SBIR got
born and continues. No politicians has the nerve to call a halt.
Miles Kimball, an imaginative
economics professor at the University of Michigan, has stepped forward
to propose an ingenious solution for the Fed’s dilemma. The government
should create a “federal credit card”
and send one to every adult in the nation, enabling each person to
borrow $2,000 at a very low interest rate and not pay back any of the
money until after the economy has fully recovered. ... Kimball’s
account of his proposal, “Getting the Biggest Bang for the Buck in
Fiscal Policy,” can be found at his blog, supplysideliberal.com. [William Greider,
the Nation, Jul 10] A form of the helicopter form of stimulus. Let's
see: the day that the USG declares the economy fully recovered, the
public will suddenly withdraw $2000 per credit card and re-crash the
economy. The solution to that is of course political pressure to never
so declare.
If markets remained relatively buoyant early this week, that was doubtless because they were waiting for central banks to step into the breach yet again. [The Economist, Jul 6] The world wants to cancel and continue debt at the same time in some way that does not depress economic activity. Can't happen! Every dollar of debt removed is a dollar less buying power for whatever you are selling. Unfortunately, our political system refuses to believe such economics and candidates promise pain-free re-balancing. After the next election we will continue to get only what we are willing to pay for, no matter which party or candidates win.
A biofuels initiative that aims to reduce the military's reliance on imported petroleum is moving ahead, with companies including Virent (Madison, WI; $200K SBIR in the mid 1990s) invited to submit proposals in a $30 million initiative .... another step in a program launched last year by the U.S. Navy along with the Energy and Agriculture departments that aims to help build up the supply of advanced biofuels - those that don't rely on sugars from plants that are eaten, like corn-based ethanol. ... The Air Force said it will select five companies in the first phase, with plans to award $70 million each to the three companies that advance to the second phase and provide matching private-sector funding. .... Critics include Arizona Sen. John McCain, who has termed it a case of "misplaced priorities" and said the Pentagon shouldn't be in the business of funding and sponsoring new energy technologies. [Thomas Content, Milwaukee Journal Sentinel, Jul 2] McCain was a jet jockey who typically expects unlimited logistics for strapping a ready-to-go jet on his back. Wars, though, are fought with logistics as a combat limiter. Never mind, since there is money to be passed out, the political system will spend its energy steering the money to their constituents.
Aerodyne Research (Billerica, MA; 199 SBIR Phase Is and something like $80M total SBIR) will receive five $1-million DOEnergy [SBIR Phase II] grants, and Radiation Monitoring Devices (Watertown, MA; 404 SBIR Phase Is and something like $150M SBIR) will receive three $1 million grants, the department said. ... Other local companies in line to receive Energy Department grants: Conispire (Boston, MA: no SBIR) , Aspen Products Group (Marlborough.MA; $5.6M SBIR), Capesym (Natick, MA; $5.3M SBIR); Nova Scientific (Sturbridge, MA; $9M SBIR); Beacon Power (Tyngsborough, MA; $1M SBIR), the department said. [Chris Reidy, Boston Globe, Jun 29, 12]
The rest of DOE,'s Phase II list also shows a preference for SBIR experience: Euclid Labs (Solon, OH; $18M SBIR since 2004, all DOE including one $10M award), four new Phase IIs; Radiabeam Technologies (Santa Monica, CA, $10M SBIR since 2005 SBIR) three awards; Tech-x (Boulder, CO; something over $50M SBIR since 1994) three new awards; Muons (Batavia, IL; $13M since 2002 SBIR, all DOE) three awards; Far-Tech (San Diego, CA;$9+M SBIR since 2003) two awards; Ridgetop Group (Tucson, AZ; $10M SBIR since 2002) two awards; Calabazas Creek Research (San Mateo, CA; $26M since 1994) two awards; Niowave (Lansing, MI; $5M since 2007 SBIR) two awards; Mesa Photonics (Santa Fe, NM; $0.8M since 2008 SBIR) two awards; Green Mountain Radio Research ( Colchester, VT; $5.7M SBIR) two awards. Of 104 awards, 33 went to multiple winners who already had collected $378M SBIR from the federal government. Is DOE over-emphasizing contractor competence at the expense of companies and technologies with brighter futures? No one knows becasue Congress shows little interest in the question, and the agency has a bias toward making itself smarter.
Import more smart and cheaper labor. Technology industry lobbying group TechNet has released a letter signed by nearly 350 tech companies — including several from Washington state — to key U.S. senators urging that legislation be approved to remove a cap on how many green cards may be issued to residents of any given country per year. [Jennifer Sokolowsky, Puget Sound Business Journal, Jun 28]
SBIR Insider Rick Shindell wants
the SB world to get excited over SBA's turning the new law's VC
participation rules into a "fair share" disaster. That is, somebody
other than the market-dead crowd getting most of the SBIR now may have
to give way to more entrepreneurial companies. For the largest part of
SBIR, the worry seems not the bother since the mission agencies aren't
interested in the kinds of technologies and companies that would
actually make something economic out SBIR awards. Anyway, to do their
part, the SBIR advocates should scream at SBA and their Congress:
The deadline for comments on the size
standard issues we've discussed is July 16, 2012. The SBTC will be
publishing their letter in a few days, along with instructions on how
you can sign on to the document. If you read their document and
agree, I urge you to sign on to it. All it will take is a simple short
email from you giving SBTC your permission to include your name on the
letter.
the Ohio Board of Regents proposes a statewide commercialization ecosystem to create jobs, promote economic growth and increase wealth in the state. Among the recommendations: ensure that professors' commercialization activities are recognized in the tenure and promotion processes and Aligning curriculum to support the needs of industry. Read the report... [SSTI, Jun 27]
If you can't stand the answer,
don't ask the question. the
House voted to prohibit the NSF from funding political science research
and to curtail the government's ability to monitor economic and
demographic trends by eliminating the American Community Survey (ACS).
[Science, Jun 15] Somebody has to pay for less government spending, and
it will be the politically weakest programs. Business may rescue the
ACS because business benefits from the data.
Give those elite [research]
institutions more money, with fewer
strings attached, and they'll find ways to be more efficient in
training students and operating their campuses. [Science, Jun