Guys -- Let's be clear here. The government (i.e. you and me) subsidize many things: Boeing's 787 ($38 billion as of last count), satellite launches (about $30,000/lb in launch costs), the internet (20+ years of taxpayer funding before it became a "product"), computers (taxpayer funded R&D from 1885 through today), etc. When the "get the government out of business" crowd takes charge, these things get cut off and "businesses" fail.
We (the taxpayers) subsidize power to aluminum smelters (usually to reduce their power costs to less than $0.01/kW-hr). The three aluminum smelters here in Washington State (2 Alcoa and 1 Reynolds) have been producing the minimum output of aluminum (most about 5000 lbs/week) each week to qualify for their allocated maximum power draw (literally tens of MW-hr's per week). They turn around and sell their "unused allocation" to (so-called) "private" power companies for $0.06/kW-hr. Several of the largest aluminum smelters in America are exempt from a minimum output of aluminum, so they are merely selling their allocated maximum power draw without any "intervening" production of aluminum! (I know half-a-dozen people who have been working in aluminum smelting since the 1970's.)
Earlier this year I was working on the design of a new Skype phone system. The development project was funded through a very well-known venture capital fund. The project was cancelled in June. The CEO of this VC fund actually said that the reason this project was being cancelled was that the Innovation Development Grant Fund (a Department of Commerce program) had had its funding cut. He went on to say (and I do not know this to be a fact) that 60% of venture capital in America derives from this fund.
As I said, I do not know much about this Innovation Development Grant Fund. However, I have been doing technology and product development work for nearly four decades now. I know that many of the programs upon which I have worked were funded in this manner. (I tell people that my background is "budgetary," not "financial.") However, earlier this year (February, to be precise), there was a moderately large announcement of a new alternative to angioplasty being released to the (medical device) market -- a roto-rooter for blood vessels. The articles I saw all claimed this was a development by a private medical device company. In point of fact, I started doing work on this device in 1984 while it was being developed by the University of Washington's College of Medicine. I was involved in design and manufacturing engineering for this device off-and-on between 1984 and 1996. From 1984-1992, every check I received for my work on this device was issued by the Department of Health's Innovation Research Grant authority. A company was created by the UW to market this device back in 1992. The company did an IPO in 1995. It was taken over and changed hands twice (through stock market actions) between 1995 and 1996. I followed it through a couple more "hands changing," before I lost track of it. My wife was the one who noticed the article as it had a picture of the pneumatic turbine system I designed for it in 1985 (which "lived" on my layout table for several months) prominently shown in the picture.
The first contract I ever bid and won myself (i.e. under the auspices of Herr-Meister Muller of Everett Tool & Die) was to make the injection mold and trim dies for the HP-01 hand-held (but not "pocket") calculator. This was a NASA program. NASA did the acceptance testing of my dies. I was paid for my work by NASA. The plant I delivered the dies to had been built by NASA (read: the American taxpayer). HP was exempted from paying taxes on profits made on calculators for 21 years (starting in 1967). Does it surprise anyone that HP got out of the calculator business in 1988? (When you buy an "HP calculator" today, you are getting a device designed and built by Brothers of Japan.) NASA purchased (at more than $1000/unit) the entire output from this (Beaverton, OR) plant from 1967-1969.
Television was invented by Philo Farnsworth -- the patron saint of Libertarianism. What people forget is that without access to the U.S. Army Signal Corp's R&D laboratory in San Francisco, his invention would have been merely an idea rather than a physical reality. Alexander Graham Bell got his start in a Massachusetts funded "business development center" (what we would today call a "business incubator") that gave him access to the materials and equipment he needed to develop his devices to aid the deaf (which turned into the telephone).
So, we should not be surprised when two decades after it was decided that the free market will provide everything (and taxpayer investment in such programs ceased) that the foundations of real, wealth-creating business erode and fail.
