Yes, big screwup for sure. Using this as an argument against any sort of innovation policy is flawed. The market can't attain efficient levels of innovation on its own due to an inability to capture spillovers. Obviously this is more severe in basic research than later-stage development, but I wish you'd been a little more nuanced.
"The market can't attain efficient levels of innovation on its own due to an inability to capture spillovers" As if the government is better? Not only is it MORE myopic (one big bet) but it's also subject to political influence and corruption. Basic research (e.g., math and physics) is fine, but "development" (engineering) should be done outside government influence.
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