The idea that the state is the enemy of innovation and the bane of entrepreneurs is deeply ingrained and deeply, dangerously wrong, argues a new book endorsed as “brilliant” by no less an authority than Martin Wolf, the chief economics commentator at the Financial Times. Indeed, The Entrepreneurial State: Debunking Public vs. Private Sector Myths, by Mariana Mazzucato at Britain’s Sussex University, is a meticulously argued treatise that shows how unwise our conventional wisdom has become. Not only do we fail to see the importance of government programs at the heart of risk-taking, innovating technologies, but knee-jerk hostility to government then cheats the state out of the resources needed to stay ahead.
One case in point: Apple, a corporation started with government-backed funding that brilliantly integrated government-developed technologies into hugely commercial designs. “Without the massive amount of public investment behind the computer and Internet revolutions,” argues Mazzucato, Steve Jobs’s brilliance “might have led only to the invention of a new toy—not to cutting-edge revolutionary products.” Mazzucato has a word for the system in which government—that is, ordinary taxpayers—funds the big risks while the private sector reaps rewards, then dodges taxes. She calls it “parasitic.”