In the Wall Street Journal, Gordon Crovitz pushes back against President Obama’s recent assertion that “The Internet didn’t get invented on its own. Government research created the Internet so that all companies could make money off the Internet.”
Crovitz is right that Obama’s thumbnail history is misleading; it was the private sector, not the federal government, that realized (in the sense of being aware of as well as concretely bringing about) the commercial potential of the Internet.
However, Crovitz’s own thumbnail history suffers from a blind spot of its own:
[F]ull credit goes to the company where [Robert] Taylor worked after leaving [the Defense Department Advanced Research Project Agencies Network]: Xerox. It was at the Xerox PARC labs in Silicon Valley in the 1970s that the Ethernet was developed to link different computer networks. Researchers there also developed the first personal computer (the Xerox Alto) and the graphical user interface that still drives computer usage today.
Yet as Adrain Slywotzky noted in Bloomberg Businessweek magazine, Xerox PARC was itself a “loose public-private partnership,” much like Bell Labs and RCA Labs. And, problematically, funding — both public and private — for institutions like these has dried up:
Labs dedicated to pure research—to the pursuit of scientific discovery—have seen funding slowly decline and their mission shift from open-ended problem solving to short-term commercial targets, from pure discovery to applied research. Bell Labs had 30,000 employees as recently as 2001; today (owned by Alcatel-Lucent ALU) it has 1,000. That’s symbolic and symptomatic of the broken link in the U.S. business model. With upstream invention and discovery drying up, downstream, industry-creating innovation is being reduced to a trickle.
Further, as Ted Nordhaus and Michael Shellenberger of the Breakthrough Institute observed in the San Francisco Chronicle, these companies ruled over their respective markets to the point of monopoly or near-monopoly:
During America’s mid-century economic heyday, a lot of important technological innovation was done by large private firms, which were either outright monopolies or overwhelmingly dominant in their primary markets. With steady profits to reinvest for the long-term, firms like AT&T, Edison Electric and Xerox made enormous investments in potentially game changing technologies and corporate research laboratories like Bell Labs and Xerox Park are justly revered for their many innovations. But now that the national monopolies and oligopolies of the industrial era have been broken up, private firms tend to invest much less in the high-risk, high-reward technologies that drive economic growth. The chance of failure is too great, the rewards too uncertain, and the technologies too easily copied by competitors.
None of this is to say that these conditions can — or should — be replicated today.
It’s only to say that we shouldn’t airbrush history when it doesn’t mesh conveniently with ideology.
Joe the Plutocrat 
John S 
Another good counter example is NASA. People wax rhapsodic about all of the technical marvels that came out of the space program. But the space program has been a shell of its former self since Apollo was terminated. And in that span of time technology development exploded, based on terrestrial commercial need that was recognized and met by the commercial marketplace, not the moon-shot idealism of a government agency.
Relatedly, DoD had to be dragged kicking and screaming to relax its “Mil-Spec” standards that over-promised and under-delivered products at budget busting cost, to finally accept Commercial Off-the-Shelf, (COTS) technology solutions that were/are higher quality at lower cost.
Finally, DOE has been funding alternative energy research for decades with only marginal commercial benefits.
There is of course some role for federally funded basic R&D. But only a dilettante Beltway Clown like Barack Obama and his minion hack Lieutenants could believe that throwing exponentially large amounts of money at mediocre ideas will convert them into good ones. Simply because they alone have the Midas Touch of Power Elite arrogance, hubris and conceit.
Your tax dollars at work…