Comment by jshaqaw

And yet it is the opposite fact, strong anti-monopoly enforcement, which lead to such labs. Most big companies had big R&D efforts during the mid-20th Century, and that was because the government was unusually aggressive in its anti-monopoly efforts. Big companies couldn't simply buy small, innovative startups. Mergers were less common, and the government examined each for any possible threat to competition. Buying an up-and-coming competitor, to limit competition, was strictly forbidden. So if you wanted to be innovative, you had to build a big lab, and do all the innovation yourself.

It’s interesting you mention Google because they do have quasi-monopoly profits that allow them to fund a lot of different things. Sure, they launch a new chat app every year and close it. But look beyond that.

Their profits allow them to staff projects that we benefit from. For example, programming languages like Go, Dart and (soon) Carbon. Go is a particularly good example here because it was literally created by Bell Labs alumni working at Google.

And it’s not just languages. No other organisation in the world wants to create another operating system. We’ve reached a local maxima with Windows, Linux and macOS (+iOS) that no one has the capability of challenging. The sensible thing is to run these operating systems till the end of time because they’re good enough. And yet Google with its profits says “how about we build an OS with a completely different approach?”

Quite apart from Google’s impact on the world, we benefit from having the option of Go, Fuschia and the rest of it. This is the product of research and development they have funded. Even if we don’t use them directly, we learn from their approach for future attempts to improve things.

There's an inherent tension in this take.

The people need to be free to study whatever they want without profit interfering, but also they need to be attached to a for profit business in a specific arena that has monopoly profits.

What is the magic ingredient that we lose if we just give the public's money (plus some extra we get from avoiding the inefficency of monopolies) to academics directly and tell them to build cool stuff?

Is it patents? Is this basically an internal Venture Capital thing using monopoly profits? If they get to stick their flag in one new idea before anyone else then they get to extract rent from everyone else and/or squash competition and so pay for the 99 misses?

edit: they were forced to licence their patents in 1956 so before that, patents were presumably the goal.

https://www.aeaweb.org/articles?id=10.1257/pol.20190086

The above suggests that the open licencing of the patents spurred innovation, except in telecoms, where AT&T maintained their monopoly.

I don't see the connection. We have just gone through the longest bull market in history. Large tech companies were absolutely rolling in cash, hiring tens of thousands of expensive software engineers, whose purpose was unclear.

What do we have to show for it? That's right - complex ad algorithms and sophisticated content suggestions that lead to escalating extremism and teenage girl depression.

I would blame the "stakeholder value" culture more than anything. Short-term profits over long-term growth and innovation. GE and Boeing had every opportunity to do cool things, but the Jack Welch school of management drained these companies of life, with piece-by-piece sell offs and stock buybacks (which, by the way, were illegal at this scale before the early 80s).

The problem is not monopolies or lack of (although the government is effectively toothless at this point in that regard).

The problem is broken Capitalism and ass-backwards incentives.

Monopolies don't foster innovation, which is the implicit claim you are making.

If the ROI on a lab is the best of available options and the company has sufficient capital then... it will get done.

Being a monopoly makes the capital part easier, but a non-monopoly of sufficient size would make the same decision.

And the direct effect of monopolies on innovation is even worse: that the directly stifle competitors.

unfortunately, i don't have access to university resources anymore. but i suspect that if someone were to go pull the 1980 annual report for at&t (T) from the proquest historical annual reports database (should be available via online library resources to anyone with an active university affilation) and were to take those financials and the inflation adjust them (perhaps to pre-pandemic times as things are all shifting around right now), and then compared the revenues and profits of the top five largest technology companies in the united states, one would find that they're on a similar scale.

unfortunately i cannot verify that for myself right now.

One of the key problems is that in todays society, those high monopoly rents wouldn't necessarily be re-invested in projects

" Want Google to have a Bell Labs"

Are you suggesting that google couldn't already do this if they had chosen too?