Big Business Can’t Afford To Develop Products

I just read an article in the latest issue of Scientific American* where the writer, David J. Kappos, made the astounding statement that the biggest companies in  the U.S. (and the world) can’t “afford” the vast amounts of money needed to develop new technology into viable products.

Product development costs are apparently so high that these “poor” companies just don’t have the financial resources to pull off the translational research needed to turn basic research into profits. By way of contrast, the article warns that China and India are prepared to invest large sums into this type of work and as a result may in fact end up profiting from U.S. “inventions” (and those of other countries, though these are naturally downplayed given the typical nationalistic U.S. slant).

The solution put forward in the article is that government at a national, regional and local level should “invest” money and subsidize this type of product development work, to help these beleaguered companies who barely have the odd tens of billions of dollars in pure profit annually to rub together.

I, for one, am sick of seeing this kind of argument. The major banks and financial institutions completely screw up the world’s economies through pure unadulterated greed and what happens? Do they suffer the consequences? No, these supposed “bastions of the free economy” are given billions of dollars of tax-payers’ money to bail them out and let them continue their unceasing greed fest.

And now; we’re supposed to hand over even more money to private companies so they can develop products to sell at hugely inflated prices to guard their big fat profits and screw us over even more? Is this for real?

The supposed “free economy” means only one thing to the people running these companies and banks. They want to be “free” to act however they choose, to have no restrictions on how they behave and continue financially raping all and sundry.

I’ll be happy for tax-payers money (not “government money” – they have none) to be used to finance this kind of research or to bail out banks – as soon as they agree to share out the profits with the tax-payer too. Somehow I don’t think that’s what they have in mind.

Apparently the Chinese and Indian systems can do this no problem because of their “socialist” policies. I don’t see a difference between a system that makes use of its collective wealth to develop products and private companies asking for billions in grants (or bail outs). A rose by any other name would still smell as sweet – or in this case bad.

And what do we get in exchange for this “investment”? These very companies have literally exported the manufacturing and income generating industries to other countries – again in the name of “profit.” Profit for who exactly? For the companies certainly, but where’s the profit for the countries themselves?

The real reason that U.S. companies “can’t afford” to carry out product development has nothing to do with how much money they make or the cost of the research. It’s simply that the “greed is good” Gecko’s running these companies don’t want to risk the fat profits that they’ve become accustomed to earning. Anything that “threatens” that becomes “too expensive” or “too risky.” They demand the right to maintain their disgusting profits, and are more than willing to let gullible and spineless politicians hand-over billions to prop them up.

What this represents is a huge transfer of cash from the public to private companies. The last few decades have seen the richest individuals and corporations become ever wealthier and more perversely greedy while the poor have become ever poorer. This is why.

If you truly believe in a free economy then the idea that even one cent of tax-payers’ money would go to a private enterprise should be an anathema. It should not  be tolerated – full stop. These companies and organizations should be left to fail, no matter how big, no matter how powerful.

If you believe that they should be bailed out, subsidized and given “grants” then fine. But the public must reap the benefits of that investment in the same as any other investor would. Anything else is criminal.

* Who will bankroll the next big idea? Scientific American, Oct. 2013, pp. 58-61.



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