Does the private sector create wealth anymore?

Let’s start the year wrong. Instead of useful advice, I’m going to indulge myself by asking a question here that I posed in Keep the Joint Running this week: Does the private sector create wealth anymore (“Creating wealth for fun and profit“)?

Wealth — real wealth — isn’t measured by money. If it were, printing more money wouldn’t cause inflation. It would result in more wealth. Thus, neither money itself nor any of the financial instruments that wreaked havoc last year have anything to do with creating wealth.

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Wealth is what you can buy that you value, whether it’s a ticket to “Avatar,” a piece of artwork, or a beer, not the money itself.

The column points out that no matter where you look, many or most of the foundations of innovation came from government investment, not private research and development. That’s significantly true of our own industry — NASA fostered microprocessor technology; Admiral Grace Hopper invented Cobol; the federal government created the Internet; an employee at CERN, Tim Berners-Lee, invented HTML; and the National Center for Supercomputing Applications developed Mosaic, the first Web browser to gain enough visibility to matter.

Foundational research in health care is funded by the National Institutes of Heath. The private sector does spend quite a bit to commercialize, but relatively little at the core of things.

Other industries? Agribusiness depends heavily on government-funded research. Energy? Nuclear comes from the Manhattan Project, fossil-fuel generation depends on 19th-century innovations, and nobody seriously expects the private sector to fund much green-energy R&D.

Only the entertainment business funds its own R&D, and even there, professional sports teams expect the public sector to build stadiums for them.

This matters, because whatever else is true of the economy, if we don’t create wealth, we won’t be able to create well-paying jobs, and we’ll all suffer the consequences of that.

So here are my questions, and please post your answers as comments:

1. Am I missing something, and private-sector research and development is actually alive, strong, and ready to carry our economy into the future?
2. If you think I’m right, what do you think should happen next to improve things?

– Bob

This story, “Does the private sector create wealth anymore?,” was originally published at InfoWorld.com.