Of course Apple Inc. (NASDAQ:AAPL) has long gotten the credit for creating the iPhone, but a new book by economist Mariana Mazzucato puts a new perspective on innovation. In short, did Apple Inc. (NASDAQ:AAPL) really make the iPhone, or did the government have something to do with it?
The Government’s Role In Innovation
Bloomberg’s Mark Buchanan reviewed Mazzucato’s book, which calls into question the things we see in terms of innovation. She highlights the government’s role in innovation, not just in today’s technologies, like the Internet, electronics, photonics and biotechnology, but also in past technologies, like the railroad, air travel and nuclear energy.
How The Government Helped Apple
She points out that Apple Inc. (NASDAQ:AAPL) received some important government-backed financing during its early years. The company’s funds came from the federal small business investment program. So the question remains: would we will have the iPhone and the iPad if Apple didn’t receive those funds?
According to Mazzucato, the vital technologies which are found in those products were developed mostly because of state funds and not directly at Apple Inc. (NASDAQ:AAPL). Her point however, isn’t that Apple Inc. (NASDAQ:AAPL) or co-founder Steve Jobs didn’t innovate. It’s that the government provided a push to make sure that it happened.
Other Companies Helped By The Government
The author’s research indicates that out of the approximately 100 most important innovations between 1971 and 2006, almost 90 percent of them came about thanks to government funding. She also said that many pharmaceutical companies do their research in government-funded laboratories.
What’s interesting to note is that this very same thing has happened with Tesla Motors Inc (NASDAQ:TSLA). The government did provide financing to help the company develop its technology, so once again, we have the government backing new tech. And yet, Tesla has been blasted for making the Model S, which is a luxury vehicle only 1 percent of Americans can afford.
But if Apple Inc. (NASDAQ:AAPL), which still makes products with a high premium on them years later, started out the same way, then how can Tesla be blamed? Not to mention the fact that new tech typically starts with the rich and then works its way down as it becomes less expensive over time.