I suppose you are too young to remember "picking winners", Harold Wilson, British Leyland, Red Robbo... Or more directly, Grundy and their NewBrain vs Acorn... Historically, government meddling in industry in the UK has been a disaster.
The US government picked winners like Intel, saving the US semiconductor industry through protectionist policies. (http://www.forbes.com/2003/10/10/1010grovepinnacor.html) In fact, the US technology industry was developed through enormous subsidy, from transistors to the internet.
Economist Ha-Joon Chang discusses that's how powerful nations develop. The entrepreneurial Japanese government's first forays into the auto industry were failures, but of course they kept at it, learning from failure. That's the nature of investment, as any HN reader should know.
You have to remember how many failures it takes to have a big success. For every Intel there's a wasteland of shoulda-been companies that are dead and forgotten, with billions invested having gone up in smoke.
Of course, when it's private venture capital that's behind this, people don't seem to complain as much.
Honestly, I've been in a couple of startups (including one that got a lot of funding from VCs and going public) and I've never seen anything like the inefficiency that was normal in the public sector projects that I worked on.
Not that I'm against public funding of research - I'm absolutely not. But my experiences of public sector research funding on "large" projects completely put me off working in that sector (so much so that I left academia to co-found a start-up).
That was probably the single biggest issue, although there were others, there was a huge administrative overhead on all of the projects that it made it difficult to spot where any actual research was being done.
I've worked on publicly funded projects and in the private sector. The publicly funded projects were the worst for pointless reporting, accounting, and paperwork.
In the private sector, the boss pops his head in and asks what I've done to day and what I'll finish by the end of the week, and we adjust goals. It takes about 5 minutes a week to do this.
When I was working on a publicly funded project, there was a report to be filed every day that took an hour of my time to do, a report to be filed every week that took about three hours over the course of the week, meeting with management to make sure that the first two reports were complete, accurate, and not fudged which took an additional two hours a week, and an end of the month assessment for both spending and time clocked in that took about twelve hours over the course of a month.
I would speculate that you're probably more selective about the kinds of companies you work for than a VC is in funding them.
There have been some legendary turkeys over the last ten years, but for every pets.com or hairdryersbyemail.com there's dozens of others so misguided you never heard a thing, they just went nowhere fast.
Japan's record isn't that good - MITI tried to strangle both Japanese auto exports and the semiconductor industry in their cradle because they didn't conform to Japan's development plan.
Well, they picked one winner - Leyland - and force-merged them with all the losers, in the hope that Leyland's magic would somehow infuse them. Instead, it destroyed them all. Some of the brands, like Jaguar, Daimler, Land Rover, etc live on. But not as British companies.
What went wrong with Leyland? It's a very respected trademark here in Uruguay, we still have some Leyland buses in operation here, including 1949 Leyland Olympics (!!!)
"The Olympic was popular in Montevideo, with 240 entering service in the 1950s and 1960s. 50 of these were new to the Montevideo local authority, most of which passed to major independent and the other customer CUTCSA on privatisation. Some of the 240 were still in use as late as 2001 including a 1951 EL40 in use as a driver trainer."
I'm not quite sure why the government's choices back then would have any bearing on their choices 30 years later? It's not the same people. It's not even the same generation.
