One of the canards tossed around regularly from the Right, especially the Business Right, is that “Big Government” kills innovation, stifles entrepreneurship, crowds out private capital and generally makes a mess of things in the economy. That ignores, of course, the very long list of innovations and initiatives–start with the interstate highway system and the internet–of public sector investment that pay off very nicely for business and the economy. It may not be widely known, for example, that a lot of research into new medicines begins either in the public sector or with public funding. The pharmaceutical companies then take it from there and rake in billions. That doesn’t even count the enormous subsidies provided to the extraction industry or the support for a huge military/industrial complex that would not exist without public funding.
Jared Bernstein has a piece up on his blog, On the Economy, that elaborates on this point.