What you're describing is a command economy of the type the Soviet Union had -- no private investment.

The whole history the twentieth century is the evidence that such a system doesn't work. And it especially doesn't work as technology has become increasingly complex.

Markets are vastly better-informed investors than governments can ever be. Which is why it's generally vastly better for governments to skew incentives for private investment to favor a particular area, rather than make investments directly.

No, that's not what I'm describing. Stop putting your ideological spin on my words.

The government doesn't need the private sector, it allows the private sector to exist where it's deemed beneficial.

The rise of the FIRE sector (finance, insurance, and real estate) to become the largest sector in the US economy (22+%) coincides with an increase in proportion of private R&D expenditure compared to government expenditure. In 2010 businesses spend $248 billion on R&D while the government spent $126 billion. In 2021 that number was $587 billion compared to $153 billion. In other words, the share of Business R&D went from 66% of R&D spend to about 80%.

The reason this is not a good trend is that the KIND of R&D businesses do vs government are very different. Government invests in basic research and invention while business invests in innovation.

Less money is going into science and more into squeezing money out of people via innovation. I would argue this is because the sector that makes all the important decisions is now the FIRE sector, which only thinks about the next quarter.

source: https://ncses.nsf.gov/data-collections/national-patterns/202...