Co-Host Min told me that, for the sake of my own sanity, i shouldn't bother with the crazy man who says the government didn't create the internet, and since it was only going to be link-blogging to Kevin Drum and Atrios anyway, i agreed. But then i read Matthew Yglesias, and he has an interesting twist. Even if you accept that the government didn't create the internet (you shouldn't accept it; read Drum and Atrios), Yglesias points out that this innovation came at a time when top marginal tax rates were 50%+.

The thing about this is that we ought to understand both PARC and its East Coast friend Bell Labs as in important respects outgrowth of the high marginal tax rates prevailing in postwar America. These were, lets recall, very high rates. If you look on the corporate income tax side (PDF) you'll see that during the Eisenhower, Kennedy, and Johnson years the top rate hovered around 50 percent. Dividends were taxes at a rate that maxed out at 91 percent before declining to "only" 70 percent as a result of LBJ's tax cutting.

This created a dynamic where "earn a profit and pay the profits out as dividends to our richest and most influential shareholders" was not a very high priority for managers. And for executives to give themselves a raise was tantamount to handing money over to the government. There was nothing left to do but spend it on something, and various high-tech research labs and skunkworks' fit the bill. After all, if something really awesome emerged you'd get glory--and the government can't tax glory.

So i guess if Crazy Guy wants to go back to that, i'm willing to let him pretend Xerox created the internet by themselves.