Mainstream economic theories popular in the last several decades have tended to downplay the government's role in markets and to increase skepticism about even that more limited role. Austerity, particularly in Europe, has added to the problem. It has not worked, even on its own terms.

If we look at the complexity of the challenges facing western societies today, we see that the problems are not really about outsiders, but have their roots much closer to home.

Markets are not static entities that are 'intervened' in (for good or bad) but are outcomes of public and private interactions.

It's important that public funds be spent in research directions that are pushing market frontiers rather than working in existing areas. This means funding research not only on drugs but also on areas like life-style changes, even if the profit potential is lower for Big Pharma as you cannot sell that change as you can sell a medicine.

Most venture capital funds are too short-termist and exit-driven to deal with the highly uncertain and lengthy innovation process.

The globalized nature of production and innovation means that the benefits don't necessarily stay in the country where the investments are made.

Government support is not only investing in upstream areas like basic research, but also in downstream areas like applied research and early-stage financing for the companies themselves. This means there are great risks.