The Chinese government is doing its damnedest to develop its technology sector. Last week, the Chinese PM was in India, trying to lure Indian companies to move into China. And they are certainly doing the same to American companies -- you may recall that Cisco's CEO is taking orders from the Chinese government in more ways than one:

Cisco has also moved the manufacturing of many of its products, which is done under contract with other companies, to China at the request of Chinese government officials...

"Our contract manufacturers, at my request, and candidly at the request of the leaders in your country, began to move our contract manufacturers here to China," [Cisco CEO John] Chambers said.

For many years, our own government had a very successful strategy for doing the same thing. Computer science research grants -- funded largely through the DOD's Advanced Research Project Agency (sometimes ARPA, sometimes DARPA) in effect provided the seed ideas and training for the people who would then go off and fund companies like, among others, Sun and Cisco. (It's an idea that goes back to the beginning of the computer industry in this country -- the ENIAC was a World War II project, and IBM really learned how to build reliable electronic computers on the SAGE project).

Our current leaders know better:

The Defense Advanced Research Projects Agency at the Pentagon - which has long underwritten open-ended "blue sky" research by the nation's best computer scientists - is sharply cutting such spending at universities, researchers say, in favor of financing more classified work and narrowly defined projects that promise a more immediate payoff. ...

The shift away from basic research is alarming many leading computer scientists and electrical engineers, who warn that there will be long-term consequences for the nation's economy. They are accusing the Pentagon of reining in an agency that has played a crucial role in fostering America's lead in computer and communications technologies.

Isn't that nice? One possible objection to this line of argument: The U.S. government spent money; the Chinese are seeking investors. First off, I'm not sure that's entirely true -- if the Chinese telecom infrastructure, for instance, a major Cisco client, isn't technically the government, then it might as well be. Second, in SAGE and even the ARPAnet development -- what turned into the Internet -- the government got a tool for its own uses in return for the technology. And third, even if you look at this simply as an investment in the future development of the society, looking at the way things turned out, it certainly looks as if the government can be a pretty sharp investor at times, whether or not libertarians believe it...