[turtletontine]

I’ve seen it claimed that higher taxes on corporate profits incentivized that lab model. Better to invest in risky research than have that money taxed away. When the regulatory environment changed, shareholders insisted they should get that money through dividends and stock buybacks, and goodbye Bell Labs. I don’t know how accurate that argument is, but it certainly sounds plausible.

[mdnahas]

My father worked at Bell Labs. He said the rules of the monopoly signed with the US govt drove innovation. AT&T, which operated Bell Labs, could charge cost plus a fixed percentage, but it was based on costs from N years earlier. I believe N=3. Anyway, if AT&T improved costs, it became more profitable.

The profits of the company depended on innovation. The employees knew that. And it innovated.

[mcmoor]

Sounds like this is what's still done in last decade Amazon who didn't report profit for so long. Though it's also stopped by another regulatory change that no longer regards S&W dev as R&D for tax purposes, but I don't remember the name.

[breakyerself]

I've heard that before and it makes a lot of sense.