 In trying to foster innovation and entrepreneurship, policymakers all around the world are trying to understand the Silicon Valley growth model. And in Europe, for example, they're asking, where are the European Googles? Why are all these funky companies like Apple, Amazon, and Facebook coming out of the US? And the answer that we've actually heard to this question is that some countries, for example, some of the southern periphery of the Eurozone, just have too much state, too much bureaucracy, which is actually impeding private venture capital, the entrepreneurs, the garage tinkers, to be able to do their thing, to be able to welcome failure. And often, this juxtaposition is very much, if you want, explicit, even in the media, where we're told, for example, that the state is a big Leviathan, which is meddling and impeding innovation because of its heavy hand. The economist, of course, is one of the proponents of this. And this has actually caused lots of innovation policy to focus on getting the state out of the way. We need less red tape, less taxation. And in arguing for this, we often hear that, yes, of course, we need some state. We need the state to correct market failures, to invest in infrastructure, skills, education. But actually, the really revolutionary spirit, which actually created Silicon Valley, really is focused in the private sector. And so what the state should do is create the conditions, facilitate that wonderful dynamism. So my question to you in the next five minutes is, where did this juxtaposition come from? Is it a fabricated image? And what is the point of this image, almost a cartoon image that we have of the state as a Caffeine bureaucracy? Is this actually impeding our ability to build what I call an entrepreneurial state, to do what Silicon Valley actually did? So what actually did happen in Silicon Valley? What is revolutionary about your smartphone? What makes it smart and not stupid? Well, all these technologies behind it, which were government funded. Steve Jobs was very smart. He was a genius in putting them together in different ways. But these revolutionary technologies were not funded in the private sector. Now, when I give these examples, people often say, oh, but you're just talking about the military industrial complex. Well, no. The examples go to energy and to health. The NIH actually is responsible for the most revolutionary new drugs, these new molecular entities with priority rating. 75% of them are actually coming out of these boring, casky, and public labs. And when we look at the actual investments, we're not just about basic research, which is your typical public good market failure problem. It was also applied research. It was also, God forbid, early stage seed funding coming from government. Government as venture capitalists through, for example, these SBIR loans, Small Business Innovation Research Program, which you can see here in this graph, have actually become more and more important in advanced capitalism. You shouldn't be surprised as finance has become increasingly short termist. Where do you get the funds to fund innovation, which takes much longer than the venture capital cycle, which is all focused on the exit in three to five years? We need patient, long-term, committed finance. Now, what I'm basically describing to you is the state as entrepreneur in the sense of being willing and able and courageous enough to take on that upper right-hand quadrant. Be one of the lead risk takers. Now, one of the problems is, if you've ever taken finance, there's, in theory, a relationship between risk and rewards. Now, in thinking about the state as one of the leading risk takers, the question is, has it actually also gotten some reward back? Well, the tax system, which is the way it should be getting back that reward for its risk taking, hasn't really worked. We know that many companies, which have received such huge benefits from the state through both the technologies and early stage financing, do not pay back much tax. In rethinking this risk reward mechanism is fundamental. I mean, had the government just received even just 1%, it should be much higher than that percentage there, back from the internet, think how much more money today there would be to actually be funding green growth. Now, unfortunately, because we privatized all those rewards and haven't thought about really specific mechanisms, for example, the government retaining perhaps a golden share of the IPR, retaining some equity or income contingent loans. We have it for students, why not for companies? That would make growth not only smart, innovation led, but also more inclusive. Now, how do we achieve growth that is both smart and inclusive? It's not gonna happen by itself. We need to think about mechanisms. And I want to encourage you to do two things. First of all, get rid of this image. It's a fabrication, which I would like to say has justified a theft, just like the image of the lazy Mexican under the palm tree justified the theft of half of Mexico by the US. If you want to look into that image, it's fascinating, it happened at a very specific time in US history, this image is a false image which is currently justifying a theft from the public sector, which is funding some of the biggest risk in technological change, which we know is a key driver of growth. And my question to you is what do we do about it? What are the concrete mechanisms? Equity, golden share of the IPR, income contingent loans, let's at least have this conversation.