Why do the R and the D?

LA Times is helpfully mesmerizing when it comes to the President's plans for the economy:

Reporting from Washington — President Obama will ask Congress to pass a $100-billion plan to expand and permanently extend the tax credits for businesses that invest in research and development, part of a larger plan for spurring the economy that he is to unveil in greater detail Wednesday.

The esteemed journalists at the LAT might be too detached from reality to understand this, but the President's proposal is simply a means of throwing money at certain companies.

To see this, ask why companies engage in research (the R) and development (the D).

Companies put money into researching new ways of doing things or new products and put more money into developing products based on that research if, and only if they expect to make money selling the end product.

They do not engage in the R and the D to get tax credits.

Sure, some companies will repackage existing research projects to get some tax credits and some companies will engage in some new "research" to do the same, but, ultimately, it all boils down to if I sink $10 million into figuring out a way of making a better widget, will I make my money back?

Of course, the answers to that question are only marginally related to tax credits.

To paraphrase, the real question is, assuming that I will come up with a product or service consumers want after sinking $10 million into the R and the D, will there be any consumers who can afford my product, will they be willing to spend that money on my product, and how much will I be taxed?

Business people tend to understand this.

If you run a coffee shop, and the government gives you shiny new coffee makers, well, by itself, that makes no impact on the long term scope and viability of the business.

You are not going to go out and hire more people just because you got a brand new shiny coffee makers from the Government.

You will only do that if you expect to make and keep more money from selling more coffee.

Even a law school graduate ought to be able to see this.