in fact this story demonstrates that ONLY the government should be doing this; as it's too risky a business proposition for private enterprise. Governments don't HAVE to make money on these ventures.
Economic calculation. The reason why no private venture went for this themselves is because all the private investors who are capable of acquiring $500000 capital in the first place were all smart enough to see that the risk isn't worth the reward here, so the business venture is not worth undertaking at all. That's the key - not all business ventures are worth undertaking, even if they make you feel warm and fuzzy thinking about them they might actually be huge wastes of money. If a government project fails, the taxpayers are penalized so there is no incentive for the government to maximize the benefits and minimize the wastes of its expenditure.
These 50 people otherwise wouldn't have had a job, and it's well known that the US has the WORST social security and healthcare in the developed world. In reality, this is $500,000 worth of research and development that otherwise wouldn't have happened.
Two counts of broken window fallacy. Those $500,000 would have otherwise been spent by taxpayers, providing just as many jobs and giving $500,000 worth of useful goods and services to the taxpayers.
I am waiting for the day the US does default on it's debts ... we'll see how many free market fanbois there are left after the shit hits the fan
Actually, most free market fanbois I see would see the US defaulting on its debt and the general shit hitting the fan that follows as a confirmation of their beliefs - that our extreme levels of government spending are unsustainable after all.