I think it’s a good methodology, good people selection, letting them do sufficiently blue sky stuff, and so far historically the government has been tremendously bad at producing that kind of progress. (When they have a great big project to try to build something it doesn’t work. When they fund long-term research it works.)

This appears to be factually wrong. Most major breakthroughs in science and technology have been done or funded by governments. This includes big projects, such as the Manhattan project, the space program (both Soviet and American), etc.

Some breakthroughs that have been done by private companies, but they usually were very large and established companies like DuPont, AT&T and IBM.