Monday, May 14, 2007

Bio-pork? No thanks.

After almost a week of relentlessly positive coverage in the Boston Globe, Edward L. Glaeser, Globe guest columnist and professor of economics at Harvard, applies substantial criticism to the concepts underlying Deval Patrick’s Biotech Bonanza in a column entitled “Politics, biotechnology a shaky mix”. He states some points already made here, but does so with far more eloquence:

LAST MONDAY, I argued that Massachusetts should embrace biotechnology but eschew “government-sponsored investment funds” that target any one industry. Even the smartest venture capitalists, I wrote, find it difficult to navigate the unpredictable waters of new technologies, and governments have far less expertise. The government also faces enormous political pressures to spread money around, rather than to target projects with high returns…

Moreover, the program can be improved if it plays to government's innate strengths and avoids areas where government is at a competitive disadvantage. The fund should support important research selected through an independent process that puts science above politics. The government should avoid playing venture capitalist -- and should drop any ambition to create biotechnology centers statewide…

The government's comparative advantage lies in subsidizing public goods, like the rule of law and new ideas, that private individuals lack the ability or incentives to provide

However, the current plan also treads in areas where the government is inherently weak. The governor and legislative leaders talk of guiding ideas to the marketplace. Venture capitalists and other entrepreneurs have the incentives, capital, and knowledge to make that happen. The government shouldn't bet tax dollars on commercial projects that experienced investors don't want to fund. It should spend on basic research that will save lives and attract entrepreneurs…

Consider the plan to fund geographically disperse innovation centers intended to serve as regional economic engines. Massachusetts's edge in biotechnology comes from the cluster of scientists and entrepreneurs in Greater Boston. Building biotech centers from the Cape to the Berkshires sounds like pure pork meant to satisfy statewide constituencies.

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