The Free Market 16, no. 9 (September 1998)
Can government do a better job than private markets in any area of the economy? Consider: The tax-funded Human Genome Project, sponsored by the National Institutes of Health, has been the toast of the scientific elite for nearly a decade. It held out the promise of mapping of the entire structure of DNA, which in turn would lead to unparalleled medical breakthroughs and a new era for biotechnology.
When first proposed, this program appeared to be a project ideally suited for full government funding. It had undeniable scientific merit, much more than, say, the ongoing space-exploration racket. And with a price tag of $3 billion, gene mapping was too expensive, too elaborate, and too long-range to be privately funded. Government may fumble at everything else, but here, at last, is surely something government could get right.
It hasn’t turned out that way. Now at the halfway point in its funding term, the Project has proceeded at a snail’s pace, mapping a mere 4 percent of DNA. And experience tells us precisely where the program is headed: deadlines pushing ever further into the future with Congress approving higher and higher funding requests until the end of time. Like fixing federal highways or winning the war on poverty, the work is never to be finished because no one involved wants to see an end to the largesse.
Unlike most government programs, however, the Human Genome Project is not just an excuse to waste money. What it was to create would have become the new foundation of human biology. Moreover, a complete DNA mapping holds out the prospects of individualized medicines, of tailoring drugs and treatments according to specific needs. In short, genome mapping would dramatically improve the quality of life.
Thus, the benefits would not only have been scientific. It would have opened a huge new potential market for spin-off products. Precisely because of the prospect of the commercial use of the research, biotech companies would not wait until the end of time for the National Institutes of Health to announce its results. And they didn’t.
This spring, a consortium of scientists, completely separate from the government project, announced they could complete the gene mapping in a mere three years at an estimated cost of $200 million. And rather than demand tax funding, scientists at the non-profit Institute for Genomic Research said they would rely on funding from for-profit scientific-instrument maker Perkin-Elmer.
The announcement should have been the occasion for celebration. Instead, it sent government partisans into fits. They warned of the dangers of such valuable information being in the hands of a private company. An “ethicist” at the University of Pennsylvania raised ominous questions about the morality of the “largest scientific revolution of the next century” being “done under private auspices.”
The implication is that government always uses such information with more prudence than private ones. Sure: with nuclear technology, the government needlessly massacred foreigners; private industry used it to provide electricity.
But there are solid economic reasons why government and technological innovation do not go together. Lacking commercial markets for their projects, the incentive for researchers is not to innovate but to delay in order to maintain the status quo. Lacking the ability to calculate economically, managers of government ventures are without a clue as to how much should be allocated to salaries, equipment, or research to achieve optimal results. And lacking the economic necessity to compete, researchers lose the drive to discover new and cost-saving ways to achieve their goals.
The reason was spotted by Ludwig von Mises back in 1920, with his attack on socialism, and in 1944, with his attack on bureaucracy. The principles of profit and loss, private property and contract, enterprise and entrepreneurship, do not exist in government. Government operates with an eye to its own short-term survival, and those of its connected interest groups, and nothing else.
There are lessons to be learned. It turns out that even a highbrow, scientific undertaking like the Human Genome Project is not immune from the laws of economics. In the end, like everything else government undertakes, it wasn’t up to the standards set by private enterprise, the real hero behind every serious advance in science and health and quality of life dating back as far as the eye can see.
