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Government's Genetic Failure

Mises Daily: Tuesday, June 27, 2000 by

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There was a perverse reason President Clinton presided at the press conference announcing the cracking of the human genetic code. As is his way, he was attempting to steal credit, for himself and for the government generally, for a scientific breakthrough that was actually made possible by private enterprise. It was another manifestation of his dishonest attempt to take credit for all things bright and beautiful, from the quick pace of economic growth to the decline in the year-to-year deficit.

Clinton heralded the government-funded and -operated Human Genome Project, but he failed to mention that this expensive bureaucracy was not the reason for the breakthrough. In fact, the opposite is true: by sucking away intellectual and economic resources from private enterprise, the government delayed this first stage of complete gene mapping. Only when it appeared that the government operation would never complete its job–and why should it, since its budget was guaranteed and its scientists were comfy cozy in their positions?–did commercial enterprises step in to do the job.

Some news reports, taking note of the presence of J. Craig Venter, president of Celera Genomics alongside Francis S. Collins of the government’s gene bureau, vaguely hinted at this underlying truth. The New York Times noted that "the public consortium has also fallen somewhat behind in its goal of attaining a working draft" of the genetic sequence and that "academic scientists have felt some chagrin" that the government "should be upstaged by a commercial rival financed by the company that made the consortium's DNA sequencing machines."

Yet these telling hints fail to capture the extent of the meltdown that the government’s gene bureau experienced. Founded in 1990, and freely spending $3 billion in tax dollars, it had consumed half its funding and only mapped 4 percent of the code. Fearing that private enterprise would horn in on its laziness, it did more, but even then only completed half the job as of 1998.

Fed up with the snail's pace and shocked at the waste, commercial rivals got into the act, and, using a new shorthand technique for decoding, spent a fraction of the money and forced the bureaucrats to scramble to prevent private enterprise from taking full credit. It was old-fashioned competition, not government largesse, that got the job done.

Celera is a division of PE Corporation, which has stockholders to whom it must answer for its every expense. It makes management decisions based on economic and not political criteria. It was driven to complete the job in a hurry and at low cost because of the prospect of profits from innovations in biotechnology.

The real question is why Venter of Celera Genomics bothered to share the podium with the lazy birds at Human Genome at all. Why not organize a private press conference, jettison the politicians from the platform, and proclaim the ability of commercial enterprises to do scientific research better than the government?

The answer was a display of muscle by the Clinton administration, which threatened to force private companies to make their data public rather than selling it for profit. The stocks of publicly traded gene research and biotech companies took a dive after this brief act of threatened extortion.

Celera might have also feared a government war against its customers, many of whom work for government-funded academic research institutes. Celera was forced to promise that it would make its research available for public use at no charge, and only charge for its annotations and unique software tools, at least until the Justice Department demands that they share those too.

But what about the claim that Celera benefitted from the publicly available information from the government’s gene bureau? To "benefit from" something is not the same thing as being dependent on it. Celera could have proceeded without the government’s research, but because it is private, it economizes on resources and uses what's available.

It is actually to the discredit of the government's bureau that it had all this information and still couldn't manage to complete the job. The same sort of claim is also made about the internet: because the government laid the first lines, we are supposed to thank big government for the web. In truth, it was commercial firms that made both genetic sequencing and web commerce come to life.

Also obscured in the news reports was that this sequencing would have never been completed but for a technique invented by private enterprise called "whole genome shotgun." As one researcher described it, the technique is comparable to shredding an entire book and putting it together again, while the government was taking an extra and unnecessary step of first dividing the book into chapters and then reassembling it. The second approach provides no research advantages but it does slow the process down, all the better to drag out the guarantees of government funding all the longer.

Celera pushed ahead with its new technique against all detractors because its incentive structure is wholly different from the government's. As is typical of government-employed scientists, their first concern is to retain and maximize their research grants. They follow the progress of legislation and Congressional appropriations even more closely than their research goals. The driving force is not success but stalling for as long as possible. The incentives for private enterprise are just the opposite: to economize on research spending so the product can be brought to market and the profits can begin to flow.

It is precisely this difference in the constellation of incentives that explains why government research is always either slow or misdirected as compared with private enterprise. Eliminate competition in research altogether and you produce strange places like the Soviet Union, which had a vast population of highly educated scientists, but technology that fell further and further behind the longer that socialist regime survived.

The difference between a society that advances scientifically and one that does not isn’t to be found in its number of scientists, but in the ability of its institutions to inspire creative research and bring it to fruition in the market. It is not science as such that produces advances, but capitalist economics that creates the right incentives and provides the means to bring science to market. In a socialist society, a million of the best scientists still can't create anything like a socially useful and available technology.

For that reason, it was pathetic to see the government's genetic point man immediately begin demanding government intervention in the use of genetic information. From his podium, he said that government should forbid "discrimination" on grounds of an individual's genetic code, a point which Dr. Venter, who has apparently not absorbed the lessons of his own experience, had to agree.

And yet a main advantage of genetic sequencing is that it would allow insurance companies and businesses to become ever more discriminating in their selection process between individuals. In health and the provision of medical resources, more information leads to a more efficient use of economic resources. But if these people get their way, insurance companies and businesses will be forced to continue to spread the cost of disease across the whole population, making the healthy pay for the defects of the sick. Society does not gain from premiums that are higher than they ought to be.

But what about fairness? Should a person be required to pay an extra premium for a malady which is genetic and not behavioral in origin? It’s not popular to say so, but there’s no getting around the fact that we are all different. Some people have advantages others do not have; such is the nature of the human being. What’s unfair is to impose taxes (that's what mandated higher premiums amount to) on a person solely because his genetic makeup grants him advantages in life.

When government gets in the business of attempting to smooth over differences in the genetic code between individuals, we have opened up the way to scientific engineering of the whole human race, the very nightmare that Orwell and other anti-collectivist prophets warned about, and that socialism looked forward to. Freedom is the answer, whether we are talking about scientific research or the use of that research by society.

If Clinton gets his way, history will record that a great scientific breakthrough occurred because his all-knowing administration had the wisdom to keep funding a lazy cabal of scientists on the dole. But for anyone who bothers to look at the facts, the truth is quite evident: the sequencing of the human genome is yet another victory for private enterprise over government planning.

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Llewellyn H. Rockwell, Jr., is president of the Ludwig von Mises Institute and editor of LewRockwell.com. Send him MAIL.

See also A Free Market for Genes?