How to Spur Budding Industries
I have to disagree a bit with Steve’s assertion that doling out state money will “drive Missouri’s budding biotech industry.” I don’t know if Missouri’s biotech industry is budding, or if it will thrive in the future. But I rather doubt that a few million dollars of state largesse is going to make the difference. If biotech is economically viable in the Saint Louis area, no subsidies are necessary. And if it’s not economically viable, subsidies aren’t likely to make it so.
No doubt spending more on life sciences will lead to some beneficial science being done, and it may very well lead to important breakthroughs. But by itself, spending more money on biotech research isn’t likely to make the broader Saint Louis area a biotech hub. Carnegie Mellon is one of the best computer science schools in the country, but Pittsburgh isn’t known as a hotbed for tech startups. Nor are subsidies from the state of Pennsylvania likely to make it a hot technology area.
If government wants to make Saint Louis the home of the biotech industry, the best way to do that is to make it hospitable to industry in general: cut taxes and red tape, provide good infrastructure, and then get out of the way. That might spur the growth of the biotech industry here in Saint Louis. But it might also spur the growth of all sorts of other industries as well. After all, the whole reason we have a market economy rather than running our economy using Soviet five-year plans is that government officials don’t know what’s needed and where the economy is headed. If they can’t run the economy as a whole, why should we expect they’d be any better at picking what Saint Louis’s next hot industry is going to be?
The reason, I suspect, is that when you cut taxes and thereby spur the creation of a lot of small businesses, you don’t necessarily get to attend a big ribbon-cutting ceremony and take credit for it on the evening news. So even if tax cuts and deregulation are better for the state’s economy than “targeted” economic programs, they’re not as good for the career of the politician in question. So instead, politicians focus on high-profile projects that make good photo-ops, regardless of whether they’re good policy or not.
