Biotechnology Incentives: Haven't We Seen This Movie Before?
Updated December 22, 2008
In December of 2008, while Detroit carmakers were begging Congress (and taxpayers) for billions in bailouts, the Associated Press reported that “North Carolina's biotechnology firms pressed governor-elect Bev Perdue … to commit perhaps millions of taxpayer dollars to buoy cash-starved companies that face the prospect of bankruptcy without financing.”
This bailout is being spearheaded by John Russell, a corporate lawyer for biotech companies who has given $20,000 to Democratic candidates according to the Center for Responsive Politics. While Perdue made no commitments, she said “We don't get through it by shutting down any of our hope for the future. This is basic investment in building jobs and creating a work force for the future. And I'm going to be a part of making that happen.”
Her words are reminiscent of Governor Easley’s in awarding a $36 million grant to Merck earlier this decade for locating a vaccine plant in Durham. “This project is going to be the one that sets North Carolina apart in biotech and represents the jobs of the future,” he stated.
Biotech will lead us into a new economy. But didn’t we hear the same thing about high tech electronics in the 1980s?
Microelectronics
In 1980, Governor Hunt launched the Microelectronics Center of North Carolina (MCNC), a state research center on computer chips that eventually consumed over two hundred million dollars in state money. It was part of Hunt's plan to recruit GE’s semiconductor business. The Center didn’t pan out. “MCNC is still being tarred for failing to convert North Carolina into ‘Silicon Valley East,’ said Paul Essex, executive director of the Southern Growth Policies Board and an assistant to Hunt during the governor's first administration. (News & Observer 8/3/93)
"When MCNC was completed, the semiconductor industry almost immediately, as the last brick was put in place, went into a recession," Essex stated. "All of the hopes for the expansion of the industry to North Carolina disappeared, not for anything we did, but for circumstances beyond our control."
High Tech Jobs Trickle
Policymakers approached high tech in much the same manner during the 1990's. In fact, despite the millions lavished on high tech industry recruiting under the Hunt Administration, high tech added only 31,000 net new jobs during boom times (1993-98) according to the industry’s own numbers (Cyberstates 5/17/00). That’s a mere fraction of the 420,000 jobs the economy created overall -- and far less than proponents promised.
Today, barely 4% of the state’s workforce is employed in high tech – essentially unchanged this decade. The Triangle Business Journal found that "A new survey of growth in technology industries shows North Carolina lagging South Carolina and Virginia in several key indicators, despite years of high-tech emphasis from policy makers and economic developers." While high tech was once supposed to represent “the future,” it’s turned out to be highly cyclical; North Carolina lost 10,000 high tech jobs between 2002-03.
How Many Biotech Jobs?
Now, in the first decade of the new millennium, all eyes have turned to biotechnology. But as Governor Perdue considers how much more tax money to throw into the biotech industry, she might seek some hard information. The taxpayer-funded NC Biotechnology Center says 180,000 North Carolinians work in biotech.
But the North Carolina Employment Security Commission’s numbers on private sector jobs cast doubt on that assertion in a report showing the latest employment figures:
1990 | 2000 | 2008 | |
| Pharmaceutical/Medicine Manufacturing | 9018 | 18,016 | 19,119 |
| Testing Laboratories | 1917 | 2921 | 3012 |
| Physical /Engineering /Biological Research | 5925 | 8637 | 16,738 |
When one considers that pharmaceuticals and biotech aren’t necessarily the same, the figures become even slipperier. According to the Biohealthmatics Center, job creation in the biotechnology sector in North Carolina is falling. For the third quarter 2008, North Carolina ranked seventh nationally for biotech job availability -- a ranking that remained unchanged from the previous quarter with availability decreasing by 34.13-percent for new job creation.
Learn From Experience
In recent years, lawmakers have poured millions of taxpayer dollars into billionnaire David Murdoch's personal biotechnological xanadu, otherwise known as the "NC Research Campus." Though the project may be worthwhile, it has become hopelessly entangled with the state's budget, even though much of the state funding will ultimately enhance the Dole Food Company chief's personal pocketbook. And it's no coincidence that the campus is being developed by the Murdoch-owned Castle & Cooke. The taxpayer funding has never been debated as a biotechnology "incentive" because budget-writers, including Perdue, slid the appropriation into the state's Higher Education budget without public debate - and the amount is increased every year. Benefit to himself notwithstanding, Murdoch could make the NC Research Campus into an important legacy to a state that's been very good to him. But does the billionnaire really need taxpayer dollars to do so?
Before spending even more money on a biotech "bailout," Governor Perdue should consider that Murdoch considers the Research Campus a success; hardly worthy of "bailout" status, and companies who participate in the project are already eligible for fistfuls of taxpayer subsidies. Moreover, Perdue should recall how the state invested 10 million taxpayer dollars in biotech companies in 1999 through the NC Biotechnology Center; losing 87% of its investment by 2007.
North Carolina's economy is hardly dependent on the biotechnology sector, so discussion of a "bailout" is woefully premature. Perhaps we need to consider a basic fact. Politicians may be smart enough to get elected. But few of them are smart enough to manage an entire economy, investing our money - and our future - in risky ventures. Let's leave the speculation where it belongs - in the private sector - and let taxpayers choose their own investment opportunities.
