RALEIGH — At the risk of sounding like a broken record, I have to say again that North Carolina’s political class continues to risk exaggerating the real very economic-development prospects afforded by the emerging biotechnology industry.
I know there are some nuts running around out there criticizing biotech on Luddite or environmental-wacko grounds, and I don’t want to be mistaken for them. I think that North Carolina should take all appropriate steps to make its business climate hospitable to the kinds of innovative, science-driven industries that will clearly play a key role in the future economy.
But policymakers are going beyond that mandate and actually risking taxpayers’ money on biotechnology as a sector, and even on biotechnology firms in particular. In his latest budget plan, Gov. Mike Easley proposes to toss additional millions of your dollars into this kitty. It is a bad new idea, for good old reasons having to do with the inability of central planners to predict which businesses will succeed and which will fail.
To spare your ears, let me remove this broken record from the phonograph and play you some similar music from different, and perhaps more persuasive, vocalists.
First, here’s an example of the hype:
“For the state of North Carolina, biotechnology is the highest priority,” said Sonny White, executive vice president of GTCC. . . White expects it to create 100,000 jobs during the next 10 years and at least as many in support industries such as transportation, helping to transform displaced textile and tobacco manufacturing workers into highly paid biomanufacturers.
And now, some cold water:
“I certainly believe there is tremendous potential in biotechnology, but no one believes it is going to be the next great thing. It’s not going to employ a huge number of workers,” said Mark Vitner, an economist with Wachovia Corp.
Andy Burke, president of the Greensboro Economic Development Partnership, said it is an important part of the Triad’s business mix but that he does not expect it to generate a lot of jobs in his lifetime.
Current employment in the industry is estimated at about 18,500. I have seen various promises: that this will rise to 100,000 by 2010, and that it will increase by 100,000 over the next 10 years, as White put it. Either way, you can see that this would constitute a stunning rate of employment growth in a short period of time, in an industry that politicians across the United States are courting as “the next big thing.”
I hope it is, and I hope North Carolina turns out to be an attractive place for it to roost. But I think the better part of valor would be to focus on policy initiatives that will confer benefits on biotech, other high-tech industries, or any other high-impact business growth that may occur. For example, the state should entirely eliminate the double-taxation of capital gains. North Carolina has one of the highest effective tax rates on this form of income in the nation, and it serves as a major disincentive to investors and entrepreneurs living and building businesses in our state.
Essentially, folks should feel free bet their own money — but not other people’s money — on the accuracy of these predictions.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.