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Mises Daily: Monday, August 03, 1998 by

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Can government do a better job than the market in any area of the economy? Consider: the tax-funded Human Genome Project, sponsored by the National Institutes of Health. It held out the promise of mapping the entire structure of DNA, which in turn would lead to unparalleled medical breakthroughs.

This program appeared ideally suited to government. 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, was something government could get right.

It hasn't turn out that way. Now at the halfway point in its funding term, the project has mapped 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 federal highways or the war on poverty, the work is never be finished because no one involved wants to see an end to the largesse.

Unlike other government programs, however, the Human Genome Project is not just an excuse to waste money. A complete DNA mapping holds out the prospects of tailoring drugs and treatments to individual needs. In short, genome mapping would dramatically improve the quality of human life.

Thus, the benefits would not only be scientific. The project would open a huge new potential market for spin-off products. So precisely BECAUSE of the commercial prospects, biotech companies would not wait until the end of time for the National Institutes of Health to announce its results. And they didn't.

A consortium of independent scientists has announced that they could complete the gene mapping in a mere three years at an estimated cost of $200 million. And rather than demand tax funding, scientist J. Craig Venter and his research team will rely on the scientific-instrument maker Perkin-Elmer. The head of the company's applied biosystems division, Michael Hunkapiller, is co-inventor of a DNA sequencing machine that is far in front of the techniques favored by government.

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 "largest scientific revolution of the next century" being "done under private auspices."

We are supposed to believe that government uses scientific information with more prudence than private firms. Not likely. For example, the feds used nuclear technology to massacre foreign civilians; private industry used it to provide electricity, and a whole range of other goods and services.

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 to maintain the status quo. Lacking the ability to calculate economically, managers of government ventures are without a clue as to how much to allocate 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.

We can see these principles in the dramatic contrast between how government and private industry is handling the Year 2000 problem. Everyone knows that computer software must be able to recognize four-digit codes or lose the ability to distinguish between this century and the next. But while private industry has been hustling to upgrade and become "Y2K compliant," government is at a loss. Experts say a whole range of federal and state agencies will shut down—an enticing prospect, to be sure.

It's not that government has lacked information needed to fix the problem. It is institutionally incapable of bringing about the desired result, since 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.

It turns out that even a high-brow undertaking like the Human Genome Project isn't immune from the laws of economics. And as usual, government 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.

Llewellyn H. Rockwell, Jr., is president of the Ludwig von Mises Institute in Auburn, Ala.