One thing to notice about new communications technologies: they permit government officials to destroy tens of billions in wealth in minutes, when it used to take years. The downside is that it permits private property to be quickly pillaged from the productive for the sake of the parasitical class. The upside is that markets can now deliver stunning rebukes to the likes of Bill Clinton and Tony Blair, who think nothing of dreaming out-loud about the glories of looting whole sectors of the private economy.
Here is what they did this time. Together they announced that they believe the research done by private companies into mapping the human genome should be made freely available to all. That is to say, socialized by government, stolen from entrepreneurs, and given over to bureaucrats to manage. Exactly what means they would use to achieve this, they didn't say. But no one doubts their ability to zero in on any great source of wealth with the effectiveness of a heat-seeking missile.
However, the stock market quickly weighed in with an opinion on the ability of these central planners to use the technology well. When investors heard that the government would administer the knowledge gleaned from scientific discovery, they reached for their pocketbooks, and sold, sold, sold. The value of biotech companies fell by 20 percent, with hundreds of billions and many years of research down the drain. Nothing surprising here: if the government announced that all cars should be sold at zero price, automotive stocks wouldn't fare well either.
If you think the remaining stockholders felt bad, think about the entrepreneurs who have poured their professional lives into doing what the government proved incapable of doing. For background, see the Human Genome Project, a government program with the same squeaky scientific image that Nasa used to have. It seemed to fit the model of a public good: too expensive for private enterprise but self-evidentially necessary to the future of the human race. The Project developed a level of prestige afforded to no other government agency.
But once again private enterprise outsmarted the central planners. While genetic researchers on the dole in the US and Britain kept insisting they needed more time-more time and more money!-to do the job right, and that they had already completed 45 percent of the job, private entrepreneurs found new ways of mapping that economized on necessary resources. While the government frittered away time and money, private enterprise has been getting the job done.
A fierce rivalry daily consumes the efforts of Celera Corp., Incyte Pharmaceuticals, and Human Genome Sciences, three companies that specialize in genetic mapping. They all agree that their results of their efforts should be made publicly available (most consumer goods are publicly available in a market economy), but like any private enterprise, they hope to be able to charge admission. It is the prospect of profits that drives these companies research divisions, and it has proven a heck of a lot more powerful an incentive than the government's bureau, which actually faces a reverse incentive to complete the job.
These biotech companies brilliantly proved that genetic research is no "public good" but rather a highly marketable one. Banking on the expectation of using these technologies for new medicines and health technologies, they invested heavily, only to have the Blair-Clinton show up at the celebration to wreck everything they have worked to achieve.
Investors knew exactly what these officials were up to: they were plotting the equivalent of civil forfeiture on a colossal scale.
The funniest part of the drama was watching the same official fly into a panic as they watch the stocks sink, for even they have to be concerned that their efforts not be seen as wholly destructive. A senior official at something called the "White House Office of Science and Technology" (oh sure!) protested that the announcement intended no harm.
There was no intention, for example, to restrict the ability of private biogenetic companies to patent their wares (to which the companies quickly responded that patents are not, in fact, their bread and butter).
And yet ignorance and short-sightedness of White House official is astounding. Could they not have known what their statements — 8 months in the making — would cause chaos on Wall Street and unsettle investors the world over? Could they not have known that a socialized resource is in fact worth far less to society than one held in private hands? Are they so fantastically unaware how hated and feared government blundering is in the world economy and how quickly investors respond?
There's no telling. For all the malice we see on the part of government every day, sometimes it is easy to forget that many of its actions are driven by sheer stupidity.
Consider, for example, the asinine statements being made by the hour by Bill Richardson, secretary of Commerce, concerning the oil price. He seems to believe that the reason the price of oil is rising is that OPEC raised it irrespective of underlying realities. His job, then, is to demand lower prices and sit back and watch oil-producing countries to comply.
The real reason for the rising oil price is not OPEC-we can assume that this cartel always wants higher prices, so why couldn't they get them until recently? — but rather the diminished supply resulting from the trade embargo with Iraq and the suppressed domestic production due to taxes and land lock ups. For many years the government has conspired with interest groups to raise the price of gasoline and then it professes shock when prices respond.
They way Richardson talks, you can understand how government officials resort to price controls. The only way they know to allocate resources is through jawboning and, when that doesn't work, sheer coercion. Whether it's the oil price or gene mapping, the method is the same: what Ludwig von Mises called destructivism, which seems to be all that government officials are good for these days. Someday, perhaps, a smart scientist in the private sector will discover that gene that causes a person to go into government work and drives them into such anti-social activities.
March 18, 2000