In today's Washington Post, Joseph Fuller (founder of the Monitor Group) and Brock Reeve (executive director of the Harvard Stem Cell Institute) argue that the United States may soon lose its leadership position in stem cell research. Their concluding paragraph:
In short, the stem cell sector is at risk of experiencing a failure to launch at the national level. Yes, some progress is being made: WARF has just revised some of its licensing policies; venture capital activity has picked up recently; and academic research and clinical centers, disease foundations and patient-advocacy groups are adopting a more aggressive stance in breaking down existing barriers. But will this be enough? Or will foreign governments, using America's biotech success as a model, systematically encourage the development of stem cell research and, not satisfied with emulating our competitive performance, succeed in outstripping us?This experience is contrasted in the body of the op-ed with past successes in biotech, and the consumer electronics and automotive sectors are held out as examples where the United States "fumbled" its global leadership position.
It is quite possible that everything the authors argue is true, but even in that case, their argument is incomplete. Consider the last question they pose in their concluding paragraph. So what if foreign governments tax their citizens to support stem cell research? What have we lost?
We will not have lost the opportunity to benefit from that research. Some part of the research will find its way into products--those products will be available here at prices similar to what they would be if the products were developed domestically. No loss to the consumers.
We will not necessarily have lost the opportunity to invest in these technologies as private entities--the capital markets in Europe and Asia are generally open to U.S. investments. The governments on these continents would have to specifically block or discourage that investment.
We will not have taxed our citizens to support production of these goods. So we will have that money, whether in the government or the private sector. How do we know whether that money is better spent on stem cell research than keeping it in the private sector or with the government?
That's the key element that is missing from the op-ed: what is the opportunity cost of committing the money to stem cell research relative to its best (or most likely alternative use)? Ultimately, the authors cannot be persuasive just by claiming that the gross returns to stem cell research conducted domestically are positive or high. The returns to the activity--net of the opportunity cost of the investment--must be positive or high.