Biotechnology in St. Louis: Economic Boom or a Sham?

The State of Missouri state and the City of St. Louis announced plans this year to turn over hundreds of millions of dollars to the biotechnology industry. Although this transfer of public funds has gotten a fair amount of press, two important questions have been overlooked: Can the biotechnology industry survive without public subsidies? Is biotechnology good for Missouri's economy?

Governor Matt Blunt announced in early February that he wanted to "sell off the assets" of the Missouri Higher Education Loan Authority (MOHELA), the quasi-governmental, non-profit corporation set up and regulated by the state to distribute student loans. He proposed giving the proceeds from the sale (a whopping $450 million) to the biotech industry. According to a February 2 St. Louis Post-Dispatch report, the money would be used to further "Life Sciences" (the euphemism the industry uses for biotechnology) research, help biotech start ups and assist state universities in setting up Life Sciences departments. Familiar promises were made that many high-paying jobs would be created and millions of dollars would be added in the future to state coffers.

After failing to gain passage of his plan in either the Missouri House or Senate, Blunt decided to circumvent the legislature altogether. He revised his plan by renaming it the "Lewis and Clark Discovery Initiative", cutting the amount of the proposed sale of assets to $350 million, and directly requesting the MOHELA Board of Directors to approve the sale. That plan had "wide backing", including leaders in the House, Senate, and state higher education institutinons, according to a report in the August 28 Post-Dispatch. Once again, the new plan ran into an obstacle: it is illegal, according to Missouri Attorney General Jay Nixon. The Attorney General suggested that the state legislature simply change the law to facilitate the sale of MOHELA assets.

Two weeks ago, three of the seven MOHELA Board members resigned, ostensibly in protest of Blunt's plan. (The Governor moved quickly to replace them.) A vote was pending at the time of Confluence publication. Which leads to another unasked question: by taking all this money out of the pool for student loans, will this not reduce the amount of funding available to Missourians who need financial assistance to go to the state's universities? Further, is that good for Missouri?

Even if we put aside questions about biotechnology's threat to our food supply and public health, there is another major drawback to this plan: the biotechnology industry is not economically viable and continues to lose billions of dollars a year. According to a June, 2005 AP report, the biotechnology industry as a whole has never been profitable. There have been some successes, such as California based Amgen and Genetech, but these have been few and far between.

"It's essentially like a casino," said Joseph Cortright, a Portland, Oregon economist who was quoted in the AP report. "There are lots of bets you can lay down, and the potential can be very valuable, but for the most part, the odds that any one will pan out are extremely long," Cortright said.

The St. Louis Board of Alderman is gambling on the biotech industry also. In late January, an Aldermanic subcommittee passed a bill for a 25-year eminent domain option toward the development of a biotech corridor in the Central West End--complete with property tax abatements and TIF money. TIF, or Tax Increment Financing, is a program designed to provide tax money for economically depressed communities. (Since when was the Central West End an economically depressed community?) The developer is CORTEX, a consortium of the Wash U Medical Center, Barnes-Jewish Hospital, Missouri Botanical Gardens and other familiar corporate biotech supporters and their non-profit cronies. Once again, the industry promises many jobs, lots of revenue for the area and the prestige of our area being in the biotech big leagues.

Bob Brauer, a representative of one of the small businesses in the proposed CORTEX eminent domain area, spoke out against it at a January 25 Aldermanic hearing. Brauer said the plan, "disregards the interests and concerns of the affected property owners," and he questioned why "unbridled power would be given to the developer." Many other spokespersons for businesses who would have to relocate or live under CORTEX's shadow for 25 years (some of whom who have been in the city for over 100 years!) spoke vehemently against this misuse of eminent domain.

During the hearing, 21st Ward Alderwoman Bennice Jones-King questioned why the CORTEX area could not be built in north St. Louis (an economically depressed, predominantly African-American area), where there is plenty of available land, and she asked if there would be a commitment to hiring minorities. CORTEX representatives and city officials did not even attempt to answer Jones-King (who is an African-American), exposing the underlying racism of this and most other big dollar development plans in Missouri.

The predictions of all the high wage jobs these corporate handouts will generate were pulled out of thin air, and have no basis in reality. The February 2 Post-Dispatch report included a graph that mapped out the number of jobs the half billion dollar gift to biotech will generate year by year. One could only suspect the original source was the biotech industry itself.

Even if, for the sake of argument, we assume that these state and city handouts do bring thousands of jobs to St. Louis, it is doubtful that they will be creating "new" jobs. Biotech jobs that come to Missouri will most likely be the result of corporations relocating from other biotech centers. People will lose their jobs in Boston, San Diego, San Francisco, et. al., as their employers relocate for even lower taxes, higher dollar public payoffs, and greater subsidies in St. Louis--or wherever they decide to go next.

It will be not unlike the race to the bottom practiced by St. Louis municipalities competing for big-box retailers. In their internecine competition to lure corporate retailers, they offer more and more tax subsidies and public dollars while at the same time building an excess of retail space, all of which totally works to the advantage of Wal-Mart. Remember all the money spent on building the "Free Enterprise Zone" at the St. Louis Marketplace (a strip mall on the City outskirts on Manchester Road)? The public was promised job creation and additional tax revenues then; the strip mall sits mostly empty now.

The biotech industry uses the same strategy: keep states and municipalities competing with each other with the lure of mega-bucks. The governments then subsidize and over-build biotech research and research sites, they compete for tiny slices of the big pie while corporate taxes go down and profits go up, up, up. The company just packs up, relocates and leaves most former employees jobless when a better deal is offered elsewhere.

The research derived from publicly funded biotech research centers will be turned over to private companies to patent and generate obscene profits. And those wonderful medical technologies the research generates, the ones that will create new cures for disease and save lives? You can forget about that if you don't have medical insurance--and less and less Missourians have health insurance, especially after Blunt cut the state's Medicaid program. Even if you do have medical insurance, higher and higher costs and deductibles will make it likely these advanced biotech medical technologies will be available mostly to the rich.

As it is now, St. Louis City Schools must go begging for money. Money for public health care is shrinking. When the Gateway Greens confronted the city this year about the lead emergency the city has (see page five), city officials told them that they did not have the money to abate all the properties that are contaminated by lead, properties that continue to poison children. As for St. Louis' north side, there never seems to be money available for much-needed redevelopment.

Biotech companies, such as Monsanto and other wealthy corporations, have been feeding at the public trough for quite some time. When they come asking for money, there is apparently plenty available--for them. This is more than corporate welfare--it is class warfare.