Smiling Faces. Beautiful Places

It gives me a warm feeling whenever I am traveling to see in the array of license plates along the way one from the Palmetto state. In a reflex, it immediately transforms my own face into one of our aforesaid “Smiling Faces.” No one can doubt we have a glorious home. Wonderful, courteous people and the 32 million others who annually visit our “Beautiful Places,” moderate weather, historic culture and nature’s abundance all make South Carolina special.

Even as we smile, challenges to our continued prosperity cause our brows momentarily to knit. All is not perfect in our paradise. While tourism is up and appears headed even higher, our public educational system is in crisis, near the bottom of the national pack. We are producing neither the knowledge based businesses we need to compete in the 21st century nor the technically able workers required to make them go because of our educational gap. We simply must do better. Additionally, because of the unavailability of sufficient risk capital for nascent firms struggling to gain a toehold in our commercial soil, we are discouraging our own entrepreneurs from founding their ventures here.

What is particularly frustrating is that solutions are at hand but have been stymied by our need first to pass a broader set of reforms. We simply haven’t had the political will to get the job done. For at least a dozen years, reform of our antiquated form of state government has been pursued in hope of giving us the executive structure we need to compete with the states in our region. While experts may differ on detail, there is unanimity that our executive branch is in critical need of reform. Thomas Friedman of “Flat World” fame would have us worry about India and China. Heck, I am scared to death of an aggressive Georgia, North Carolina, and Florida.

Our state constitution, reflecting post civil war social and economic tensions, was inspired by “Pitchfork” Ben Tillman in 1895 and continues more than one hundred years later to reflect the populist fear of a strong executive. It sharply limits the power of the executive to see to the efficient and accountable operation of state government. With eight other executive officers, all reflecting their own popular constituencies still required by our constitution to be elected along with the governor, it makes effective administration impossible, and if that isn’t bad enough, the Lieutenant Governor, not necessarily part of “the team,” is elected on a separate ballot from the governor and has at times in past administrations been at odds with his goals.

Whatever the tensions in the South Carolina of 1895, those pressures are of another era, and if we are to place the state on a forward looking path to sustained growth and competitiveness with our neighbors, they are not worthy of holding us from doing what we must today.

In many important markers, our state is very near the bottom of the pack, and unfortunately, despite our apparent frugality, our citizens according to the Executive Budget pay one-third more per capita in state taxes than average throughout the country, and our rate of increase in government spending is 2.4 times the rate of growth in income for our citizens.

The Executive Budget for 2007 notes that “our government is duplicative and unaccountable…. “State government is a hodgepodge of some 50 independent agencies and departments.” and quotes Alexander Hamilton for the truism that, “One of the weightiest objections to a plurality in the executive…is that it tends to conceal faults, and destroy responsibility.”

In the present situation, who can we hold responsible? Our government is structurally fragmented and operationally uncoordinated. The end result is that it is often not responsive to our needs, and its structure and divisions hampers us in effectively doing anything about it.

I ask our public servants in Columbia: “With the governor in his second term and with the pressure on government to be both frugal and effective, isn’t now the time to fix this? And who better to do it than this legislature and this governor?” I do prefer government in the sunshine, but after the fits and starts of the past, I wonder if it wouldn’t be better if our legislative and executive leadership went fishing together for a weekend and worked this out in seclusion with recreation, good fellowship and then hard bargaining on whatever the impediments have been that have held us back. We’re all praying for you, and I am hopeful that our prayers will be answered. We can’t always expect, with the majority of the migration into our state coming from the North, that we will be able to count on the level of political consensus we enjoy currently.

National policy is my usual beat, but inasmuch as I am unburdening myself this week in the state arena, there is one more step we need to take to propel our economy forward and to transform our society into the knowledge based economy we seek. I have now been in this state long enough to feel confident when I say we have both the intellectual and financial capital to transform our economy. We even have described our goals in some detail, but we are going to fail until we handle the financial "Chasm" for the companies/economy we want.

The financial chasm comes for the start-up company when the investor/founder has used up all his capital and ability to fund debt, and he can't get to the revenue flow figures that even the most entrepreneurial venture fund insists upon before investing. It is at this point, we need to look to Pennsylvania for a solution that has proven to be both cost effective and has helped transform their rust belt into an opportunity belt for technology ventures.

Pennsylvania has created a state sponsored venture fund that emphasizes knowledge based employment growth through its Ben Franklin Technology Partners. Originally capitalized with $60 million in state funds and divided into four regionally targeted breeder funds, loosely attached to prominent research universities in the state, the funds, when they make an investment, get back convertible preferred shares or notes and warrants that allow them to participate in the up-side at the same time they have a debt that experience proves will be paid in sufficient percentage to more than nullify the cost of the investment to the citizens of Pennsylvania. The Pennsylvania model includes a state board with non paid directors and local boards, also non-paid, for the four breeders. The funds universally will tell you that their success in meeting their goals to help build a new Pennsylvania has been a function of the professionalism of their decision making process that is devoid of politics.

South Carolina is not as big as Pennsylvania and can get good coverage with three regional funds which I would propose be at Clemson, USC and The Citadel/MUSC. The state currently provides some funding for pure research, and a South Carolina version of Ben Franklin would help attract and retain the innovative capital we need to get promising technology firms to the point that our own commercial risk capital can then provide the capital to get them the rest of the way.

These two proposals, when considered as sequential steps, will succeed in breaking the logjam that has held us back. I would welcome the support of my readers to help get this done. I am confident that if we can find the political will to undertake these two actions, we will unleash the forces that will put South Carolina into the forefront in our region and will lead us to the vibrant economy that will secure our future.

Robert E. Freer, Jr
Free Enterprise Foundation Founder and President
Charleston Mercury, February 15, 2007; p. 16

Pandora's Box

In mythology, in punishment for Prometheus’ theft of fire from the gods and its presentation to mankind, Zeus and the pantheon punish both Prometheus and mankind for Prometheus’ transgression. Prometheus is doomed to have an eagle peck away at his liver, but mankind receives a special punishment.

Each of the gods provides the gift of a trait to the creation of Pandora, a woman conceived as man’s ideal. Not all of her traits were alluring. Zeus made her idle, mischievous and foolish. Hera endowed her with unquenchable curiosity, while Hermes endowed her with cunning, boldness and charm. Pandora also was given a large earthen storage vessel as a gift for mankind.

When Pandora arrives on the scene with her vessel, mankind lives an Eden like existence. At this point, I am sure you are way ahead of me…..Despite Prometheus’ warning to her not to accept any gifts from the gods and Epimetheus insistence that she never open it, Pandora accepts the vessel, and in quick order lifts its lid, and all the world’s woes are released to plague us forever.

Not all was lost; however. In addition to pestilence, fire, disease, evil and death, man received self awareness and, through the exercise of will and the noble part of his being, perfectibility. From the depths of our fall, we have stumbled, crawled and gradually lifted ourselves towards self respect and our lost nobility. We may be fallen creatures, but we don’t have to stay that way. Pandora’s “gifts” are still with us, however, and we are constantly presented with the dilemma of good and evil.

Genetic engineering and testing, thought to be a part of the distant future, present us with just such dilemmas. Since Watson and Crick discovered DNA, scientists and researchers throughout the world have been manipulating the gene pools of numerous plants and animals by introducing new genes into the key to identity. Often the research is in an effort to better understand and treat diseases and cancers. This is not always true, or it is not always the only by-product of the research. The research and discovery creates a profitable market for scientists, universities, and corporations which sometimes overshadow the benevolent efforts of those who work for the common good.

Public polls have shown that 92% of the American public is against the bioengineering and genetic engineering industries. Genetics’ complexities provide very few concrete resolutions, but huge potential for profit. The public yearns for the benefit but is properly scared of the potential impact of “mutants” on our society and is alarmed that the vast profitability that beckons will blind us to its risks. Genetic research regulation is in its infancy, and there is no worldwide consensus on an appropriate protocol to follow. Whatever we may do, labs elsewhere will not be bound, and there is little we can do to channel the knowledge that has been discovered along pathways with which we would be comfortable.

To continue the classical allusion, we are twixt Scylla and Charybdis. Genetic research proffers cures for cancer and other debilitating diseases, healthier lives, and healthier plants and animals on the one hand and potential genetic disaster on the other.

Not unexpectedly, Michael Crichton in his copyrighted manner weaves an edge of disaster story in his most recent novel, Next, that plays our responsible selves against our greedy selves in looking genetic disaster in the eye before pulling us back from the edge.

He argues and I agree. The implementation of rules and regulations is essential to channeling the value and benefits of genetic research along a responsible course. Courts have decided research issues according to property laws. They analogize tissues to, say, the donation of a book to a library. But there is only one such “book” in the world, and we have rightful feelings of ownership about our unique selves, and that feeling will never be abrogated by some skewed notion of contract law. The law should ensure that a patient has permanent control of his or her tissue. “If a magazine can notify you that your subscription has run out, a university can notify you if they want to use your tissue for a new purpose.” And it should require your permission and not impair your children’s rights who bear similar if not exact DNA.

Research data needs to be made public so that the public awareness will help channel the research along responsible pursuits. Researchers are hiding the adverse results of their experiments saying that they are trade secrets. Deaths during research should be fully disclosed in a timely manner. Studies publicized about a drug or research should not be sponsored by the researcher who owns the rights to the drug or research. This practice creates skewed results and the lack of public confidence in the results.

Patenting genes has become a lucrative market. It is highly questionable whether gene patents should be permitted at all. If at all they must be under the most stringent restriction. Not only does patentability encourage a eugenics approach to procreation, genes are part of nature and unique to each individual. They are in no way inventions by the human hand. The purpose of patents is to insure that a person’s invention is protected but encourage others to make their own versions. With gene patents, no person can innovate any other use of the patent without violating the patent itself, so further innovation is closed. Gene patents are bad public policy. They suppress research and that harms patients. Dr. Crichton argues that while scientists, universities, and corporations fear the end of gene patents saying that it threatens research, it is more likely to result in a burst of new products for the public.

Crichton argues that in order to stimulate research efforts, all bans on research should be avoided. Bans serve no purpose. If research is not allowed in the United States, it will be conducted illegally or in some other country where it is lawful. Finally, Dr. Crichton argues that we must rescind the Bayh-Dole Act of 1980 that permits university researchers to sell their discoveries for their own profit, even when that research had been funded by taxpayer money. The Act led many scientists to create corporate ties to biotech companies skewing their judgment through the inherent conflict. Today, universities attempt to maximize profits by conducting more and more commercial work themselves, thus making their products more valuable to them when they are fully licensed.

The velocity of technological change in the last half century leaves most of us stunned. Mankind is quick to make use of the product of our own inventiveness, but the interplay among the digits in the digital world we have created has not been lived with long enough to weigh cost versus benefit to us as a species for the velocity of ongoing genetic research . I realize to say that is to shout at the surf that graces our shores. At times like this we are thrown back to Pandora, who in her second look into the vessel released Hope to sustain us in times like these.

Robert E. Freer, Jr.
Free Enterprise Foundation Founder and President
Charleston Mercury, February 1, 2007; p. 16