I agree with Posner that President Bush should allow much greater freedom for federal financing of research on embryonic stem cells. However, I am not convinced that the restrictions he imposed will make that much difference either to world research in this area, or even to that by the United States.
In addition to federal financing of stem cell research, American funds are coming from state governments, foundations and wealthy individuals, and for-profit biotech companies. Since even the strongest supporters of stem cell research would agree that this field should take only a small fraction of the over $35 billion Federal budget for medical research, it should not be difficult to make up any federal shortfalls with monies from other sources.
Californian voters strongly supported a referendum in 2004 for the state to spend $3 billion on stem cell research. While that spending is temporarily held up by litigation, private donors in California have pledged hundreds of millions of dollars to help the state make the transition until the litigation is resolved. New Jersey, Connecticut, Illinois, and Maryland are also discussing state support for research on stem cells. A few private companies are venturing into the stem cell area, even though they concentrate on aspects of this research that could lead to patents and profits.
The aggregate of all spending on stem cell research by non-federal sources probably exceeds what the federal government would have spent in the absence of any restrictions. One useful comaprison is with Singapore, the nation considered to have perhaps the most liberal and generous policies toward research on embryonic stem cells. According to a New York Times article, Singapore has spent a total of $950 million on biotechnology since 2000, and has budgeted another $900 million to be spent over the next five years to finance development of new therapies and drugs. That this is a much larger fraction of Singapore's GDP than say is the ratio of California's approved $3 billion spending on stem cell research alone to U.S. GDP is not relevant. For it is the absolute spending level that determines the amount of research that can be done when comparing America to countries like Singapore with quite high standards of living.
A well-known result in economics is that up to a point increased federal government spending on various programs discourages private and local government spending on similar programs almost dollar for dollar. By that is meant that if other sources had been spending say $500 million on research on cancer, and if the federal government adds another $200 million to its own spending on cancer research, these other sources would reduce their spending by close to $200 million, perhaps to spend the money on other diseases. In that example, the greater federal spending had little net effect on total spending on cancer research. Only if the increase in federal sponsored cancer research greatly exceeded $500 would that make a large difference to the total amount spent on cancer research.
This analysis is directly applicable to the controversy over financing of stem cell research. The amounts budgeted by state governments, universities, and private philanthropies for research on stem cells is large relative to any additional amounts that would be spent by the federal government in this area, absent any restrictions on what the federal government can finance. So mainly what is happening is that private and more local public sources of finance are replacing the federal government, and federal monies are going instead to research on other aspects of health.
If that is the case, why it might be asked, have several prominent American stem cell researchers moved to Singapore to conduct their research? Part of the answer is that Singapore is lavishing very high salaries and generous research budgets on a small number of prominent stem cell researchers. In this way they have also attracted well-known British researchers, even though Britain has a much more liberal government policy toward stem cell research than the U.S. federal government has. This means that Singapore probably would have succeeded in attracting some prominent stem cell researchers from the U.S. even without the present federal restrictions.
Two qualifications should be made to my rather rosy view about the effects of the limited federal approach to financing stem cell work. One is that, as Posner suggests, some stem cell specialists may believe that the U.S. restrictions will grow tighter in the future than they are at present. I believe the opposite is more likely, that pressure will build to loosen them further, but that is far from certain. Another qualification is that present restrictions make it difficult for researchers supported by federal grants in other medical areas to combine that work with use of embryonic stem cells. I do not know how serious that restriction is, but scientists who call for more liberal policies on federal financing of embryonic stem cell research do not frequently raise this argument.
My final point is that it is not necessary or possible for the U.S. to take the lead in all areas of medical research. If Singapore, Great Britain, Finland, Canada, or other nations take the lead in stem cell research, the United States would be allocating more of its generous federal support of medical research toward other fields. This may well be close to an optimal allocation of monies spent on medical research among different fields and approaches, even considering U.S. interests alone.