Blueberries and Venture Capital

February 21, 2013 13:00 pm

by Charlie · 23 comments

Today’s Courier Herald Column:

Sometimes, quite by accident, two columns written about two completely different topics have the ability to tie concepts together that begin to show a pattern of problems and/or opportunities within our political framework.  The commentary that follows these writings on our blog over at PeachPundit.com often helps to further develop issues, but also can help show where fissures or outright cognitive dissonance appears between groups that coalesce under the same banner.

On Monday, I wrote about those who are closest to making up their minds to enter the US Senate race for Senator Saxby Chambliss’ seat.  Congressman Jack Kinston made a semi-announcement at a Forsyth County GOP meeting last Saturday, putting him the closest publicly into the race with the already announced Congressman Paul Broun.

The records of Broun (R-Just vote no) and Kingston (R-Subcommittee Chairman of Appropriations) will be a study in contrast, and Congressman Kingston will receive little appreciation for his 20 years of service from Tea Party Groups because of it.  To the surprise of few, Tea Party Leader Debbie Dooley was already prepared with lists of Kingston’s quotes to declare him an establishment candidate while others were prepared with lists of individual earmarks.

The one most highlighted was listed as “My personal favorite is the $209,000 spent to improve Blueberry production. Sounds important.”   Well, blueberries are Georgia’s fastest growing agricultural product, with the state producing three times as much revenue from them as we do peaches.  It would seem that research (most likely spent in a local university) to figure out how to do that better would be a good thing for the state.

Much of the breakthroughs in science and technology come from grants issued to universities and other research organizations through a grant process funded by the federal government.  Entire programs such as NASA exist on the principle that expanding the envelope of knowledge has a greater social benefit than the cost, yet would likely not exist if left solely to the market forces of the private sector.

Which brings us to the column of Tuesday where I argued against the creation of another economic development fund to put the state in the venture capitalist business, competing with private sector funding initiatives and putting the state in the business of for-profit enterprise.  It seems that somewhere in between lies a slippery slope.

It would appear that being for grants to improve blueberry production but against the creation of a state venture capital fund would be contradictory.  To many this would be self-evident, and in the court of public opinion each person gets to be his own judge and jury.  Such is our system of free thought and free speech.

But it also calls for the need to look at underlying concepts and principles which are often overlooked in our political culture of gotcha sound bites and bullet points as treatises.

Though universities often retain intellectual property rights for their discoveries, the grant made for blueberry production is based on expanding knowledge for the common good.  It is not, like the venture capital slush fund, pushed on an public eager to see unemployment return to levels below historical levels as a panacea for jobs.

One of the longest lasting damages of the past five years of bailouts will be the codification of the concept that America privatizes its profits while sharing the losses of capitalism with the public.  For capitalism to succeed long term, this concept must not.

Those backing the idea of the fund will quickly cry that most profits will be returned to the state, yet they must first acknowledge that all losses will be as well.  They would then have to concede that the concept of “profit” is easily manipulated and could allow much of the profit created to escape this guarantee.  Anyone disputing this should have to account for the hundreds of billions sitting offshore because of America’s relatively high corporate tax rate.

Underlying concepts and principles are acceptable when approaching a slippery slope in a world that is rarely black and white.  We have established policy that science and technology is good, and can provide near term tangible benefits for all – even in south Georgia blueberry fields.

But when the state decides it too can mimic the private sector by creating and funding for profit enterprises, we have left the realm of public goods and are quite specifically picking individual winners and losers.  The concentration of potential winners under this scenario does not mitigate the risk to the much broader pool of potential losers to justify this action.

TheEiger February 21, 2013 at 1:15 pm

Well, folks. I have made it to the big leagues. Charlie Harper has quoted me.

The one most highlighted was listed as “My personal favorite is the $209,000 spent to improve Blueberry production. Sounds important.”

TheEiger February 21, 2013 at 1:27 pm

“Though universities often retain intellectual property rights for their discoveries, the grant made for blueberry production is based on expanding knowledge for the common good.”

This isn’t always true Charlie. What are your thoughts on Universities suing farmers for replanting second generation seeds from first generation seeds that had a patent on them? Up until the the 1980s universities sold seeds to farmers without restrictions on the farmer being able to plant the second generation seeds. They no longer allow that. Or most don’t. The Ohio State still has a program that doesn’t put these restrictions on local farmers.

Here is an interesting article about it.

A group of universities, entities affiliated with universities, higher education associations, and entities involved in university technology management, in an amici brief filed in Bowman v. Monsanto, argue that reversal of the decision that petitioner Vernon Bowman infringed Monsanto’s patents on glyphosphate-resistant soybeans “would weaken patent rights for artificial, progenitive technologies and upset the flourishing innovation system created by U.S. patent law through the Bayh-Dole Act and technology transfer organizations.” Amici therefore urge the Supreme Court to affirm the decision of the Federal Circuit in Bowman v. Monsanto. Oral argument in the case is scheduled for tomorrow.
http://www.patentdocs.org/2013/02/universities-urge-supreme-court-to-affirm-in-bowman-v-monsanto.html

I will be completely honest and say that I am torn on this. The patent laws have proven over the years to protect and promote innovation, but have we really come to suing a 75 year old farmer for replanting seeds that he grew himself?

Charlie February 21, 2013 at 1:37 pm

I’ll generally let others discuss the column before I step on it, but I’ll agree with you about being torn on where, exactly, the point of no return on this slippery slope is. And frankly, that’s the point I’m trying to make.

We don’t live in a world of absolutes. Policy must be weighed for its good and bad, and judged against both the outcomes and the underlying philosophy/principles/ideology which we hold as the guides for what is right and what is wrong.

Too many in our current political debate/discussion want to stop all conversations as soon as they can find a point where an absolute is breached. This is especially true on the conservative side. Thus, it takes many conservatives who are just trying to get involved in the process out before substantive discussions begin, and leaves them on the sidelines when the policy decisions are made.

Otherwise, the damn purity tests will be the death of us.

Harry February 21, 2013 at 2:36 pm

The Obama people are the ones with the most absolute purity tests, and they control the media (by way of positive and negative controls) so they get away with it on a much bigger scale than the tea party.

Stefan February 21, 2013 at 2:57 pm

The universities aren’t suing. They signed an amicus brief. Monsanto is the party at interest, or, to use your phrase, the one suing.

TheEiger February 21, 2013 at 3:13 pm

Correct. Sorry, I will rephrase my statement.

A large group of universities and organizations associated with public universities have signed an amicus brief in support of the company Monsanto. Monsanto is suing a 75 year old farmer for replanting second generation seeds that have a patent on them. It is in the universities’ best interest to support Monsanto because they themselves, collectively, have tens of thousands of such patents.

TheEiger February 21, 2013 at 3:18 pm

Just clicked on your link for the first time Stefan. Did you get any new clients from the recent disaster cruise? If I were you I would have been in Mobile handing out business cards as folks got off the boat.

gcp February 21, 2013 at 1:57 pm

My question is why should taxpayers subsidize blueberry research? My simplistic thinking is that perhaps the growers, the food companies or the marketers should fund such research. The few legitimate responsibilities of government such as the military require some taxpayer funded research, but blueberries; I don’t think so.

Charlie February 21, 2013 at 2:02 pm

Should the taxpayers fund public universities? If so, what do you expect these students to be do research on? All R&D isn’t military and space exploration.

gcp February 21, 2013 at 4:57 pm

Well then, should we publicly fund research on watermelons, pecans, Vidalias (probably already do)? Where does it stop? Yes I see a need for publicly funded research in areas such as wound care and weapons but blueberry research is hardly a necessary government function. Private companies already fund some university research and fund more research in their own labs. Let them handle research on their products, not the taxpayers.

Engineer February 22, 2013 at 8:43 am

Pecans: They’ve got federal funds at UGA for that. http://onlineathens.com/local-news/2011-10-15/uga-gets-12m-grant-study-nutrition-pecans

Vidalia Onions: I haven’t found any federal funding, but UGA get’s private money to fund research. http://www.vidaliaonion.org/farming/research

Sure they grow a lot of them around Cordele, but watermelons aren’t quite at the big money-making crops that Blueberries, Pecans, or Vidalia Onions are. However I found several other state universities (outside of Georgia) that received federal funds to research watermelon.

Some schools, like ABAC in Tifton, thrive on these very kinds of research projects.

Personally, I would much rather my tax dollars going into agriculture research, that is likely to help boost future agriculture performance and/or sales, than some than some of the supposed “art” projects I’ve seen in the past.

seenbetrdayz February 22, 2013 at 9:01 am

What if they could fund research to create a blueberry-pecan-watermelon-onion hybrid thing?

BlueCanMelonions. Georgia’s next cash crop.

“Jobs!”

Charlie February 22, 2013 at 9:39 am

There’s an excellent story behind your question from one of my oldest political friends that I will reserve to tell if I ever get around to writing from a more story based narrative.

saltycracker February 21, 2013 at 2:33 pm

Would a pure capitalistic world see ConAgra & Archer Daniels Midland duking it out for total domination of blueberries ?

Government has a role in research & regulation to maintain an open competitive market. (Not debating we are not doing so well there).

Patrick T. Malone February 21, 2013 at 2:20 pm

The most poignant statement in the column and the discussion that followed is “the damn purity tests will be the death of us.

novicegirl February 21, 2013 at 2:22 pm

I think it is possible to be against the overall increase in Federal spending, while simultaneously fighting for more dollars to return to GA. I know the initial reaction would be to call that position hypocrisy, but why would you place a self-imposed sanction on your state, while the Feds continue to require your citizens to pay for benefits in other states. I get the idea that other states are supposed to follow your lead, but that theory reminds me a little of Will Ferrel’s character in the movie Old School, when he calls for the crowd to go streaking with him and takes off running through the town naked, only to turn around later, realizing nobody followed him.

saltycracker February 21, 2013 at 2:24 pm

We would hope that most folks see research and limited development as a proper role in government while preferring we minimize ownership/implementation of the commercial process.

Government can involve themselves in blueberries or solar efficiences but cross the line when they fund or implement the private commercial ventures. There may be exceptions out there, but rare ones.

Government has a hard enough time drawing boundaries and defining needs/wants, particularly when it comes to cost vs. benefit.

The devil is in the details of the research partnerships, patents and intellectual properties.
It is too complex to tackle here.

saltycracker February 21, 2013 at 2:44 pm

There is a very complex debate going on between the biotechnology industry and the Feds over biological patents including natural biological substances. It ain’t just plants but your body in play.

Ellynn February 21, 2013 at 3:10 pm

Commodities like blueberries normally don’t have food companies that support them. The companies have contracts with farmers or coops to buy the berries at either a set price (like market value the day of sale plus X%) or at a whole sale auction or market. Some research funding may come from large scale providers or sellers, but unless the research has a clear cut chance of helping the provider, they are not going to fund it. Government grants in most cases are the seed money that can help further the research to the point the big money will then invest. Providers are not going to fund a research project they believe is going to fail. Universities will, because even if the research goes nowhere in the capitalist world view point, it has expanded the knowledge base of the blueberry; which will help in developing research that does work. If you talk to any company that helps underwrite university research, they will tell you that they don’t want small grants from Uncle Sam to stop. There goals are to make money for their stockholders, not hold the hands of grad students trying to solve blueberry blight, when they can just buy and ship blueberries from South American instead. But if some smart UGA student can find a promising possibility, which looks like it will make someone a lot of money…

Keep in mind, if took six different colleges, 3 men on seperate paths of reseach in botany (including mellon production), 4 government departments in 3 seperate countires, and almost 12 years of government funded research before Merck and Company invested a single cent into the this stuff called penicillin; and only because the the Allies forces gave them lucritive production rights.

Three Jack February 21, 2013 at 4:04 pm

Thank you Charlie for exploring this topic. I thought about it myself as I was in the middle of debates on both threads where I opposed state backed VC on one while supporting Kingston’s desire to return money to his district on another.

Another benefit from the blueberry study (or one like it) was a study showing a certain amount consumed by women helped reduce their likelihood of suffering heart problems. From a personal standpoint, I am watching this study – http://clinicaltrials.gov/ct2/show/NCT01532622 – to see if daily consumption of blueberries will help reduce gout causing uric acid.

“Otherwise, the damn purity tests will be the death of us.” – Need to figure out how to shorten that for a tshirt.

David Staples February 22, 2013 at 10:15 am

“Purity Tests Kill”

Three Jack February 25, 2013 at 4:04 pm

That’ll work, thanks David.

Harry February 22, 2013 at 12:27 am

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