Excessive reliance on life sciences poses risks

January 29, 2007 —

According to the Michigan Economic Development Corporation - the successor to the Michigan Jobs Commission - the life sciences corridor in our state is booming, with over $2 billion worth of research and development investment in 2006. Employment of health professionals has increased by over 27 percent since 2000, far outpacing the national average. Whole and retail sales of health equipment and services have increased 165 percent since 2000.

Clearly, our state has found something it is extremely good at and is pursuing it with fervor. It hardly needs to be stated that the proposed health sciences building for SVSU needs to be part of this rapid economic expansion.

Governor Granholm's veto of the legislation that would award funding to SVSU, then, comes as something of a surprise. Her reasoning: it would be fiscally irresponsible to fund such an undertaking given that one of the state's primary sources of revenue, the Single Business Tax, will expire at the end of 2007.

While we won't know Granholm's solution to the problem until she unveils her budget plan in a few weeks, we do know that this is serious. The health care industry is obviously going to be an important part of Michigan's economic future, and the health building is going to be a vital part of SVSU's future, especially given the ailing market for educators.

But the growth of the health sciences field is a double-edged sword. We needn't forget what over-dependence on the auto industry brought Michigan in the 70s, 80s, and 90s.

So when we talk of the growth of the health care industry, we must consider that a robust life sciences field is just one part of a diversified economy stable enough to withstand the shocks that free markets so often deliver.

Over-investment in new technologies and infrastructure has the potential to hurt Michigan more than help it.

For whatever reason, few people seem to recognize that the cost of health care will rise with the expansion of the field. However, it seems clear that the new technologies, professionals, and equipment that are developed in Michigan will cost money and that money is going to come out of the pockets of those who need health care. If Pfizer comes out with a new pill that purports to cure the common cold, we're going to have to pay for it. If a new technology is developed at SVSU that serves to aid in physical therapy, a broken foot might end up costing much more than it already does.

In the United States, the health care industry works like most other businesses: it buys and sells commodities. The only difference is that the commodity being bought and sold is your health.

Building a new health sciences building is not a bad idea. In fact, it's an excellent one. But when we talk of the burgeoning industry as a panacea to cure Michigan's ills, we're making a grave mistake.