Stem Cells and Libertarianism in an Unlibertarian World

In a post back at my own site this morning, I argued (in reply to Andrew Sullivan and John Tierney) that there are good reasons for libertarians to oppose a ban on federal funding of embryonic stem-cell research even if we'd generally prefer private funding of science. Among other things, I argued:

One of the problems here is that if you look at the National Institutes of Health FAQ of stem cell funding, you find this (emphasis mine):

No federal funds may be used, either directly or indirectly, to support research on human embryonic stem cell lines that do not meet the criteria established by President Bush on August 9, 2001.

Now, NIH guidelines go on to allow a sort of mini-exception: Federal funding for "facilities and administrative costs" won't necessarily bar an institution from doing any embryonic stem-cell research, provided the grant recipients are willing to jump through various accounting hoops. But nothing charged as a direct cost can be used to "subsidize" non-allowed research. As I read it, that means any kind of machinery or equipment acquired as part of a directly-funded project can't later (or simultaneously, for that matter) be used for embryonic research outside those few approved lines. That leaves a lot of labs with the choice between eschewing federal funds altogether, finding separate funding to buy a lot of redundant equipment, or focusing on research programs the feds like. Now, maybe embryonic research is sufficiently promising that there are plenty of places willing to do one of the first two. But larger labs with lots of resources, especially in the academic world, are likely to find themselves pushed toward option three.
So the problem isn't just that the ban results in less direct funding for embryonic research that can be made up easily enough elsewhere, it's that it warps the decisions of institutions by making the marginal cost of pursuing embryonic research much higher than some alternative (if less promising) project, even if both are directly funded from a private source, because the other project isn't going to require that you purchase a bunch of new equipment to avoid repurposing stuff from other projects. The distorting effect goes well beyond having to find alternative funding for specific research. So given that we're going to have some federal funding for scientific research, I think we should at least insist it not distort the ordinary developement of research any more than necessary.

Well, I just got an e-mail from a scientist who, owing to his own ties to the government, prefers to remain nameless. He says:

Your analysis of the effect of restictions of federal funds on labs that might do stem cell research is spot-on. Academic labs get built up over time through a variety of funding sources: startup money awarded to new faculty (which may come from private, state, or federal resources), contract work, and grants. It's understood (even if not explicitly acknowledged by the NIH) that durable goods (everything from equipment down to pipettors and glassware) are going to be around beyond the funding period of the grant on which they were purchased, that some grant money will be used as "seed money" to collect preliminary data for subsequent grant submissions, and that multiple projects are usually going on in a lab and that no one "dedicates" equipment for one project only (unless necessitated due to technical requirements such as dedicated equipment for RNA work).

As such, the idea that federal money cannot directly or indirectly go to support a particular line of inquiry is not only onerous–it's completely unrealistic. This is the biggest problem I see with the current policy.

I suspect that this complication is getting little airplay for several reasons:

1) The policy makers are completely out of touch with how labs operate.
2) The NIH doesn't want to open this can of worms, for fear that congress might come back and demand greater accountability for where NIH money goes, and the NIH recognizes what a burden that would place on both it and researchers.
3) As a researcher working on an NIH grant, I certainly wouldn't want that to happen, either.