Taking a break from the usual theme of this site, I return to a subject well-studied over the last 20 years: job chasing. Lessons from the past offer words of caution about expending public resources in search of the next high tech fling.

At last week’s Biotech 2006 industry convention in Chicago, Jim Greenwood, president of the national Biotechnology Industry Organization, said, “It’s safe to say that every state in the country is targeting the life sciences as a major growth industry.” In the same Sunday Globe article, Stephen Heuser was reported as stating that 44 states have some type of program to “build research facilities in the hopes of seeding new biotech development…”. Before Massachusetts and other states expend considerable resources in catching the next high-tech wave, we should look at historically sobering evidence of the folly of many of these efforts.

As far back as 150 years ago, states and communities around the U.S. openly and aggressively courted companies; in this particular case, the then high-tech industry of the day––watches. The industry, a transplant from Britain and Switzerland, arrived in the U.S. first as finished products sold by jewelers, blacksmiths, and the occasional clock maker. Within decades, the forefathers of the industry traveled to Europe and through devious means brought back the blueprints and industrial equipment designs needed to manufacture watch parts. In about 10 years, the U.S. had the beginnings of an industry, greatly enhanced by developments associated with the Civil War. The infant industry was protected from competition by a trade embargo against European imports, especially British and Swiss watches and parts. Perhaps more importantly at that time, watches were a necessary part of a soldier’s military gear––after all, time was an important part of the execution of battles. With ample protection and rising demand, the industry boomed.

By 1868, the industry had taken off. In a decade, it grew from a small number of companies, historically headquartered in the environs surrounding Boston, to more than 100 firms spread across the U.S.––all seeking venture capital and enthusiastic local and state governments willing to invest local funds in the hopes of attracting a new factory.

This industry’s growth was spectacular. In 20 years, the number of companies went from 10 to more than 100, employing thousands of workers. When all was said and done, millions of dollars were spent by local and state governments and other investors in building the infrastructure required to manufacture watches. But just as rapidly, lower tariff barriers, excessive price competition, and the reemergence of lower-cost competition from Switzerland led to the industry’s collapse. Most of the factories and firms folded and used equipment piled up, but not before entrepreneurs moved across the country convincing cities like Wichita, Kansas, to build factories and order machine tools to manufacture watches. Wichita has the dubious distinction of being a city that invested in an entire factory, including new machine tools, which never opened. It was scrapped even before the ribbon-cutting ceremony could take place.

The point of this history lesson is simple and timeless. Companies and capitalists expect to risk their funds in chasing an industrial dream based on getting in on the ground floor of an industrial boom. But, it is folly for states and localities to do so, no matter what industrial developers and industrial trade associations say about the built-out prospects of a new industry like biotech. If history repeats itself, and it frequently does, when it comes to unbridled, risk-filled industrial boosterism, time runs out, literally, and most places are left holding the bag. Therefore, states and communities that are either currently competing or expecting to compete in the biotech game should consider only investing in activities that will have a permanent impact on local conditions and some degree of transferability in their economy. Building up training and education infrastructure is one such durable investment. Providing tax breaks to underwrite the costs of new construction and operations is not. Unfortunately, if the rhetoric heard at last week’s expo in Chicago is any indication of where boosterists are heading, then for many it may be too late. Community advocates should approach this industry with some skepticism––attempting to follow Castenada’s adage, that those who do not learn from the lessons of the past are bound to repeat them. Like industrial innovation feeding frenzies of the past, only a few players win, but not before many others sink under the weight of their misplaced enthusiasm.

Amy Glasmeier is the E. Willard Miller Professor of Economic Geography, Penn State and the author of Manufacturing Time: The History of the World Watch Industry 1750-2000, published by Guildford Press.

Over the last several months, numerous articles in The New York Times, The Christian Science Monitor, The Wall Street Journal and other news sources including National Public Radio have drawn attention to the plight of the poor in America. In a detailed accounting of the 1960s media-led portrayal of poverty in America, in an article in the New Yorker, “How Poor is Poor?” John Cassidy challenges the proposition that few persons can be considered poor in America if access to material goods is taken into account. He takes on journalists and pundits who suggest if we define poor as the absence or curtailed access to such goods as cars, televisions, washing machines and houses then few if any persons in America can be considered poor and argues instead to recognize the existence and importance of relative poverty . Based on research conducted in the US and other developed countries, Cassidy argues that relative poverty in a high income country has serious debilitating consequences on the personal well being, health, and aspiration levels of the poor.

“Since relative deprivation confers many of the disadvantages of absolute deprivation, it should be reflected in the poverty statistics. A simple way to do this would be to classify a household as impoverished if its pre-tax income was, say, less than half the median income—the income of the household at the center of the income-distribution curve. In 2004, the median pre-tax household income was $44,684; a poverty line based on relative deprivation would have been $22,342. (As under the current system, adjustments could be made for different family sizes.)”

In a time of high societal angst about personal and national security, social exclusion is a critical issue that must be addressed at the highest levels of government.