Monday, January 23, 2006

I'm From the Government, and I'm Here to Help You!

Story by Toby Coleman in this morning's News and Observer (the primary paper of the Triangle Area)

If everything goes as planned, Morrisville's commissioners will put their final stamp of approval on a plan to give Chinese computer maker Lenovo $1,050,000 in tax breaks at their public meeting tonight.

Really, though, they OK'd the deal in secret last August, months before they told a single taxpayer.

Morrisville's secrecy is allowed; North Carolina lawmakers have not given the public the right to participate in discussions on how much, if any, taxpayer money their government should offer companies in the form of economic incentives.

Although the town's commissioners had to hold a public hearing in December before they could set the deal in stone, the town staff considered it more of a "formality" than anything else, according to commission documents.

Town officials kept the deal secret for 59 days, until Gov. Mike Easley announced on Oct. 27 that Lenovo would move to Morrisville and get $14 million in incentives from the state, Wake County and the town.

It was not easy to keep the deal under wraps. At one point Town Manager John Whitson even felt compelled to suggest in an Oct. 5 e-mail message that town employees could sidestep questions about the offer by saying that they were "not aware" of any plans "that may or may not be related to this or any other potential economic development incentives proposal."

So why did the town go to such verbose extremes? Well, Lenovo wanted it that way, according to Whitson. And besides, "we certainly would not reveal our hands to our competitors who are also courting the company to their towns," he said.

Critics, meanwhile, say the practice hurts the public's confidence in government.

"It's really troubling from a public policy standpoint to have business conducted this way," said former state Supreme Court Justice Robert Orr, one of the lawyers suing to stop governments from wooing companies with tax breaks. "It gives government and government officials a black eye."


Successful public officials need only two qualifications--
1. A complete absence of self doubt
2. An absolute incapacity for shame

So, for government officials, at any level, to ask us to depend on forebearance to curb corruption is not just foolish, but outrageous.

Here is the scorecard for the kind of corporate welfare that passes as "incentives":

1. Local businesses: Have paid taxes, and employed citizens, for years. Yet their tax dollars are taken to be used to subsidize land, and reduce costs, for competitors. Sorry, suckers, we only care about the NEW girl in town.

2. Taxpayers: Net loss, sometimes a huge net loss. In the case of sports teams, or "public" arenas, it's like taking local taxpayers by the heels and shaking them until even the lint falls out of their pockets.

3. Workers: a wash. This kind of economic prostitution focuses on outside companies, instead of building a comprehensive infrastructure of low cost, high productivity work force, roads, and communications. So, a few workers (many imported from other states) get high paying jobs. Some local workers get temporary construction jobs, and maybe even permanent jobs. But the long term effects are negligible.

4. Politicians: the only real winners here. They get to claim credit for bringing in big new businesses. Shining, happy people holding hands. Get reelected.

Maybe time for a Steve Miller riff: the politician knows exactly what the facts is. He ain't gonna let those companies escape locating here. He makes his living off of the people's taxes. (sure, the rhyme and meter don't work, but consider the original)


The Unknown Professor said...

What makes it more insidious is the phenomenon Thomas Sowell described in his book "Applied Economics: Thinking Beyond Stage One". The politicians get the credit (and benefit in terms of votes) now. And then, by the time the "unintended consequences" of their actions come home to roost, they've either moved on or the public has forgotten who caused the mess.

Anonymous said...

You are forgetting the first principle of politics: It's not a lie if you believe it (adopted from George Castanza's theory on how to fake a polygraph). Whether the facts support your position is irrelevant, the only issue is whether you can make others believe it also. They key here is to be truthy.