There are few things politicians like better than having voters think that government leaders create jobs. We’ve all seen the news conferences. The television cameras roll, the pols and company executives smile and praise each other lavishly.
Most of these deals are negotiated in private, with the public kept in the dark about details. That was the way Amazon conducted its search for a new headquarters, dangling the promise of thousands of jobs to communities across North America in exchange for hefty taxpayer subsidies.
Rarely are quality of life issues debated on such proposals. Too often there is scant discussion of what citizens are getting for the millions and billions in government money and tax subsidies they fork over to make the rich richer.
Amazon’s decision to abandon New York because of local political opposition isn’t the only recent example of a large government subsidy plan that didn’t pan out as ballyhooed by politicians. In Wisconsin, a multi-billion dollar subsidy for Foxconn, a Taiwanese electronics behemoth, just went sour. This deal was trumpeted by President Donald Trump and then-Wisconsin Gov. Scott Walker on the premise that the company would build a huge manufacturing plant to make flat-screen televisions and bring 13,000 jobs to the rust belt state.
The Foxconn arrangement represented the largest public subsidy in history to a foreign corporation. It wasn’t the first time a company and its political enablers overpromised and under delivered.
Then There’s General Electric. Back in 2016, the company announced that it was moving its headquarters from Connecticut’s Gold Coast to Boston. Massachusetts Gov. Charlie Baker and Boston Mayor Marty Walsh held the all-smiles news conference and boasted that GE would bring 800 high-paying executive jobs to New England’s largest city.
It hasn’t worked out that way.GE has since been hit by troubles in some of its divisions, particularly one that makes power turbines. It’s stock price plunged. The company recently announced that it is selling its future headquarters in the Fort Point neighborhood and expects to employ only about 250 people in Boston.
Lt’s talk about Rhode Island. It was home to the granddaddy of all foolish taxpayer bribes in 2010 to move the 38 Studios video game company from Massachusetts to Providence. The firm run by retired Red Sox pitcher Curt Schilling burned through $75 million in taxpayer money before going belly up. The 38 Studios bankruptcy made Rhode Island a national laughingstock.
These taxpayer giveaways pit community against community and state versus state. That’s what happened with the Pawtucket Red Sox, the Boston Red Sox top minor league club. Rhode Island pols –chastened by the 38 Studios fiasco –decided they wouldn’t pony up the many millions the PawSox wanted for a new stadium. So the team is taking its bats and balls to Worcester where Massachusetts offered government subsides worth more than $100 million.
The sad irony about all this is that the same politicians who say taxpayers can’t afford money for better schools or affordable housing have no compunction about throwing zillions of other people’s money at some of the nation’s richest companies.
There is a role for government in the economy. There always has been, since John Adams built the lighthouses on the New England coast to aid the clipper ship trade. The government created state universities, granted land to build railroads and even financed the research that created the Internet.
Those were smart investments. Except perhaps for the railroads, they didn’t involve politicians picking winners and losers in the marketplace. It’s time to stop throwing taxpayer money at those who don’t need it and start investing in people.
Scott MacKay’s commentary can be heard every Monday morning at 6:45 and 8:45 and at 5:44 in the afternoon.
