It’s not often that you’ll find me
celebrating the loss of an economic development project that would have created
200 jobs in Western New York. But, I did just that a few years back when a deal
to bring a Canadian plastics manufacturer to the Buffalo waterfront fell
through at the eleventh hour.
That company would have been in
direct competition with mine. Even though news reports and press releases identified
them as a “furniture manufacturer” – which they are – they also produce
products that we do, like kayaks and spa cabinets.
As a free market capitalist I
typically welcome competition. But I don’t when competitors, especially those
new to a region we’ve called home for 45-plus years, are given special
privilege by my government. To bait the Canadians, the Cuomo Administration and
the NFTA would have given them, among other incentives, $2 million in Excelsior
tax credits, a super-sweet deal on publically-owned real estate, and 3.7
megawatts of cheap electricity produced by the New York Power Authority.
Had the Canadians pulled the trigger
on the offer, the State would have enabled our competitor to produce the same
products we do with considerably lower cost factors than us, all while
operating in what’s basically our backyard. It would have been disastrous to
the 230 families that I work with as we could have lost clients to the local
and cheaper alternative. While the region might have gained 200 jobs from the
new company, it could have lost a bunch due to disadvantageous competitive
factors that were of the government’s doing.
This sort of economic cannibalism,
in which economic developers sacrifice their own to bring in the next big deal,
is not unique to Confer Plastics -- it negatively impacts every business, every
home across the state. In order to prop up newfound businesses, they are
allowed – and encouraged – to feast on the fruits of labor of existing ones.
Consider everything state officials
did to bring silicone chip manufacturer GlobalFoundries to the town of Malta.
In 2008-2009, at the height of the Great Recession and while the state was
facing a $15 billion budget gap and small businesses were struggling to stay
afloat, New York officials brokered a $1.3 billion incentive package of which
$650 million was cold hard cash.
Then, the state gave multibillionaire
and so-called entrepreneur Elon Musk a sweet deal to open up a factory for SolarCity
(also known as Tesla and Panasonic at various times) in Buffalo. The Cuomo
Administration spent $750 million of taxpayer funds to build and equip the
plant.
And then we have the recently-deceased
Amazon deal. Had the internet retail giant stayed with their plan to open a
headquarters in New York City the state would have kicked in $500 million in
cash incentives.
That’s just 3 projects totaling
nearly $2 billion in state funds – my money, your money. There are countless
more projects undertaken every year, much smaller in size, through which
start-ups are given tens of thousands and sometimes hundreds of thousands in
grants.
Getting their mitts on free money
gives them special privilege over all existing New York-based businesses still
dealing with, unabated, what makes it difficult to do business in the Empire
State and it puts the burden of funding those deals on taxpayers and businesses
attempting to survive what has become decades of socioeconomic malaise in New
York which, not coincidentally, was caused by the same state government
brokering these deals.
While the GlobalFoundries and
SolarCities of the world break ground and grow, they do it using the money made
on the backs and risks-undertaken of others. This brand of economic development
ends up cannibalizing jobs in one place to make jobs in another. In that case,
economic value isn’t created, it’s only shifted, from your business or your
household to another economic enterprise -- at the whim of government.
It’s not fair. It’s not just.
It is dangerous. It is time for a
change.
While you can certainly appreciate
the efforts and intent of some economic development officials who want to fairly
make the economy in their community, region or state better, too many of their
peers are overzealous and reckless. To make economic development work properly
they need to drop the blinders and abandon their love affair with corporate
welfare and approach things with a collective, regional and truly
entrepreneurial view and ask some critical questions: Who wins and who loses? Why
are the winners winning; are they doing so on their own merit?
They’d be surprised by the
answers.
From the 25 February 2019 Greater Niagara Newspapers and
Batavia Daily News