Friday, October 16, 2009
BS Alert by Brett Narloch
Issue: Budget & Spending
On October 5th, Prairie Business magazine, a corporate welfare cheerleader, published an article about government-led economic development projects in the region. Unfortunately, though unsurprisingly, the article offers little proof that the “success” stories they brag about are actually the best ways to grow an economy.
For instance, when an Ohio-based Molded Fiber Glass Companies was looking for a new location, the city of Aberdeen, SD, offered to build a factory for the company. Now officials are calling the project a success simply because the factory employs 300 people. Important issues weren’t addressed. For instance, how many jobs would have been created had the money used to build the factory not been taken in the first place? The article admits that the free factory wasn’t the deciding factor in the company locating in Aberdeen. So it begs the question, why did the city build it?
In Grafton, ND, Marvin Windows has been given between $3 million and $4 million in subsidies. The project has also been called a success because 500 people are employed. The NDPC has previously noted that the city pays Marvin Windows $1,000 per year per employee they have in Grafton, which means that the city gives a private company $500,000 per year. That money could be used to nearly eliminate property taxes. Are property owners in Grafton aware of the choice their leaders have made?
In a long article about government-funded economic development projects, there was also no mention about the constitutionality of such programs. For instance, Article X, Section 18 of North Dakota’s constitution states that gifts to private businesses are prohibited. A Minot man, Robert Hale, is suing Minot’s MAGIC Fund and the North Dakota Commerce Department, alleging that the government-led economic development projects are unconstitutional.
Unfortunately, the article does little to explain the true nature of government meddling in an economy. It did not ask the proper questions; it did not discuss whether or not the overall local economies actually benefited by pointing to empirical data proving the so-called successes.
The article also failed to touch on the moral aspect of seizing money from some via taxation and giving it to politically selected companies.
The media should be critically analyzing these boondoggles instead of echoing the establishment line. Sure, the article briefly mentions the fact that taxpayers face risk and that sometimes the projects don’t work out; however, it was clear that the author did not ask any of the right questions. This article is BS.