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No Recession for Corporate Welfare April 2, 2009 One might assume that in a climate of twin economic and fiscal catastrophes, Connecticut politicians’ penchant for corporate welfare has waned. One would be wrong. Giveaways to for-profit entities have become second nature in Nutmeg State government, and a severe recession hasn’t changed anything. (Heck, a relentless litany of lousy economic news is all the more reason to mess with the marketplace!) Here are just a few corporatist obscenities in the news lately: * In Stonington, Breslin Realty Development Corporation is demanding a $214,849 property-tax abatement to move forward with a shopping complex -- it’s also sniffing around for a federal “stimulus” subsidy. * Connecticut Studios LLC, which plans to build a $65 million facility in South Windsor, is lobbying for the retention of the state’s tax credit for filmmakers. It’s likely to get subsidized goodies all for itself, too. (Connecticut’s starry-eyed governor is enthralled: “From every camera angle, this project has the potential to be a winner for Connecticut.”) * In response to its threats to bolt from the state, Stamford-based Gartner, Inc. (“the world’s leading information technology research and advisory company,” according to is website) got a $5 million loan and up to $20 million in tax credits from the Department of Economic and Community Development (DECD). * The DECD offered UnitedHealth Group a $1.5 million bribe -- uh, “loan” -- to remain in downtown Hartford. Why Connecticut’s self-professed proponents of “economic development” continue to support corporate welfare is a mystery. If you want to study the failure of economic planning, come to the Nutmeg State. Since 1989, Connecticut’s economy has been on “pause” -- and that’s being charitable. There has been no net creation of private-sector jobs since that year. (Government employment is up.) The last 20 years have also seen entrepreneurship stagnate. “Connecticut is the only state with no business growth since 1989,” according to the Connecticut Economic Resource Center. U.S. Census data show that the state’s median household income -- the point at which half of households earn less, and half earn more -- fell from an inflation-adjusted $68,328 in 1989 to $64,141 in 2007. These scary stats were generated during an era in which state- and local-government agencies dramatically escalated their private-sector meddling. Job-training programs, no-strings-attached grants, low-interest loans, tax abatements, tax credits, “cluster” initiatives -- all these tools and more have been put to use, we are told, to strengthen Connecticut’s economy. Why haven’t they worked? They haven’t worked … because they can’t work. People in government, however well-intentioned, do not make “public investments” that consistently create jobs and raise wages. “No matter how intelligent central planners may be,” write scholars Samuel R. Staley and Michael LaFaive, “they simply cannot possess enough knowledge necessary to bet on winning businesses and industries (and thus, against anticipated losers) with much success.” And since they bear none of the consequences of poor stewardship of other people’s money, corporacrats are particularly susceptible to trendiness, groupthink, and outright scams. A cruel assessment? Take a trip back to May 8, 2006, when a group of 100 Connecticut “leaders” gathered in Wallingford to celebrate the groundbreaking of a 305,000-square-foot corporate campus. (The HQ was approved for millions in taxpayer-financed incentives.) “The company plans to more than double the number of employees within three years in its new home,” wrote the (Meriden) Record-Journal. “This is the new financial-services industry,” said Governor M. Jodi Rell. “These are high-paying jobs -- career jobs. These are the jobs we want for the future.” The company was Mortgage Lenders Network USA, Inc. Its specialty was subprime mortgages. You can guess the rest -- the firm filed for bankruptcy not long after the Wallingford hootenanny. In the words of researchers Alan Peters and Peter Fisher, “decades of policy experimentation and literally hundreds of scholarly studies” have exposed the economic-development establishment’s claims as hollow. Conservatives and libertarians have long disdained corporatism, and even some on the left now seem to agree. (Tom Condon, a columnist for The Hartford Courant whose knowledge of capitalism would require a microscope to find, once observed, “Connecticut has a lot of economic-development agencies, but apparently not much economic development.”) Yet despite its failures, its scandals, and the scorn it receives from independent analysts, the corporatist beast keeps growing. For example, the governor’s proposed budget raises the DECD’s budget in 2010, then cuts it by less than 1 percent in 2011. Nutmeggers have learned the hard way that corporate welfare can’t grow an economy. Too bad the same can’t be said for Connecticut’s politicians. D. Dowd Muska is a writer, commentator and lecturer. His website is www.dowdmuska.com. # # # # #
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