It not hard to find a politician who will tout the advantages of economic development grants, or in some way will try to justify the existence of the MEDC and its offshoot programming. Many will say that a particular business would never have set up here without the advantages offered by such gimmicks. Some might say that tourism wouldn’t be nearly enough without ‘Pure Michigan’, and a couple of years ago, it was the film credit that was the big winner.
The payoffs that pass through this type of giveaway are more than simple enterprise zone tax breaks, but often full blown over payments for business models that have no government moral imperative. Certainly the purported successes of invested business might be used to offer justification of continued use of our tax paid dollars, but the alternatives for not having provided the funding for those hand picked winners are never studied. In fact as the Mackinac Center for Public Policy points out, there is never a press release for a failed risk:
“Unfortunately, newspaper readers rarely see follow-up stories reporting whether those job promises panned out. The MEDC doesn’t issue press releases when the jobs don’t materialize, or fall far short of the number promised. If it did, citizens would know that for all the hundreds of millions of dollars in MEDC handouts and lost tax revenue over the years, less than one-third of the promised jobs ever happen.”
Unfortunately, its both sides of the aisle who want to play venture capitalist with taxpayer funds. In fact, my opponent, the current incumbent of the 104th district has recently expanded the scope of the giveaways with his bill, HB5477. It has become law, and allows expanded use of the giveaway moneys by recipients. While our other northern representatives (except foster ) declined to join, Schmidt touted his bill as something that:
“strengthens the 21st Century Jobs Fund to provide easier access to micro loans and reimbursement for startup costs. The Jobs Fund promotes growth and diversity in Michigan’s economy by investing in venture firms, university research and other contributors to economic growth.”
You read that correctly, “VENTURE FIRMS”.
Risk takers, business gambling, and playing banker to junk stock.
Its easy to give away other peoples money for some, and what bigger pocket to dig into than the taxpayers of Michigan? And failures? Plenty, and not limited to the MEDC alone. Here are but a couple:
- Folks who are familiar with the MEDC’s record, should remember the millions given to Quicken Loans to move to Detroit. Unfortunately, that move merely emptied a building in Livonia, and caused hardship on its workers with a new Detroit income tax they did not have to pay previously.
- A convicted felon, Richard Short was awarded a $9 million dollar grant in an ‘oversight’.
- A scheme to defraud taxpayers with the film credit moneys on a $50 million purchase of a $4 million dollar building implicated a legislative aide (google “hanger 42″)
- The Film Credit of 42% in fact, was based on a study by VCU which actually called for a 2.5% credit. Our legislators, anxious to play banker, overshot the necessary ‘incentives’ for attracting film business.
There are more as well documented by the Mackinac Center, which tracks the ineffectiveness of government sponsored catalyst money.
Frankly, If the MEDC’s record of success was even a good one, it would still be inappropriate to be using taxpayer money from some business, or workers, and giving it to potential competitors or firms that simply shuffle the deck chairs to meet “winner” requirements. Given the lack of success and the abuses of such efforts, its time to end the program in its entirety.
Our state government is NOT a bank, nor is it a private philanthropic organization which uses its own money to reward good works. Its role and ability as provider of certain infrastructure, public health and safety, and ‘general welfare’ (schools, competitive regulatory environment, etc) is abused and threatened when it steps into risk taking ventures.
I pledge to educate other legislators, and stand firm against any expansions of these efforts with an emphasis on removing the bureaucracies and the MEDC responsible for them.