POSTED ON OCTOBER 12, 2011:
New Business Model
Should taxpayers be at the mercy of big-business and economic development schemes?
Will we ever have a serious discussion about government's role in economic development?
I know, I know... merely utter the phrase "economic development" and eyes glaze over. We just can't be bothered with government esoterica when we're lining up for the latest iPhone or fretting over the future of the Big 12 Conference.
Even so, if we don't awaken from our civic slumber and demand such debate, we will continue to be outraged by reports that we, the state's taxpayers, were dunned $84,000 to dispatch four representatives to the Paris Air Show to "promote" Oklahoma's aviation industry.
Well, maybe you weren't outraged. Maybe you didn't even take note of the Associated Press' Sean Murphy's excellent reporting -- even though it topped the front pages of both the state's major dailies. Maybe you simply yawned, dismissing it as political business as usual.
If so, you get the government you deserve.
I'm sure the State Chamber will be inclined to skewer these comments as liberal, anti-business rhetoric.
I want to make it clear: I am not anti-business -- in fact, I own one of those small businesses the Chamber lionizes publicly (sadly, to disguise the fact their agenda is set by the state's mega-corporate elite).
What I am is pro-taxpayer. And I think it's way past time we thoroughly review whether these economic development efforts are worth our precious resources.
In my view, these economic hard times provide a perfect incentive for such discussions.
We already know, for example, that a joint House-Senate committee is poring over nearly $6 billion in tax breaks, trying to determine which are useful and which amount to corporate welfare.
It's now time to expand the discussion, involving rank-and-file Oklahomans -- not just some stacked, pro-business-as-usual crew -- in a review of the millions and millions of dollars state and local governments spend wooing new business investment to our state.
It is entirely possible we may conclude, collectively, that despite some spectacular failures -- Ardmore's MG plant and Tulsa-based Great Plains Airlines spring to mind -- it is worth risking our hard-earned tax dollars.
Why? Because when we do attract a new plant or other business investment, it can help broaden our economic base -- making us less dependent on oil, gas and agriculture -- and create taxpaying jobs. It's a laudable goal to secure a much higher return on taxpayers' investments than we originally committed as seed money up-front.
On the other hand, we also may conclude it's not worth risking hundreds of millions of dollars when so many basic services are woefully underfunded. After all, free enterprise means "free" enterprise -- not socializing risks and guaranteeing profits. Shouldn't we focus government spending on the basics: education, highways, health, child welfare and corrections?
Think about it: We routinely use taxpayer dollars to wine and dine potential investors, then dangle huge taxpayer-funded incentives in order to seal the deals.
And we do it because everybody else does, too.
Oklahoma couldn't very well decide in a vacuum to quit playing the game. All we would do by waving the white flag of surrender is to reduce by one the number of competitors in the market.
The fact is, for this strategy to work, every other state and local government -- or at least enough of the biggest economic players -- would have to agree that this is no way for governments to do business.
Missouri, for example, is looking enviously across the border into Oklahoma, where Pryor recently celebrated the opening of a 130,000-square-foot Google data center, initially employing 106. But there is room for expansion -- Google is using only 30 acres of its 800-acre campus -- and there is every indication that the Mountain View, CA-headquartered Internet behemoth intends to use it.
On the east coast, North Carolinians are engaged in fierce debate over why their state lost out to neighboring South Carolina in their quest to land a 1,300-plus-job Continental Tire plant. The bottom line seems clear: South Carolina offered a better package of taxpayer-financed incentives.
There are many reasons to take a serious look at the economic development goodies game, but here is a simple one that I find quite compelling: Business investors -- some scrupulous, some not -- often play government entities against each other to secure the best deal, the taxpayers be damned.
Let's be clear: Business investors usually have a pretty good idea where they want to locate and spend their money before any word of their plans becomes public. Human nature being what it is (think: greed), they then try to figure out ways to sweeten the deal as much as possible. So they negotiate with their preferred location -- but invite others to join the competition, as well, hoping to pry open the taxpayers' vault a little wider.
Oklahoma knows all about that game. In 1990, United Airlines pimped Oklahoma City taxpayers for a sweetheart deal for their proposed maintenance facility. But United wasn't really focused on the Sooner capital -- it was interested in parlaying Oklahoma City's generosity into a better offer from its preferred site, Indianapolis.
Indianapolis, of course, was the winner -- and Oklahoma City was left to wipe egg off its face, having been fooled twice into approving big airline incentive packages only to be left at the altar.
In a perfect world, free enterprise capitalists would be free enterprise capitalists. They wouldn't wrap themselves in the flag one minute -- demanding they be freed from government regulations -- while in the next bellying up to the taxpayers' trough in a venal attempt to guarantee profits and socialize losses.
Rep. Mike Reynolds and Sen. Steve Russell, both Oklahoma City Republicans, publicly denounced the state's spending $84,000 on the Paris Air Show promotion -- while most other top state officials, including Gov. Mary Fallin, praised it as money well spent.
Many will simply dismiss Reynolds and Russell as far-right cranks, hardly representative of mainstream Oklahoma thinking. And for the most part, that's true. But as the old saying goes, even a blind squirrel on occasion will stumble across an acorn. And in this case, there's more than a kernel of legitimacy to their criticism.
Will the outrage last more than a day? A week? A nanosecond? Or will we demand our elected leaders, from sea to shining sea, take a serious look at the way the economic development game is played.
It is your money, after all.
--Arnold Hamilton is editor of The Oklahoma Observer; www.okobserver.net
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