[E]arlier this month, a legislative panel agreed to give $500,000 of taxpayers’ money to G.W. Plastics in Bethel and $200,000 to a Canadian company.
What company?
None of your business.
Your money, but not your business.
Last month, the federal government approved two grants totaling more than $8.3 million so the state airport at Newport can extend a runway and build a new snow removal equipment storage facility, according to Guy Rouelle, the aviation program administrator for the Agency of Transportation.
The airport is a public facility.
Well, sort of. The still-unfinished terminal, Rouelle said, is to be “privately funded,” in part by Jay Peak resort, which expects to be one of the airport’s major beneficiaries, especially if the expansion leads to scheduled airline service.
“We’ll service both the ski areas,” Rouelle said, meaning Jay Peak and the Q Burke Mountain resort in East Burke.
The airport expansion will also “support AnC Bio,” Rouelle said, referring to the proposed Newport biotech plant.
In other words, while that $8.3 million – plus about another $10 million in federal dollars spent on the airport earlier – is going to improve a public facility, it is also a subsidy to private, for-profit businesses.
As are the smaller payouts to G.W. Plastics and the un-named Canadian company.
Is this bad?
Maybe it’s good. G.W. Plastics plans to use its share to build a new facility, one that will create 73 jobs, according to Patricia Moulton, the secretary of the Agency of Commerce and Community Development.
As to the mystery company from Canada, it plans to open a branch of whatever it does in the Northeast Kingdom.
That means more Vermont jobs. More jobs is better than fewer jobs. That’s no doubt why any time a company emits the least hint that it might move any of its operations out of the state, the first reaction – the default position as the computer nerds would say – is to throw some state or federal money at it.
Earlier this year, when G.S. Precision of Brattleboro announced it would build a new plant in New Hampshire, Brattleboro officials knew just what to do: offer the company money.
Adam Grinold, the executive director of the Brattleboro Development Credit Corp., public officials and the company are working on a package of tax credits and loans to help G.S. Precision expand on properties it already owns at the Exit One Industrial Park that would keep 300 jobs in Vermont and create nearly 100 more.
This might be good policy. Besides, everyone else does it. Unless every state and locality around the country stopped its own subsidies, Vermont and its towns would be engaging in unilateral disarmament were they to decide to let companies make their hiring, location and relocation decisions on the basis of mere economic factors – proximity to supply and markets, availability of skilled workers, interest rates and all that jazz.
Or to put it another way, on the basis of free market economics.
OK, there has never really been a free market. America grew by subsidizing farms, railroads (usually thanks to bribery), oil and gas production, electric utility generation, and banks.
But if anything, the subsidizing system seems to have become more elaborate and more universal than ever.
And less acknowledged. No matter how many millions of dollars of taxpayer money are spent on tax breaks, loan guarantees, job training, and public “improvements” designed to benefit a single firm, it is almost never called what it is: a subsidy.
Instead it’s called “economic development.” Who can be against that?
No opposition here. Just a thought. Could we drop all the rhetoric about how businesses only want the government to leave them alone?
Nobody wants the government to leave them alone. Everybody wants governments at all levels to do a great deal for them and theirs. They object only when the government spends money on somebody else.
Happily, Vermont suffers somewhat less from this rhetorical sleight of hand than many other states. Relatively few Vermonters have drunk the Kool-Aid of economic libertarianism, that pathetic effort to deny the modern world. Not that the modern world does not deserve denial. It’s full of awful stuff: food courts, artificial turf, Kardashians. But the denial ought to be sensible.
And often enough, the rhetoric makes its appearance here. Just the other day, the Vermont Chamber of Commerce griped about what it called an “impact list” of $52 million worth of taxes, fees and mandates imposed on Vermont businesses for this year alone.
Talk about sleight of hand. As it turns out, more than a third of that $52 million came from some income tax increases on upper-income earners, not on businesses.
And where is the Chamber when that same tax-imposing, regulating, state government is thinking about spending money and tweaking the rules to businesses’ benefit?
Right in the front row, cheering it on, holding out its plate, asking only for more. Like the rest of the business community, the Chamber was a big backer of S.138, which substantially expanded the state’s generosity to businesses.
So were most of the legislators, including the one (his/her identity or party is irrelevant here) who proclaimed on the stump one day, “I want government to get out of the way and encourage businesses.”
But while that subsidy (“economic development”) bill this lawmaker voted for may be encouraging businesses, it is not government getting “out of the way.” It’s government getting in the way of the market to subsidize selected firms.
The state of Vermont spends $3.7 million a year on tourism promotion, even though there is scant evidence that the money has any impact aside from saving the resorts and hotels from spending quite as much themselves. Vermont schools and colleges regularly coordinate with employers to create the education and training that will develop the skills employers need. The Vermont Employment Growth Incentive (VEGI) “offers an economic incentive for business recruitment, growth and expansion.”
That costs money, and nobody really knows how much. Many of the economic development packages include guaranteeing firms a lower local property tax rate. Trying to figure out how much that costs the towns statewide would require a prodigious research effort.
Again, the subsidies might be worthwhile, even necessary. Adam Grinold points out that G.S. Precision has invested a good deal of money in the community. It even runs its own school to train its workers.
So it makes sense, Grinold said, for the community to invest on behalf of the company “to keep these jobs in Vermont.”
So it does, at least if the best way to get and keep jobs in Vermont is to subsidize businesses.
But is it too much to ask that the subsidies be called … subsidies?
In this sense (and only in this sense) a subsidy is like a rose. It smells no sweeter under any other name.
