In a weekend opinion piece, Virginia’s Lieutenant Governor, and “chief jobs creation officer,” Bill Bolling, attempted to put the best possible face on the current administration’s habit of using incentives (none dare call them bribes) to lure companies to the commonwealth. That Mr. Bolling felt the need to write such a defense speaks to the discomfort such handouts tend to generate in a state that prides itself on fiscal discipline.
But in his piece, even Bolling is forced to admit giving taxpayer money to those who don’t need it isn’t good policy:
In a perfect world, we’d all have flying cars by now, too. But I give Mr. Bolling credit for acknowledging that incentives are a grubby business. Regrettably, just as his moment of clarity began to take hold, he counters with an argument right out of the “Lemmings’ Guide to Leadership”:
Everyone else does it, so we have to, as well. It’s the kind of argument parents have with kids: just because everyone else is getting a skull and cross bones tattooed on their forehead doesn’t mean you have to. Think for yourself.
And let’s consider the more insidious logic in Mr. Bolling’s statement: Virginia is competing with other states for jobs. It most certainly does not. Companies compete with one another for business. If those businesses are successful, they generate profits, which allow them to expand and create new jobs.
The state competition model is strictly a political creation that has regrettably become much more. One can, as Mr Bolling does, talk about careful, targeted, wise, and guaranteed benefits of state incentives. But every dollar the state hands out to another company to “create” a job comes from existing businesses and taxpayers, It is a wealth transfer, or what, in a different context, is called welfare.
Long story short: it’s enough to cause Mr. Bastiat to spin in his grave.
But not all of Mr. Bolling’s piece was an exercise in economic illiteracy. There was also a bit of dark humor. And it centers around General Electric:
What’s funny about this? Not much if you happen to be among the 200 or so folks who worked at General Electric’s now-shuttered light bulb manufacturing facility near Winchester. GE lobbied for the federal rules that made the plant unnecessary. The rest of the plant’s operations are being shifted to Mexico.
But no matter — GE found Virginia’s political class eager to hand over an undisclosed sum of money to “create” just about as many jobs as it cut. The winner? GE. The loser? Besides those who lost their jobs, Virginia’s taxpayers. The irony of all this is utterly lost on the state’s pols.
And so it has been, too, in the case of defense giant Northrop Grumman. To lure the company’s headquarters to Northern Virginia, the state promised over $14 million in incentives and grants (and probably a pony, too). All to encourage the company to “create” 300 jobs.
Meanwhile, NG was cutting around 700 existing jobs at Fort Eustis and at its shipyard in Newport News.
Though the state will be able to claw-back some of that money owing to NG’s dodgy handling of the state’s computer system.
All taxpayers need now is a few more such noisome outages and they can call things even.
