When I was at Duke, there were many times that the basketball team would go up by 20-25 points. Sometimes, our opponent would make a small run and reel off 5-10 points. The visiting fans would start to get very excited and cheer, loudly. It was at this point that the Duke student body would begin the following cheer:
Don’t cheer, check the score! Don’t cheer, check the score! Don’t cheer, check the score!
Yesterday, the News Journal ran a piece on government “investment” in business (i.e. the Strategic Fund investments or Corporate Welfare). According to the article (which can be found here):
Of the $64 million in state economic development loans and grants extended since Jan. 1, 2009, more than $55 million has gone to assist some of Delaware’s largest industries, which have been coping with a crippling financial recession.
So, getting back to “Don’t cheer, check the score,” during this time of government largess, Delaware’s real unemployment has remained north of 12%. Meanwhile, these large industries are sitting on millions of cash on their books waiting for the economy to pick up — including sitting on $55 million in Delaware taxpayer money.
The ironic thing about the News Journal’s quote is that Delaware’s small businesses, who employ most of the workers in the State, have also been “coping with a crippling financial recession”. Delaware’s small businesses do not have the effective lobbying apparatus of Delaware’s largest industries. So, while Delaware’s small businesses struggle, these same small businesses are providing the large companies $55 million in free capital.
It is arrogant and foolish to think that Delaware’s government can make reasonable economic investment decisions (aka Venture Capital). A much better use of the $64 million would have been a 33% reduction in the State’s Gross Receipts Tax. Instead of $55 million of taxpayer money flowing onto the balance sheets of global behemoths, that money would have gone directly into the local Delaware economy. Driving local employment, investment, and, eventually, more revenues to the State.
Now, it is true, that these large companies will eventually spend their $55 million — there are “provisions” for receiving “free money”. Of course, that just means that these companies won’t invest money from outside of Delaware into their Delaware facilities — our small businesses through the Gross Receipts tax have already made those investments for them.
So, Delaware’s struggling small businesses are financing large corporations through the Gross Receipts Tax & the Strategic Fund so that those large corporations don’t have to invest in Delaware. Meanwhile, unemployment remains at crisis levels and most of the money remains unspent. Whatever happened to “TIME” (Turning Ideas into Meaningful Employment), the Governor’s campaign slogan for creating 25,000 new jobs?
Don’t cheer, check the score.