The thing about handing out other people’s money for political gain is that it’s very, very easy to look only at the upside, because the future is, obviously, not yet known, and when it arrives, few will check the record, and responsible parties may no longer be in place, anyway. Thus, Democrat Governor Gina Raimondo is free to say things like this, from a Ted Nesi article on Johnson & Johnson’s agreement to put a location in Providence with 75 employees for the low-low government welfare handout of $5 million:
And 10 years from now, when GE has 700 employees there and J&J has 700 employees there and Virgin Pulse has 700 employees there and it’s tens of millions of dollars of revenue for the state, great, I did my job.
Note the assumption that the government can pick these winners. It sounds great to think that every one of these subsidized companies will succeed and expand by multiples over the next decade, but if that were feasible to expect, investing would be easy.
Meanwhile, the money handed out to them won’t be in the state’s economy serving other purposes that might be more productive. The simple fact of these companies’ competing in the Rhode Island market with the benefit of subsidies will have a largely untraceable effect on others. And we can be confident that some of them will seek more public money down the road (like 38 Studios) to secure the state’s “investment.”
Moreover, we’re already seeing the insidious contagion of corporations’ government dependency:
A.T. Cross, the maker of fine-writing instruments and accessories founded in Providence in 1846, celebrated its move back into the capital city from Lincoln on Wednesday, after nearly $1.9 million in economic incentives from the state helped fund the company’s $2.1-million move.
Taxpayers are nearly paying the whole bill to move this company from one Rhode Island municipality to another.
The economic system that these money-grubbing companies are ushering in is clearly unsustainable. The key marker of success will quickly become whether a company has the political connections or leverage to get money from the government to offset the high taxes and suffocating regulations.