Economic Development Winners and Losers | Eastern North Carolina Now

    Economic development, as envisioned in Beaufort County, is the poster child for bureaucratic ineptitude and crony capitalism. It has accumulated a portfolio of failed commercial real estate fiascos that have recently been unceremoniously demoted into potential sites for the new jail, chased a series of laughable projects ranging from fraudulent ethanol schemes to an imaginary diamond cartel, and poured financial support into a clutch of waning companies that were selected on the basis of political expedience.

    Washington's city council and Beaufort County's board of commissioners, have taken a trickle of taxes from thousands of local residents and hundreds of businesses, and created a flood of venture capital with which they have funded a small group of politically selected businesses and projects. This amounts to nothing less than the political authorities mandating a forced investment by taxpayers in firms that find it easier, and more profitable, to court political favor than generate investment from banks, stock holders or the company's own management.

    While pretending to be venture capitalists, economic developers are functioning as the direct antithesis of private investors. Traditionally, private investors seek out business that are most likely to achieve above average success. However, the philosophy of bureaucratically guided investment is to direct funding into businesses that will provide the greatest political returns. This leaves the community poorer. Money is being directed away from investments with growing employment and expanding opportunities, while being captured by firms that can, at best, mount only a grudging resistance to declining employment and profitability.

    The community's financial resources are taxed away from profitable, innovative businesses that are the expanding employers of the future, and committed to preserving the status quo. They fund buggy whips by taxing iPhones.

    Economic developers argue that they are "putting money into the economy," but they overlook that their strategy necessarily requires that money first be taken out of the economy by taxes before it can be put back into the economy by subsidies. If simply transferring money from taxpayers to businesses is truly a benefit, then we should begin generously over paying for services provided to the city and county by the many private firms working under government contracts. Bad idea? Of course it is, but if we honestly want to spread some money around, then let's have a tax cut. Let's just leave a little more money in everyone's pocket. Allow every taxpayer the right to spend their money where they chose and to invest in whatever they see as their best opportunities for self-improvement, whether it's a rainy-day fund, helping reduce a car payment or better tools on the job.

    Government sponsored economic development should not try its hand at securities analysis and corporate investment. It should focus on areas of regulation, infrastructure and education. How can administrators lighten the unnecessary regulatory burden on local companies? Can anything be done about the affordability of utilities in our community? What skills do our young people need in order to be seen as a competent and reliable work force?