Posted on 01/20/2016 8:12:39 AM PST by Kaslin
As General Electric gears up to move its headquarters from Fairfield, Conn., to Boston, the people and communities being left behind are dreading the pain to come.
John Engel, a real estate agent and town councilor in nearby New Canaan, told public radio's "Marketplace" that the departure of 800 GE executives, most of whom will likely list their homes for sale, will send the local housing market staggering. Once the region loses millions of dollars in disposable income, it will ineluctably lose much of the business those dollars sustained. There will be fewer patrons to fill local restaurants, for example, and thus fewer jobs for restaurant employees. Some (most?) of the $14 billion that GE has annually spent buying goods and services from Connecticut vendors will migrate northward. Ditto the $10 million GE has spent per year on charitable contributions, and the estimated 49,000 hours its employees have given in volunteer work.
The impending exodus of GE after more than 40 years is a blow from which many local companies, and the families that depend on them, may be reeling for years. Tony Hwang, a state senator from Fairfield County, doesn't exaggerate when he describes GE's forthcoming move as "a punch in the stomach for the state of Connecticut."
Have you ever paid someone to punch a victim in the stomach? If you're a Massachusetts taxpayer, you have now.
To induce GE to relocate to Boston, Governor Charlie Baker and Mayor Marty Walsh offered to cross the corporate behemoth's palm with silver — lots and lots of silver. The package of incentives underwritten by Bay State taxpayers is expected eventually to total more than $150 million in direct subsidies, tax abatements, training funds, site improvements, and property acquisition costs. That means that General Electric — a conglomerate with roughly $150 billion in annual revenues — will siphon $188,000 out of the public treasury for each job it proposes to move to Boston.
"We won Powerball today," the mayor exulted to reporters when the news broke last week. That might be true in some alternate universe where Powerball winners fork over a jackpot rather than collect one. In our universe, however, when government spends huge honking sums of taxpayer dollars on corporate welfare, it hasn't won a thing. It has wagered public money for the benefit of a private company, in the process penalizing other companies by forcing them to subsidize their competitors. The politicians covet the power and glory that come with making those wagers. But their track record is terrible, and labeling their reckless gambles "investments" changes nothing.
"This will be a good investment for Massachusetts and . . . Boston," says Baker, rationalizing the offer of a fortune in public funds to influence a corporation's private business decision. "The tools that we'll be using are the same tools that have been in place for a very long time and have been used by prior administrations."
No kidding. Prior administrations played the same game, placing losing bets on Organogenesis and Vertex Pharmaceuticals, on Evergreen Solarand Intel Corp., on Nortel Networks and Fidelity Investments. Again and again, Beacon Hill doles out subsidies, tax breaks, and other bribes to lure out-of-state companies to Massachusetts or persuade in-state firms not to leave. Again and again, the giveaways fail to produce the intended results. Again and again, politicians swear they've learned their lesson. Then along comes another company, promising the moon in exchange for "incentives," and the taxpayers get ripped off once more.
Coaxing GE to Massachusetts via pricey perks and favoritism isn't legitimate economic development. It's a corrupting shell game. It compels Bay State taxpayers to enrich a vast multinational, while knowingly inflicting pain on their neighbors in Connecticut. Baker and Walsh are taking bows, but their crony capitalism is nothing to cheer.
THIS is what is driving the Trump populist revolution.
Crony Capitalist Bailouts and Featherbedding. The one issue that could bring the Tea Party and OWS together.
What a waste. Moving to Massachusetts fixes what ?
99% same old same old in MA.
GE should move south, hell not north!
Also, how much Federal tax does GE pay again? LOL.
Crony Capitalism is an oxymoron.
The Boston metro area isn’t overcrowded and outrageously expensive enough to suit the politicians.
So to make it worse, they pay companies to move more people there using money extorted from taxpayers with threats of punishment by government authorities.
In 2015 Massachusetts had a population of 6.79 million
$150 million / 6.79 million residents = $22/resident
The residents of Connecticut would gladly pay $22 each to keep GE based in Connecticut.
Democrat Connecticut governor Malloy has killed the golden goose. He had warnings that GE would move if taxes stayed high. Malloy failed to get promised concessions from unions that would have lowered taxes.
Republican Massachusetts governor Baker has landed a big fish that will pay for itself in less than a year.
This is not crony capitalism. This is an example of union-driven politics in Connecticut.
If you were born and raised in the rustbelt states over the last 40+ years, this is nothing new. Get used to it. At least they didn’t relocate to beijing, mexico city, perth, or austin.
That $150 million will be offset by the Massachusetts income tax these employees pay. If they are big executives, that money might add up over 5 or 10 years.
This is corporate welfare and bribery. Taxpayers’ money used so the politicians can claim that they are doing everything possible for jobs.
Perhaps Malloy will enact an Exit Tax on GE. Wouldn’t surprise me.
Interesting math. I bet L.A. is paying out more per citizen to get the Rams.
In the Era of Baraq, the level of desperation seeking jobs and employers is very high.
Yeah, GE was foolish to just consider the money. They’ll love getting used to locals in the suburbs.
What a bunch of BS. GE is a public company, accountable to it’s shareholders. If the laws allow it to take advantage of moving it’s corporate HQ, that’s their business and nobody elses. Business is ALL about winners and losers in an open market environment.
The only alternative is government regulations. IF that’s what you advocate, come out and say so.
Well, you got to hand it to companies like GE and Tesla (Elon Musk) they sure do know how to scam the taxpayers out of vast sums of money.
This is how the system now works. Politicians hand over gobs of taxpayer money to private companies, then these companies and owners kickback much of this enrichment back to the politicians in the form of campaign contributions.
Gee, who has admitted playing the game very well? Could it be Donald Trump who himself admits he shoveled lots of this cash back to politicians?
Oh, I believe it. GE has deep roots in the NE. They can’t just pull up stakes and move too far away, for now. They just moved their locomotive division out of Erie, PA. down to Texas. That doesn’t hide the fact that damn near most of the parts for them are coming out of china though.
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