This article does a nice job investigating and connecting the dots behind the corporate welfare scam economic incentives package being crafted by state lawmakers and unelected officials to lure a tire plant to North Carolina.
A state lawmaker and a group of Democratic political donors with ties to Gov. Beverly Perdue are poised to sell land at a handsome profit for a tire plant that’s being lured with $100 million in state and local incentives, according to public records reviewed by The Associated Press.
….
Perdue’s campaign has received more than $52,000 from five men with an ownership stake in the Brunswick County industrial park proposed for the new facility.
The governor’s son, Garrett Perdue, is also a lawyer and site-selection consultant for an influential law firm that a county official said was advising the tire company. The firm, Womble Carlyle Sandridge & Rice, does not disclose which projects the younger Perdue works on, citing attorney-client privilege.
Also involved in this latest adventure into crony capitalism is (naturally) the unelected and unaccoutable Golden LEAF Foundation.
A development company owned by David T. Stephenson III, a Lumberton tobacco farmer, is also listed as having a stake in the center. Stephenson is a major Democratic contributor appointed to the board of Golden LEAF, a foundation created by the state legislature to dole out hundreds of millions of dollars paid by cigarette manufacturers through a legal settlement.
Brunswick County officials have asked Golden LEAF for a grant to help fund an incentives package for the plant, said the county’s top economic development official.
I’ve written extensively before about the web of cronies running Golden LEAF (not to mention their redundancy), so its no surprise they are wrapped up in this scam.
So, in short, we have land owned by several major Democratic campaign contributors that is poised to make a tidy little profit on the land courtesy of state dollars controlled largely by Democrats. And what a deal those land owners may be getting in return for their generous political donations.
A confidential document outlining the terms of the proposed deal reviewed by The Associated Press indicated that money from the incentives package would be used to buy a large portion of the 1,129 acre site for the tire plant at a price of $6,000 an acre.
Records show the investors bought the site in 2007 for $4.3 million, or about $3,800 an acre.
My calculator tells me that is a 58% profit in four years. But of course, we all know how real estate prices have been soaring since 2007 (Note to Bev: that last sentence was sarcasm.)
This article sheds more light on the dirty underbelly of the “economic incentives” game. By now we’ve all heard of the Solyndra scandal at the federal level. The whole “economic development” process is a nice cottage industry – with site selection consultants, lobbyists and economic development directors all making a nice living at our expense.
Worse still, the entire purpose of the economic incentives game is to further empower the political class, by centralizing the decisions of how our scarce resources are to be utilized. In a truly free economy, we as consumers direct the employment of resources through our purchasing decisions. Government economic development schemes serve to strip power from the many (us as consumers) and concentrate it in the hands of the few (the political class).
Be careful of your wording. It isn’t crony capitalism, it’s crony socialism. Don’t let the socialists dictate the terms of the debate. If it’s capitalism, to them it’s cold and heartless, and they should be in charge. When they are in charge and doling out money to favored friends, it gets called crony capitalism to cover up that it’s the socialists stealing money from We the People and handing it off to Them, the Favored Few. How come it’s always “capitalism” and it’s always wrong?
Sean,
You bring up great points. I use the term crony capitalism in the sense that the primary difference between a capitalist system and socialist system is the ownership over the means of production.
Our current system is still based on private ownership of the means of production, but with heavy influence and distortion created by political privileges selectively bestowed upon those most effective at leveraging the political class.
really solyndra!! I might have read this with an open mind but then I saw that old time conservative propaganda about Solyndra which cost us what 500 million? Where is your conservative outrage for the HUNDREDS of BILLIONs of dollars in infrastructure, military supplies and all the other waste in IRAQ which will again be used against us? who profits from war? Republicans and their supporters like Dick Cheney and the Bushs and all the rest of the war criminals. Have some common sense!!
FYI who initiated the Solyndra deal? Bush did are you ignorant of this or just misleading your readers??
STY,
Funny, I didn’t mention any President by name on the Solyndra deal. What was misleading about “at the federal level”?
As per your other comments, try to stay focused. This post was about a state economic incentives deal, with a couple of lines commenting on economic development in general.
I’d be happy to respond to any comments you have that are relevant to the subject.
Smarter – Read up on Solyndra. The Bush administration turned down the loan in Jan. 2009 out of concern for the financial viability of the company. Within weeks of taking office the DOE, under new leadership, started moving the loan forward again. The loan was granted. At the same time it was under consideration a major funder of Solyndra made several visits to the White House and administration officials pressured the career people to move the loan forwrd to meet a scheduled piblic event in Delaware. Loan was granted and the loan was restructured in Jan 2011 to move the government loan behind major investors for repayment if comapny failed. The rest is history, it failed. Major backers who also happened to be major political donors are now in front of taxpayers for repayment.
As I understand it, having talked with companies interested in moving operations to NC, our state actually offers LESS in raw incentives than other states. The question, then, is whether such deals ever make economic sense.
A hundred million dollars sounds like a lot of money, and to us as individuals it is. If I personally had $100M, I don’t know if I’d invest in building a new tire plant or not. But from the state standpoint, it’s not that big a number; if we were talking about cash, it would be a little over $10.50 per capita.
Of course, we’re not talking about cash, but about a combination of cash and tax breaks, i.e., foregone future revenue; but let’s stay with the cash assumption. What do we expect that $100M to buy us? I saw at least two figures for employment at the proposed plant, 1500 and 1300; if we take the lower number, and neglect any jobs involved in actually building the plant, the rail spur, etc., $100M means that creating each job would cost a little less than $77,000.
Even $77K seems like a good chunk of change, but consider this: given the median household income in Brunswick County of a little under $45K, that $100M would provide enough money for 1300 Brunswick County households to live for only about 1 year, 8-1/2 months. Invested in building the tire plant, however — and based of course on the assumption that the plant is successful — that $100M could provide incomes for Brunswick County households for decades … income on which they will pay state taxes, and which they will spend on goods for which they pay sales tax, etc. It’s the “teach a man to fish” rather than “give a man a fish” outlook: considering the $100M as an investment that will eventually be recouped.
The other key point is that, without that $100M, the chances of that plant being built in Brunswick County will be quite a bit lower, perhaps even nil. And if the plant goes elsewhere, those households will get absolutely nothing and the state tax base will be increased not at all.
You are right that a completely laissez-faire system would rely only on market forces to determine where companies locate. Whether that would be better — whether, for instance, in the absence of all state incentives each of us could spend our $10.50 to produce an equivalent aggregate economic outcome as generating 1300 jobs with it — would be an interesting thought experiment.
What might be better, as you point out, would be for these deals to be made with greater transparency and public awareness, so that everyone knew what was at stake and who was involved. But the deals themselves may still pay off in the long-term.
Thanks,
G
Several years ago, in cooperation with another REALTOR,in SC, several members of the NC governor’s office and several officials in South Carolina, I would have been an integral part of bringing the BMW plant to Fayetteville, NC. It never happened because NC refused to support the building of the plant nor, most importantly, offer absolutely no tax breaks to BMW. I have also worked in several states, during the last 30 years, selecting sites, buildings, and providing funding for the Fortune 200. Say what you will about this post, I have found Republican, state officials more aware of business practices, and more involved then any Democratic state official, in any state I’ve worked in. Democrats are more similar to the Mexican government, which I’vve also worked with, even going as far to tell me that any project may be improved or initiated, as long as a certain official receives “consulting fees” as part of the approval. Please check Perdue’s record, a woman/person oblivious to why she’s in office in the first place. Oh wow! She does know why: to finance the Democratic party’s whims and dreams, especially her son’s.
These results are proof that the Voters in NC have,somehow been drugged,or,never finished the 3rd grade,or,both.
Herman Cain (38%, 86 Votes)
Mitt Romney (22%, 50 Votes)
Rick Perry (16%, 36 Votes)
Another candidate (13%, 29 Votes)
Ron Paul (11%, 24 Votes)
Michele Bachmann (0%, 2 Votes)
How do some of these people find their way to the polls? Gov.Easley 2 terms Perdue is worse than Easley I do believe. Easley should have been prosecuted . Perdue thinks they should postphone the congressional elections and allow them ,without recriminations ,to do anything they see fit, We should call special elections and put some of these inept fools on the streets , where most of us are going to be unless we take “charge, as vice president says.
“should postpone the congressional elections ”
It was a snark….get over it!