The N&O fact checks a claim made by Walter Dalton in the recent Democratic gubernatorial debate regarding job creation numbers resulting from a corporate welfare economic development program – the One North Carolina Fund. Dalton claimed that the fund “created 60,000 jobs and produced $11 billion worth of investment since its inception.”
Here’s how the N&O fact-checker responded:
The One N.C. Fund has been around in some form since 2001. The 60,000 jobs and $11 billion worth of investments referred to by Dalton is the total jobs and investments that companies have pledged to create and invest after receiving a grant from the One N.C. Fund.
But Dalton is incorrect in stating that the fund has created 60,000 jobs. Companies only receive the grant money if they meet their hiring and investment goals. While many of companies who received grants in the past have achieved their job-creation and investment milestones, others never achieved them or have yet to achieve them.
Unfortunately, the analysis stops there – proving again the N&O is full of bad economists. As Frederic Bastiat famously observed, the difference between a good and bad economist rests on whether one stops only at observing the easily detected effects of a policy versus those who factor in the harder to detect, secondary effects of a policy.
The truth of the matter is that any analysis of the One North Carolina fund needs to take into consideration the “unseen” effects of the program. For starters, the One NC Fund is financed with tax dollars. How many jobs would have been created in the real economy if those funds had not been removed and transferred to the politicized One NC Fund? Moreover, how many business investments were not made because resources such as loanable funds, labor, land, raw materials, etc. were diverted to those investments subsidized by the One NC Fund and thus no longer available for other entrepreneurs?
In reality, on net, the existence of the One NC Fund has likely made our economy worse off due to the distortions caused by shifting resources from the real economy directed by entrepreneurs in response to consumer demand into the hands of businesses that may not have existed without taxpayer subsidies.
It could be worse.
In 2006 Beaufort County’s Economic Development Commission built two industrial parks costing $6.5 million. One park is entirely empty. The
second has a $2.4 million never occupied spec building standing unsold since late 2007. The entire project has garnered 34 jobs. Salary expenses alone for EDC executive director exceed $1 million since 2006. The entire industrial park strategy has required $220,000 per job created.
Elected officials have never required that the BCEDC submit a
documented and verifiable performance report.