Government officials at all levels arrogantly persist in using public funds on various schemes in cahoots with business people. They play the “incentive” game to lure companies to their jurisdictions or bribe them to stay put. Politicians and their supporting political class excuse this unauthorized behavior by telling themselves that we need jobs.
Subsidized private sector employment uses confiscated earnings of others. There is no net wealth gain—only redistribution of it. But there are benefits from government incentives: to the political class. They can brag: “See the jobs we created.” Or, “Look at tax revenues generated”—reflecting self-serving and greedy motives.
New Hanover County Chairman Woody White put it this way, “He said the county is paid back in tax dollars and new jobs,” according to a recent Wilmington StarNews article—begging the question: Who asked the taxpayers if they wanted to risk money on business ventures? This State has a long trail of failures based on political incentives, but many politicians still support them—always expecting different results.
Mr. White voted with three other commissioners (Brian Berger voted No) to “award $325,000 in incentives to Live Oak Bank for a planned expansion.” Curiously, White expects county taxpayers to engage in a public lending scheme: lending our money to a lending company that does not need the “loan.” According to the Live Oak Band website the company is “One of the largest originators of small business loans with one of the strongest loan portfolios in the country.” So, what’s the point of this? (link)
Wilmington StarNews reporter Wayne Faulkner observes that the company’s “splashy” new 36,000 sq. ft. headquarters is “sophisticated” and laced with loans of about $500,000,000 this year. The company plans to invest $16 million in building structures and add 120 new employees with an average salary of $80,000 per—nice work, if you can get it, but why should government and public funds be involved?
Wilmington Business Development operative Scott Satterfield noted that Live Oak Bank is growing “dramatically.” So, why should it get county and city taxpayers’ hard earned and confiscated money? Infusion of public cash or credit to one company shifts the tax burden to others. If governments are flush with funds, money should be returned to taxpayers who will choose better ways to spend their own money.
Satterfield promotes another $250,000 incentive recently “unanimously approved” by the Wilmington City Council. (link) He said “the future is bright”—maybe not for city taxpayers. Live Oak may be spreading its branches, but two other banks formerly headquartered in Wilmington “went belly-up” not long ago. Nationally, other banks on average have decreased their “troubled asset ratio,” but Live Oak has dramatically increased its purchases of risky loans this year. Do our local politicians have insider information about this that we don’t? (link)
Another curiosity about this spending spree involves Mr. White’s trustworthiness. That virtue seems to have eluded him based on a previous position he held on government incentives.
While a North Carolina State senator in 2004 White voted against a $242 million incentive giveaway to Dell Computer Corporation—another failed state venture. Back home he’s changed his tune. Now he’s all for this local giveaway. Apparently, Mr. White has no principle position on the proper role of government. How can he be trusted to do the right thing?
It’s been said that if one doesn’t stand for something, he’ll fall for anything. For my part as a resident taxpayer in this county, Chairman White—and all the others who voted for Live Oak Bank incentives—has lost trust; a virtue too often sadly lacking in our elected officials.