A Rebuttal on Economic Development and My Response
On Saturday July 10, the Hartford Courant published my essay in which I argued the state’s economic development strategy was ineffective.
The Commissioner of the Department of Economic and Community Development, Joan McDonald, offered a rebuttal case via a Letter to the Editor which was published on Thursday, July 15.
In McDonald’s further discussion of the state subsidies required to keep businesses in Connecticut, she notes the cost of such companies leaving or failing to expand in the state and suggests my argument “oversimplified” the situation. In my piece, I emphasized the point that it is good news that companies are staying in Connecticut. In fact, I did it four times. That can hardly be construed as “ignoring” this fact.
In a second point, McDonald takes on the unenviable task of defending the performance of the Connecticut General Assembly on economic development issues. I would argue that the Legislature took steps backward on reforming the cost of energy, for example, which is perhaps the largest issue in this policy area. The Governor thankfully vetoed a bill that the Legislature rushed through the process and passed at literally the last minute, but there remains a legion of legislators whose “remedies” will end up worse than the disease.
The Legislature also punted on addressing budget issues that will almost inevitably end with significant tax hikes in the years ahead. The solvency of the state’s unemployment fund, for example, is a major concern for businesses. Inaction on the impending $3.3 billion budget deficit is another driver of tax uncertainty in the state. Giving businesses an environment they can plan for would seem to be a basic task of government, and yet so often it fails miserably on this count.
But most significantly, Ms. McDonald’s rebuttal fails to address the thrust of my piece. If tax subsidies served as an interim strategy while the Legislature worked like busy little bees to address the concerns commonly raised by small businesses in Connecticut, their use as a tool would actually make sense. But as long as subsidies remain our primary tool for economic development, we shouldn’t be surprised when the exodus of businesses continues.
