In testifying to the Arkansas House and Senate Committees on Revenue
and Taxation yesterday, Grant Tennille (the head of the Arkansas Economic
Development Commission) explained yesterday that Arkansas’s reliance on
corporate welfare is like a nuclear weapon.
Tennille said:
“I say this all the time. I hate incentives. I don’t think
we ever should pay a dime to anybody to do anything. But I feel about
incentives the same way I feel about nuclear weapons. I will happily be the
second guy to put mine down”
or, Tennille explained, to resort to their use. He added:
“As long as Bobby Jindal pays $56 million for a chicken
plant, I can’t sit here and say that we’re going to be too good to do that.”
This remarkable metaphor is perhaps more revealing than
Tennille intended. A central justification of nuclear weapons is that they are
better used as threats than as tactics; when we get to the point that nuclear
weapons are used on a regular basis, most people will conclude that something,
somewhere, has gone wrong. One name for what has gone wrong in that case is
mutually assured destruction. Maybe it’s true that we should compare corporate
welfare to nuclear weapons, but if so we ought to keep in mind that the
substantial damage that corporate welfare can do — taxpayer-funded subsidies to
businesses that apparently can’t make it on their own — is already taking
place.
Regrettably, it is not even clear that the money that
taxpayers are spending on economic development is having its promised effects:
an Arkansas Democrat-Gazette analysis last month demonstrated that there is no
way for the public to verify that economic-development expenditures actually
result in jobs. When asked about this at the hearing, Tennille responded that
he is confident that most companies have delivered on their promise, but “a lot
of it is an article of faith because it’s really tough for us to say with
absolute certainty … that yeah, they’ve done what they said they were going to
do and hired this many people.”
At the hearing, a number of legislators asked Tennille some
probing questions that implied some skepticism about the value of corporate
welfare in general:
Rep. Stephen Meeks asked what the return on investment was on
the governor’s Quick Action Closing Fund, which prompted Tennille to discuss
his thoughts on faith and evidence as reproduced immediately above. Instead of
supplying the requested figure, Tennille gave the example, near Meeks’s
district, of Hewlett-Packard’s taxpayer-funded economic development success –
in my opinion, an explanation similar to that of a poker player who is intent
on relating anecdotes about the big hands he won but who is less talkative
about his losses. Meeks responded to Tennille’s invocation of Hewlett-Packard
by asking if Tennille thought his anecdote was the exception or the rule,
pointedly underscoring that we won’t be able to discuss these matters
meaningfully until we have actual numbers.
Tennille then replied with more anecdotes.
Rep. Andrea Lea asked how we tell whether the economic
development assistance that is funded by taxpayers is providing any return on
investment at all, and whether AEDC provides any information on the question of
what benefit its actions provide to the public. Tennille answered “We do … we
actually prepare those reports for you.” Under questioning by Lea, however,
Tennille conceded that those reports only contain predictions, and the only
evidence of actual achievements is hidden in the tax returns that corporate
welfare recipients provide to the state; when Lea asked further if there is
anything that provides after-the-fact evaluation of how well these programs
work, she was told by AEDC staffer Morris Jenkins that AEDC “would love to
know” the answer to these questions and that “there is some language” in
legislative draft form that would address them. Further questioning by Lea
resulted in Jenkins’s admission that he had no knowledge of any legislators
working on the issue, followed by Tennille’s invitation to Lea to carry such a
bill, to which Lea responded “I’d love to carry the bill, if I can agree with
the language.”
Rep. Charlie Collins suggested that AEDC’s mission was based
less on individual choice and more on central planning; given the historically-demonstrated
defects of central planning, Collins asked, are AEDC’s methods the correct
ones? Tennille responded at some length that he had discovered over time that
some of the strongest advocates in Arkansas of getting government out of the
business of corporate welfare were on the state dole: “They’re entrepreneurs,
but when it came right down to it, they showed up at our door, and we’re toting
their note.” Collins responded to this non sequitur by saying “I agree with you
that if you put a pile of sugar cubes in the middle of a field, every horse in
the field will eat them.” I think this was a particularly concise way of noting
that what we want to do is to think about what happens when we get the sugar
cubes out of the field, and that Tennille’s revelation that many businesses
have received corporate welfare was essentially unrelated to that question.
Rep. Linda Collins-Smith noted that it wouldn’t seem hard to
her to require recipients of corporate welfare to disclose what they are
getting and what they are providing, saying “I would like to know how many jobs
we have purchased with taxpayer dollars.” Tennille responded by suggesting that
he’d need to know what was meant by “purchased,” asking if any incentive would
count as a purchase. Rep. Collins-Smith fired back, noting that lawmakers had
been supplied so little information about the details of Arkansas’s existing
economic development programs that it was difficult to respond with appropriate
criteria to Tennille’s question. It was around this time that Tennille
explained that business incentives are like nuclear weapons, a metaphor which
is (depending on one’s perspective) either highly regrettable or highly
revealing. If these legislators continue to attend to this issue, there will
likely be continuing fallout.
Alex Cartwright is an Economic Policy Analyst at the Advance
Arkansas Institute.
A version of this article originally appeared on the blog, “The
Arkansas Project” on 7/20/12.
No comments:
Post a Comment