Conservative, Yes. Sanctimonious, Probably. But Egomaniac? That’s a Bit Harsh.

by James A. Bacon

And now for another view…. John Fredericks, whose John Fredericks Show is heard in radio markets across Virginia, calls me a “sanctimonious conservative egomaniac” for asking questions about the use of the Governor’s Opportunity Fund to lure business investment to the City of Norfolk.

“It really irritates me,” said Fredericks on his show two days ago. “Any of these … 365 people in the Hampton Roads area that now have a job that didn’t have a full-time job, who can support their families, you know what, it’s a good deal for them, dude! … If you just got hired, and you got benefits, and you can now support your family, that’s a good thing. I’m for jobs. Period. … If you’re unemployed, and if Terry McAuliffe goes out and finds a business to hire you, he’s done a good thing.”

I’ve appeared on John’s show a couple of times, and I find him entertaining. (He refers to Governor Terry McAuliffe as “the Mackster,” which I do find amusing.) Indeed, because he is generally conservative in his views, I agree with a lot of what he says.

Believe it or not, John, I also agree that there are worse ways to spend government money than keeping jobs in Virginia. (If I have time this morning, I’ll post about some development expenditures in Virginia Beach that John might find questionable.) Job creation is the single best remedy for poverty and economic insecurity there is.

That said, given the resistance to paying higher taxes and the competing demands for state funds, Virginia has a finite amount of money that it can dedicate to economic development. We need to ensure that we spend these limited funds as cost effectively as possible. And when we spend money to shuffle jobs around the state — most of those “new” Norfolk jobs are coming from Roanoke and Virginia Beach — I don’t take it on McAuliffe’s say-so that we are getting the best deal possible, or for that matter that we’re getting jobs that we would have lost to other states. I’d like to see the proof.

Here’s what’s going on: Any time a corporation is ready to expand or relocate jobs, the top brass knows from experience that it has an opportunity to extract easy money from state and local governments by threatening to set up shop outside Virginia. They hire site-selection consultants to shop other locales and use that as leverage to extract subsidies and tax breaks. They almost always succeed in getting something. Once upon a time, the Governor’s Opportunity Fund was used to attract outside businesses to Virginia. Now it’s used extensively to keep Virginia businesses here.

Would Norfolk Southern and Movement Mortgage have made the decision to locate in Hampton Roads without the concessions? Economic developers don’t know, the governor doesn’t know, and the public doesn’t know. It’s a shake-down racket, and the only certain winners are the businesses in a position to negotiate special deals for themselves that other businesses don’t get.

The purpose of my original post, and this one, too, isn’t that McAuliffe should not have made the investment, it’s that we don’t know whether he made a good investment or not, and we will never know because there is insufficient transparency in the system. If corporations want to tap public funds, I argued, then they should waive any non-disclosure rights so citizens can evaluate the merits of the subsidy. Is that really so sanctimonious?