Monday, September 22, 2008

Regardless of name, government does not create jobs

Lisa Renee at Glass City Jungle is on the email list of Commission Ben Konop. I am not. She reports the following 'Fellowship Program.'
Commissioner Konop Urges Colleagues to Support High Tech Jobs Program

Proceeds of Stamping Plant Loan to Fund Jobs at Local Start Ups in Alternative Energy and High Tech

(Toledo, OH)– At a time of rising unemployment and serious economic uncertainty, Commissioner Konop will propose a jobs program to help jump start local start up businesses in high tech and alternative energy. Commissioner Konop will introduce his resolution at tomorrow’s 9:30 A.M. Commissioners Meeting.

Several local small business owners in the high tech and alternative energy fields will be speaking at tomorrow’s meeting in support of Konop’s resolution.

“Last week I was excited to support an investment in the stamping plant to help create manufacturing jobs in Lucas County,” stated Konop. “This week I hope my colleagues have the courage to also invest in jobs in high tech and alternative energy and put people to work in 21st century jobs,” added Konop.

Konop’s proposal calls for investing the proceeds of the loan to the Maumee Stamping Plant into a fellowship program which would place 15 Lucas County residents in 6 month fellowships at local companies in emerging technologies. Under the plan, local businesses in the high tech and alternative energy fields will submit proposals to the County for six month fellowships in research, design, engineering, manufacturing, business strategy, and marketing. These jobs will then be filled by Lucas County residents, including recently displaced workers, via the Source, the county’s one stop job center.

“This program is a win/win for local small businesses trying to grow but lacking capital and people looking for jobs in an increasingly tough economy,” stated Konop. “I hope my colleagues put progress over politics and invest in our communities future by voting for the resolution,” concluded Konop.

This is not the role of government!

First of all, the county doesn't yet have any of the interest on the loan and probably won't until after the end of the year.

Second, since when is it the role of government to hire people to work at private companies? This is his 'Job Corps' program repackaged with for-profit companies rather than non-profits, but it's still wrong. Government should not spend tax dollars to pay people to work at outside entities - and the only government workers they should pay would be the ones absolutely necessary to fulfil the mandates placed upon the county government.

Third, this is not creating jobs nor wealth within our community. Remember the 'broken window fallacy' of economic development? It's the story of a shopkeeper whose window is broken by a little boy.

Everyone sympathizes with the man whose window was broken, but pretty soon they start to suggest that the broken window makes work for the glazier, who will then buy bread, benefiting the baker, who will then buy shoes, benefiting the cobbler, etc. Finally, the onlookers conclude that the little boy was not guilty of vandalism; instead he was a public benefactor, creating economic benefits for everyone in town.

The fallacy of the onlookers' argument is that they considered only the benefits of purchasing a new window, but they ignored the cost to the shopkeeper. As the shopkeeper was forced to spend his money on a new window, he obviously could not have spent it on something else. For example, the shopkeeper may have spent the money on bread and shoes for himself, but now cannot so enrich the baker and cobbler because he must fix his window.

Thus, the child did not bring any net benefit to the town. Instead, he made the town poorer by at least the value of one window, if not more.

If one broken window is good - is not a dozen, or a hundred or a thousand? Shouldn't we break all the windows, thus stimulating the economy? So it is with Konop's 'fellowship' program. If 15 fellowships are good, what about 50, or 100?

One great lesson of political economy, emphasized for centuries, is that the government creates no wealth of its own. Everything it has it has to get from you and me, one way or another. If the Commissioners spend this interest income on part-time, temporary jobs, it won't be spending the money on the mandated functions of county government - and that means that you and I will still have pay taxes to afford those things.

Of course, if you're one of the few businesses that would qualify, you might welcome having someone else pay for the work you're getting through such a program, so expect Konop to produce several business owners who will rave about what a great idea this is. Should we be surprised that the recipients of government's largesse support it? No.

As the Board of Commissioners rejected Konop's 'jobs corp' program, they should reject this 'fellowship' program as well, because other than the name, they are exactly the same. However, if Commissioners Pete Gerken and Tina Skeldon Wozniak again reject this type of 'program,' expect Konop to accuse them of 'politics over progress' and 'maintaining the status quo' while he whines about not getting his way - once again.

If you really want to 'jump start' local businesses, lower the taxes, reject all property tax levy increases, stop spending so much money, reduce regulations and end duplicative requirements on businesses. Doing those things would be a much more effective way of helping ALL Lucas County companies, not just the ones you like.


Timothy W Higgins said...

Once more, young Ben proposes a "token" program instead of real economic development. Fifteen temporary jobs in high tech and alternative energy will have no more effect on the development of these businesses than his loan program for local art did on the local arts community. (You probably thought we forgot about that, didn't you Ben?)

Like some of the other political posturing going on lately, Mr. Konop appears to be positioning himself for a good sound bite and a run at his next political office instead of actually accomplishing anything.

If this is another example of his economic development skills, we can all be thankful that he has given up on the LCIC (which may allow it to survive). If this is an example of his leadership skills, he needs to abandon a career in politics while there is still time to salvage some shred of self-respect.

navyvet said...

Does anyone know the terms of the Stamping Plant loan?

So far, all indications are that it will be "repaid" by year-end?

If so....the interest will be $20,000 or less......15 jobs???...6 motnths???

Young Ben is starting to get on my nerves.......

I am still waiting for the "Tarta Shuttle!"

He reminds me of a pinball machine...and he is the ball. He bounces everywhich way but loose..and ends up in the hole.

Wow....what a mayor he would make...

Maggie said...

NavyVet - the loan is to provide cash between now and when the SEC approves the other financing portion/ownership. The county's loan is guaranteed by an account that holds the individual investor's deposits. The expectation is that the SEC will issue their approval before the end of the year and then the loan can be repaid from the long-term financing sources.

Some have described it as a sort of 'bridge' loan.

If the loan is carried to full term, it will produce about $100,000 in interest. If it is paid off by the end of the year, it will only generate about $20,000 in interest, as you indicated.

That's part of the reason this action should not be approved. The county doesn't yet have the money - or even know how much it will have.

navyvet said...

Merci Buckets.. :)

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