A story in the Richmond Times Dispatch November 14, 2016 prompted by a report of the Joint Legislative Audit & Review Commission ( JLARC) warrants taxpayers attention. It has long been alleged that the 20 year old legislation to create an ever expanding array of Economic Development agencies has been riddled with example after example of the political cronyism that should have been alone reason for former Gov. George Allen never to launch this program to begin with. The report by JLARC is cited in the Times –Dispatch article to illustrate the waste and inefficiency of the various grant programs that after 20 years should leave little doubt as to the sheer folly of government engaging in matters best left to the private sector.
One such example cited as evidence of how poorly managed these agencies are is the recent awarding of a $1.4 million grant to the Lindenburg Industries , a company that had used a website that published false information and used an physical address in North Carolina where it never had an actual presence. The furor led to the dismissal of then VDEP’s Executive Director Martin J. Briley in March.
These various State grants over the last 10 years have totaled almost 400 million dollars . The report by JLARC cited ‘ VEDP’s approach to administering incentive grants has exposed the state to avoidable risk of fraud and financial loss”. Too numerous to catalogue here were the dozens of specific weak practices that illustrate the wasteful nature of how these grant programs are being run. The report states “ VEDP is not an efficiently or effectively managed organization” Little guidance or oversight brings into question whether they ( various agency staff) are working the hours or producing the results for which they are paid what JLARC describes as above average wages for a state agency” .
Legislators comments were noted such as those of House Appropriations Chair Del. Chris Jones R-Suffolk ….. “ to read this ( JLARC Report) really made me sick to my stomach”. “ One of the worst things here is the culture and the pattern over many years” said Del. John O’Bannon III R-Henrico. Del. Robert D. Orrock Sr. R-Caroline said “ To me, this is just wide open for criminal activity”
The arguments for government to engage in spurring “ economic activity” are simply stupid on their face. The late Dr. Milton Friedman once said “ to encourage economic development you need low taxes, reasonable regulation, infrastructure and an educated workforce” What is even more telling is the documented fact that the U.S developed into an economic power unmatched anywhere in the world in its first 200 years ……….before government run economic development efforts even came into existence. I doubt it is a coincidence that growth rates were historically superior prior to these patently political efforts were launched . One politician noted “ it’s as if you dip a bucket into one end of a pool, then pour the contents into the other end , believing you somehow have more water “ .
Virginia has numerous areas that need the scant resources we have. One might cite the VRS and the perennial problem with the General Assemblies ducking what will only get worse. The money spent on these agencies is now after 20 years clearly not being allocated or monitored well. It is time to recognize one irrefutable truth when it comes to economic development
“ wise decisions usually result when one is risking one’s own capital, not so much the case when it is someone else’s money”
Let other states engage in the folly of literally bribing business to locate there, Virginia needs to be run by men & women who recognize the wisdom in distinguishing between things government should do, and things that should be left to a free market based process. Enough taxpayer money has already been squandered.
My own experience over the years has repeatedly led me to conclude how difficult it is to measure in an objective or quantifiable manner the results of these “investments”. Equally humorous is that many of the advocates of this practice are people who have spent their entire life working in the public sector and have never risked a single dime of their own starting a business. Our own local B.O.S here in King William is just such evidence. The Supervisors who this year voted to fund yet another Regional Economic Development effort are a case study. None of them have ever started a business on their own, and one works in an already well established family business. Having control of grant money, how it is spent and whom it ultimately goes to can give politicians a very powerful tool, and easily lead any human to act imprudently.
This report just proves it.