My post of last week, “Batteries not Included,” elicited an interesting comment a frequent commenter who styles himself as “Conservative Texan.” Why should government be deciding winners and losers among development projects? Government has a poor record in these endeavors. That’s because they tend to be controlled by which project has the best lobbyists, and the deepest pocket campaign contributors — not on their merits. I agree 100% with Conservative Texan. You and I don’t know, for example, whether the $50 million project that the governor’s office recently bestowed on Texas A&M is a good project on the merits. But we do know that A&M has a private back door to the governor’s office that other universities don’t have, and we have every reason to question whether the level of scrutiny applied to A&M proposals is rigorous. The testimony of the staffers from the governor’s office before the House Appropriations committee about the A&M project was full of puffery. The staffers referred repeatedly to “world class researchers.” How do they know who or what a world class researcher is? Nobody gets a piece of parchment that says “world class researcher” on it. Nobody has “world class researcher” on their business cards. Show me a list of world class researchers. You can’t, because there is none — except the list of Nobel laureates. This was hype designed to snow the committee. No sale. Let me hasten to insert here that I have great respect for Texas A&M as an institution. I do not have respect for inside dealing between the university administration and the governor’s office. Friends and former staffers of the governor hold key positions in the A&M System. This is a situation that is ripe for abuse and it has been abused, as the revelations about fund shifting made clear. Other universities cannot speak out about the favoritism shown to Texas A&M for fear that they will be punished. Here is more from “Conservative Texan”: Remember the push for government subsidies for the “surefire” SST passenger plane? We passed, and the French and Brits took a bath instead. How about the scientific demand that the U.S.government fund high definition television development? Again, we passed. It came along quite nicely with private funds, thank you. In the late 80s, the Japanese model — government calling the shots, supervising private industry investment — was all the rage. Whoops. Japan went into a recession 15 years ago and basically hasn’t emerged yet. The lesson is clear — government should regulate to maintain a level playing field, but should stay the hell out of picking winners and losers. I suppose you can’t stop states from getting into bidding wars on projects like the battery project. But it’s a trend that should be resisted, not embraced. The discussion reminded me of a lecture I attended by the late UT professor and LBJ hand, Walt Whitman Rostow. He was speaking about the contemporary applicability of his book, widely read at the time when I was in college, “The Stages of Economic Growth.” The Soviet Union had built the greatest 19th century industrial society the world had ever seen, he said — in the 20th century. But the Soviets never could make the leap from an industrial society to a consumer society, because government bureaucrats made all the decisions about what kinds of goods consumers wanted, instead of allowing innovation. And when the next step beckoned — a technological society — the bureaucrats were helpless to decide which technological proposal was the best. This lack of innovation was not the only reason the Soviet economy imploded; excessive military spending was the primary reason. But the economy was not able to evolve because the government made all the choices. Here’s what I think ought to happen: The Legislature should abolish the emerging technology fund. The state has no business investing in start-ups. This is just wheeling and dealing with public funds that carries a huge potential for abuse and inside dealing. Lawmakers should take the $250 million appropriation and allocate it to the state’s major research universities. Unlike the governor’s office, the universities DO know who the world class researchers are, and they can use the money to recruit them from other states that are suffering worse budget crises than we are. As for the Enterprise Fund, used for closing deals, I would cut it in half and give the rest to the research universities. The governor’s office hasn’t done a great job of picking winners and losers here either. Countrywide? WaMu? Our tax dollars were used to help them undermine the American financial system The testimony before the Appropriations Committee was that the Enterprise Fund has so far brought promises of 54,000 jobs to Texas. The number of actual jobs? Just 23,000. (Enterprise Fund beneficiaries have a set number of years to reach their job targets. If they fail, they are supposed to reimburse the state for the jobs they failed to create–but the state may wind up holding the bag for companies that will have taken the money but may not be able to–or may not be around to–reimburse the state for the jobs that they failed to create. I’m worried about Caterpillar, which received Enterprise Fund money to open a plant in Seguin in a highly touted deal that could bring 1,400 jobs. Here is a company release dated February 11: FOR IMMEDIATE RELEASE PEORIA, IL – Caterpillar Inc. (NYSE: CAT) today announced it is offering a voluntary early retirement incentive package to approximately 2,000 production employees in Illinois Caterpillar facilities (Aurora, Decatur, Joliet, Pontiac and the Peoria-area) as well as in Denver, Colorado; Memphis, Tennessee; and York, Pennsylvania. “We recognize these are extremely difficult and uncertain times for our employees. In offering this package, our intent is to provide eligible employees the opportunity to retire early as we expect significant declines in all geographic regions in most industries due to difficulties in the global economy,” said Sid Banwart, Caterpillar vice president with responsibility for the Human Services Division. This company-initiated incentive is being offered in accordance with Caterpillar’s Non-Contributory Pension Plan. Eligibility for this package is based on a combination of age and credited service. The incentive plan announced today is in addition to other previously announced workforce reductions related to production employees. Consistent with previously announced plans, and depending on business conditions, more voluntary and involuntary workforce reductions may be required as the year unfolds. “Conservative Texan” is right. The government should not pick winners and losers.
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