Choosing One’s Partners

December 13, 2012
Dan Keating

Louise Story wrote an excellent article in the New York Times Sunday edition entitled, “Empty Words, Empty Workplaces.”  The story was mainly about how General Motors used state and local communities to gain billions in cash and tax incentives only to walk away from their obligations as it suited the company.

Tulsa’s elected officials might learn much from Ms. Story’s findings as they jam square pegs in round holes trying to jerry-rig economic development incentives at the airport.

The story leads off, “…in the end, the money that towns across America gave General Motors did not matter.  When the automaker released a list of factories it was closing during bankruptcy three years ago, communities that had considered themselves GM’s business partners were among the targets.”

On GM’s 2009 liquidation list, there are over 50 properties in towns and states that had awarded the company billions of taxpayer dollars.  GM simply walked away, and “thanks to a federal bailout, is once again profitable.”

The Times discovered it is not possible to know the extent of all the awards since they were granted by thousands of government agencies and officials. “Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid.”

“How can you even talk about rationalizing what you’re doing when you don’t even know what you’re doing?” said Timothy J. Bartik, senior economist at the W.E. Upjohn Institute for employment research in Kalamazoo, Michigan.

Ms. Story’s article goes on, “For towns, it became a game of survival, even if the competition turned out to be a mirage.”

The tactic referred to was used repeatedly by the vote yes faction in the Vision 2 election to scare voters that our airport tenants might soon be leaving.

“Moraine, Ohio was already home to a G.M. plant in 1997 when the company pushed hard for additional incentives.  G.M. said it was looking for a place to accommodate more manufacturing.”

“Wayne Barfels, the city manager at the time said a G.M. representative had told officials that Moraine was competing with Shreveport, LA and Linden, N.J.  After the local school board approved property tax breaks, the Dayton Daily News reported the other towns had not been in discussion with G.M.”

The city of Ypslanti, Michigan, sued GM twice after the company closed the Willow Run factory where Chevrolet Caprices were made and after GM accepted tax abatements.

GM’s bankruptcy has allowed it to emerge as a new company and leave many of its liabilities and contractual obligations behind.

Ms. Story’s article illustrates how easily cities can get into trouble relying on false promises and assurances.  It is far better to pick up a California company with 150 employees trying to get away from an onerous tax environment than to swing for the upper deck with a union company.  That only has its interests at heart.

Like GM, the Obama administration never had to take responsibility for the debris and empty factories left behind in Michigan, Ohio and Wisconsin cities because of the bailout of Chrysler and G.M.

With the economy in such a weak condition and the President bent on taking capital from the economy the likelihood is former G.M. facilities will remain empty and closed for years to come.

Don’t expect your neighbor and friends to add anything to the mix by purchasing a plant.

CBS reported in late November, according to New York University Professor Edward W. Wolff, that the median net worth of American households has dropped to $57,000.

At this Christmas, no one needs to consider or thank any person who voted for our ruinous socialist president.

It will be years before real goodwill toward man enters  many American hearts.