Freedom, low taxes beat corporate welfare

For the Malloy administration, economic development in Connecticut has turned out to be only a matter of subsidizing corporations that are already here to do what they were already going to do on their own anyway.

On July 27 the administration announced a $7 million loan at 1 percent interest, potentially forgivable, to Dollar Tree Inc. for the distribution center it long has been planning in Windsor. The facility hopes to hire 200 people over five years, so the subsidy might be $35,000 per new job.

Then on Aug. 1 the administration announced a grant of $9 million to the accounting firm Deloitte LLP just for keeping its offices in Hartford, Stamford, and Wilton and adding 200 jobs by the end of next year, a subsidy of $45,000 per new job.

The big new industrial developments from out of state that the term "economic development" might have been thought to encompass are nowhere to be found in Connecticut. The Malloy administration is just inviting in-state businesses to extort state government for some cash before expanding. This isn't economic development but corporate welfare and political patronage.

A more prosperous nearby state, New Hampshire, has a profoundly different policy. The state-promoted commercial zone around the former Pease Air Force Base in Portsmouth puts it this way:

"New Hampshire's state motto, 'Live free or die,' represents the state's Puritan-minded roots that exemplify independence, frugality, simplicity, and industry. Freedom is the essence of economic independence and New Hampshire is a state that has a history of fighting taxes and controlling state government spending. The philosophy can be seen in its tax policy, which has resulted in New Hampshire having one of the lowest tax burdens in the United States - no broad-based personal income tax, no tax on personal property or machinery, no sales tax, no use tax, no inventory tax, no capital gains tax, no professional service tax. ...

"In return for low taxes, New Hampshire doesn't provide new businesses moving to the state with subsidies, exemptions, or other cash allowances that end up being borne by in-state businesses. Tax incentives are based on what a company saves in operational costs and the opportunity to use those savings to increase profits."

Unlike Connecticut's system of economic development, this is a democratic system, as it gives everyone a chance to benefit directly.

While winters are much colder there, New Hampshire is growing faster than Connecticut without suffering the intractable social problems that have wrecked Connecticut's cities and are spreading into the suburbs. For decades now the only growth industry in Connecticut has been government itself, which may explain everything.