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The Leap of Faith
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Business New Haven
3/6/2000
By: BNH
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In Indiana Jones & the Last Crusade, our hero is faced with an overwhelming choice. Step out into thin air and risk a fall to certain death in his attempt to retrieve the Holy Grail he needs to save his mortally wounded father.
In a true leap of faith, Jones stepped into the abyss, to find that indeed there was a secure pathway across the abyss - even though he could not readily see it.
Today, leaps of faith are rare and reserved mostly for works of fiction. It is just such a bold act, however, that is necessary for Connecticut's corporate and government leaders to help them navigate this new Millennium, this new economy.
The painful recession/depression of the early 1990s set in motion across Connecticut a predilection by government to meddle in the economy and the affairs of particular industries and companies. This meddling - or “economic development initiatives” - moved beyond the accepted role of government as engine of infrastructure development and tax policy.
State government continues today on a quest to identify winning industries and giving financial incentives to individual companies and entrepreneurs when their efforts are seen to be aligned with government's goals. Unfortunately, many business people and business advocacy groups joined in this misguided business as well.
More recently Gov. John Rowland has recast his predecessor's policy by limiting certain financial incentives to individual companies. But the governor has been willing to pledge even hundreds of millions of taxpayer dollars to private companies if they would undertake major developments in Hartford, New Haven and Bridgeport.
These pledges have yet to bear fruit. In New Haven, $50 million didn't steal a steel company. Hundreds of millions in Bridgeport have yet to move markets to build a luxury retail development.
In Hartford, hundreds of millions couldn't woo the Patriots, and now we'll see if the capital can even land a retail project. In New Haven, many wonder just how committed developers actually are to the Long Wharf mall if withholding the government subsidy (a fraction of the total) is enough to derail them.
The Connecticut economy is strong. Unemployment is 2.2 percent. The success stories of the new economy have emerged for all to see. Just how much help has government really been?
In Bio Haven, the decision to help fund several biotech firms looks silly in light of recent market developments. It was CuraGen's quest for first-class office space (on a start-up budget) that touched off legislators' calls for a fund to help biotech companies.
CuraGen never got the money, but entrepreneurship got the job done. By March 2 its market capitalization soared over $3.5 billion and the company had raised some $200 million from new investors.
Branford's Neurogen Corp., a company owned in part by and in partnership with the $100 billion Pfizer and other pharmaceutical giants was a recent recipient of government aid for facilities expansion. That money may have been wisely invested, as Neurogen's value has nearly tripled in the past few months. But was it necessary?
We understand the desire of those in government to “do something” to improve the economy, ease the plight of the cities and provide jobs for those left behind. But business leaders must show more faith (and a 2.2-percent unemployment rate ought to support that faith) in market forces. Subsidy, twisted taxation, “targeting” industries and chasing away developers as “speculators” are part of what put our cities in the hole in the first place.
The solutions are plain: Stop favoring a few industries and large businesses in the cities, and in markets, reduce taxes on small businesses (who haven't benefited from reduced corporate rates) and of course hold urban schools to higher standards of performance and accountability.
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