Economic heartburn

Economic heartburn


Even a cursory review of Connecticut’s history – and Wallingford’s, for that matter – will reveal a rich history of innovative business enterprise built by the likes of Eli Whitney, Samuel Colt and Seth Thomas, to name but three. And you can add to those names that of Robert Wallace, founder of Wallingford’s Wallace Silversmiths Inc. and a pioneer of the silver industry as another example of the entrepreneurial giants who took huge risks to build our economy through their own drive, ambition, intellect … and money.

Ah, but times have changed. Fast forward to today, where the poster child for Connecticut economic muscle is a burrito bandito from Colchester who was given $150,000 in loans and grants to create three – yes, three – fast food jobs in Mystic. The business failed – quickly – and it was then discovered that, lo and behold, this guy had two houses worth over $700,000 in foreclosure at the same time that our state government was writing him checks.

His story is but the proverbial tip of the iceberg of the Small Business Express program established two years ago by the Malloy administration. Recently they proudly touted that under this program our Department of Economic and Community Development has ladled out $136 million to 1,015 businesses, dubiously claiming to have “retained” or “created” over 14,000 jobs.

This includes 16 Wallingford concerns, among them 5 manufacturers, 1 business/financial services firm, 8 specialty products/services companies, and 3 retail shops. A caterer got a $132,000 loan and a $50,000 grant to retain 1 job and create 4. A hair salon/day spa got a $103,000 loan to “retain” 6 jobs and create 5 (now down to 9 full-time total), and a retail tile store got a $100,000 loan to “retain” 12 jobs (now down to 10 full-time).

Statewide, this program has dished out millions in outright grants and below-market loans (a euphemism for grants as many of them are at least partly “forgivable”) to over 200 retail establishments, including 8 beauty salons and spas, 10 new car dealers, 17 car repair shops, and 48 food markets and restaurants. The list includes doggy day spas, a pole dancing studio, laundromats, dentists, veterinarians, movie theaters, fitness centers, yoga studios, a wine store, at least a half dozen microbreweries, and a home dancing instruction business. A CPA who has been in business for 40 years got a $100,000 grant to create four jobs. A wedding/banquet outfit received $375,000 to create 5 jobs. A paintball game outfit got a $100,000 grant!

Anyone with even a rudimentary understanding of economics will have severe heartburn reading this list. As I was reading page after page of these transactions, questions emerged:

Supporting manufacturers is appropriate, but why is the state involved in deciding winners and losers in the retail economy? Why should one salon/day spa receive support from the taxpayer so that they have a price advantage over their competitors? If one caterer gets $182,000 to expand his business, why shouldn’t the rest of the firms offering the same service in town be similarly supported? How accurate are these “jobs retained” numbers? If the state didn’t provide the money, these jobs would be eliminated? Really? Malloy certainly infers that. How much of this money will end up being funneled back into politics by the “grateful” recipients to support the legislators and the governor who dished out this dough? How will we ever know?

Samuel Colt and Eli Whitney must be spinning in their graves to see how far we have fallen. Instead of creating an economy that is an engine of economic opportunity, our state government is reduced to propping up certain neighborhood stores and local service businesses with money provided by their competitors.

This program is a travesty of sensible economic development, and speaks to the economic illiteracy of the political leadership in Hartford and the naiveté of the voters who sent them there.

Stephen Knight is a former Wallingford Town Councilor.


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