Finger pointing

by | May 12, 2015 | Economic Development, Editor's Blog | 3 comments

Well, Pat McCrory lost his auto plant and the finger pointing has begun. Volvo announced yesterday that it will build its first American plant in South Carolina. Almost immediately, Commerce Secretary John Skvarla blamed the legislature for its inaction on legislation approving incentives packages. The Senate claims that’s BS.

The House has approved a bill that would lift the cap on incentives but it’s bottled up in a Senate committee chaired by “Massachusetts Bob” Rucho. He says the Senate has already offered $5 million which the governor’s team has rejected. Rucho believes that more tax cuts for businesses will attract industry and that incentives have not proven themselves to be effective.

We’re seeing another split between the ideologues and the pragmatists in the Republican party. While both agree that lower taxes and less regulations help attract businesses, the governor’s team wants to compete with incentives. Skvarla calls them “investments” and says that the money is offset by money flowing into the treasury through increased tax revenue.

The stakes in this debate are high. Incentives can be very expensive. South Carolina doled out $150 million in incentives to lure Volvo. The state believes in incentives because they’ve seen them work. The BMW plant they landed more than 20 years ago revived the Upstate area around Greenville and Spartanburg. However, if they fail to bring in jobs and revenue, big incentive packages can be a budget buster.

Massachusetts Bob and company cite studies that show incentives have a lousy return. They believe in the free market mantra that as long as companies aren’t hampered by taxes, high wages and over-regulation, they will set up shop in a state. If they are wrong, though, North Carolina could get left behind in the competitive world of economic development, costing the state much needed jobs.

Unfortunately, neither the ideologues or the GOP pragmatists believe in investing in people as a way to attract businesses. It’s unfortunate because Volvo and South Carolina downplayed the incentives and said that the state’s well-trained workforce was a major reason for the automaker going to South Carolina. Instead of funding education and training, the GOP in North Carolina continues to cut it.

Charleston’s port was the other reason Volvo cited for locating in South Carolina. McCrory has money in his bond package to upgrade our ports but the ideologues believe that’s a waste of money, despite the new supertankers and container ships that will by-pass Wilmington and Morehead City without significant improvements.

The battle lays out three competing approaches to attracting industry and creating jobs. The ideologues want to put as little money as possible into recruitment and rely on low wages, low taxes and less regulation. The GOP pragmatists agree with ideologues but want to offer incentives to companies that promise to deliver. Democrats, historically, have believed in on-going training and education programs to produce a superior workforce while offering incentives packages that can offset any taxes that companies might see as burdensome. Unfortunately, the Democrats’ approach is not in play in North Carolina despite its success yesterday. 

3 Comments

  1. Russell Scott Day

    In the end McCory is correct that it is the Ports that will make the difference, as they have all throughout history, into antiquity. Those who cannot understand that really ought not be in government. What fools they are.
    The ignorance of those who want ignorance and poverty as levers to twist as if truly proving over and over that they miss the whip that was wielded to get more cotton faster treating people no better than poor dumb animals. They themselves ought be forced to live as they doom the lives of the poor in the grand state of North Carolina to experience.
    We ought feel rage over the 25 percent poverty that is endemic to the state now.
    It was abominable that the GOP has worked so hard to disenfranchise as many voters as they can possibly get away with. I remember the phrase out of McCrory’s mouth “We just corrected the calendar.”
    But he and any that want to make sure the port system of North Carolina is as good as that in Cuba, are right, that will make the difference.

  2. Apply Liberally

    So, the GOP wages an intra-party debate (let’s face it, it will never be a bi-partisan debate as the NCGOP won’t consider any words or ideas offered by Dems) about which economic development approach state government should adopt.

    Meanwhile, other competing southern states succeed in attracting companies like Volvo and Mercedes, even though site-readiness-wise, NC has at least two locations at which manufacturers could essentially hit the ground running with site/factory development.

    How can this be? Isn’t the NCGOP all about being the job-creators? Don’t they tout themselves as being the so-called “problem-solvers” when it comes to advancing NC’s economy?

    I’ll tell you why is can be. Because the NCGOP “leaders” have zero capacity to compromise, to be pragmatic, to listen to other ideas, or to put aside philosophical, ideological, and urban-vs-rural differences, even when they stand a chance to better the state and its workforce.

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