Illustration by Lalo Alcaraz. (Click image twice for full size.)
“If only they would run government like a business,” goes a familiar conservative lament, the gist of which equates “business” with the kind of furious efficiency that rewards honest, hard work in both industry and the animal kingdom. But now a new study shows what actually happens when elected officials hand over the keys to the private sector and ask it to run the services that society depends on.
Suddenly, according to Creating Scandals Instead of Jobs, the book of Ayn Rand fairy tales is shut and a dangerous reality asserts itself. The study, conducted by Good Jobs First, discovered an especially dizzying level of corruption in those enterprise and commerce agencies charged with expanding state economies and creating jobs. (Californians will remember how, until it was recently changed, their own Enterprise Zone program helped wreck the middle class by rewarding businesses for downsizing their work forces and lowering wages.)
Among Scandals/Jobs’ findings about so-called PPPs (public-private partnerships):
Governor Jerry Brown signed into law Thursday the “Governor’s Economic Development Initiative,” which radically overhauls California’s troubled Enterprise Zone program. The signing took place in San Diego at the headquarters of Takeda California, a pharmaceutical company. State legislature backers of the new program, which consists of Assembly Bill 93 and Senate Bill 90, say it will stimulate economic activity and create good jobs for Californians via a three-pronged approach.
The first prong is a sales tax exemption on research and development equipment purchases for biotechnology and manufacturing firms. The second is a series of credits given to businesses that hire in regions with high unemployment and poverty rates. Finally, the initiative allows for California business to gain tax credits based on the quality and quantity of jobs they create.
The governor said he has supported this legislation in order “to help grow our economy and create good manufacturing jobs,” with a focus on building “the strength of intellectual capacity.”
The victory in the state Assembly was a narrow one, but a victory nonetheless for Governor Jerry Brown and opponents of California’s troubled enterprise zone program. The zones reward companies with $750 million in annual tax breaks for relocating their businesses to depressed parts of the state – and for replacing their workforces with newer, usually lower paid ones. Thursday, the Assembly approved a bill already passed by the state Senate that would radically overhaul the program.
Although the vote was 54-16, passage required a two-thirds vote, since it amended a tax law; four Republican Assemblymembers joined 50 Democrats in voting for AB 93. The legislation now goes to the governor for his signature.
According to the Los Angeles Times’ Marc Lifsher, “Brown’s proposal, the centerpiece of his economic development strategy, all but eliminates the power of the state’s 40 locally controlled enterprise zones and replaces the program with a broader,
(Editor’s Update: Luke Dowling’s June 25 piece below references Governor Jerry Brown’s proposal to restructure California’s controversial enterprise zone program. Last night the state Senate approved Brown’s initiative to transform the program. The next move rests with the Assembly, which is considering a Brown-backed measure that would create an alternative to the program.)
The fight over California’s enterprise zone program continued last Friday when John Burton, chairman of the California Democratic Party, proposed a measure for the November 2014 ballot which would give voters the power to eliminate the zones.
This proposal echoes concerns contained in Frying Pan News reporter Gary Cohn’s exposé of the rampant exploitation of the enterprise zone program. These zones are intended to foster the creation of jobs in economically distressed areas of the state by providing financial incentives to companies to move to those areas.