Monday, May 07, 2012

Business as Usual

With all the hubbub over the attempts of the Legislature to put a deal together to finance a new stadium for the Vikings, it’s easy to lose sight of the fact that the State of Minnesota regularly shovels millions of dollars at private companies that allows these firms to make more money. Two new approved projects are expected to bring jobs to Iron Range:

ST. PAUL, Minn. — The board charged with investing in development on the state's Iron Range has approved funding for two projects that will create more jobs in northeastern Minnesota.

The Iron Range Resources and Rehabilitation Board voted today to approve a $650,000 loan for Ellefson Off Highway in Iron, Minnesota. The company refurbishes mining equipment. Company vice president Dan Houck explained Ellefson's business to board members. "We essentially purchase whole pieces of equipment from around the world, bring it back to the Iron Range," Houck said. "It will be dismantled, gone through our shop, which is where these jobs are needed. We need mechanics, warehousing people, welders that can essentially bring these components to the levels we need them to be. The parts are then sold." The company's expansion plans include adding nine new jobs.

Nine jobs in exchange for a $650K loan from the state? Doesn’t seem as if the taxpayers of Minnesota are getting a lot of bang for our bucks.

The board also voted to pay for a $2 million expansion for DeCare Dental in Gilbert. That company plans to add 120 customer service positions.

DFL Rep. Tom Rukavina, who chairs the board, said it's a good investment for the state. "People like the jobs. They stick around a long time, the benefits here are good. Starting wages are around $12 an hour and most people working there are making $15 an hour or better," Rukavina said. "You know, we've been promised that by the end of the year there will be 40 new employees there, so it's great."

Yeah, that is great, isn’t it? I guess it’s great if you’re the politician who can claim credit for using other people’s money to create jobs. Or if you’re DeCare Dental and you just suckered the state into picking up the tab for two million dollars in expansion expense. Or if you’re one of the one-hundred-twenty folks who will now be making twelve dollars an hour thanks to money confiscated from your neighbors.

But for the taxpayers of Minnesota who see their hard earned money forcibly redistributed by the state to a private business it might not be all that. Or for competitors of the two firms on the receiving end of this latest state handout. That’s what’s really so insidious about the government stepping in to pick winners and losers with the power of the public purse. If you’re a business who doesn’t put your hand out or stick your snout into the public trough you may well find yourself at a competitive disadvantage with other firms who eagerly belly up to the bar of public funding. So even if getting into bed with the government may violate your core free market principles, you may find that you have no choice but to do exactly that.

(Photo from Star Tribune)

Rukavina wasn’t the only politician basking in the spotlight of another corporate giveaway as Governor Mark Dayton took a break from shilling for a Vikings stadium to hail the handout:

“I would like to personally thank these quality companies for investing in Minnesota by growing 129 new jobs on the Iron Range. Both projects illustrate how investing in our existing businesses is a strategy for success,” Dayton said.

The companies get thanked for taking our money? How about a little something for those of us giving it up? Left unsaid it all this celebration about how wonderful it is that the state is “investing” in these businesses is any discussion about where the money comes from and whether individuals would have chosen to invest their money differently had the state not forcibly picked it from their pockets.

Oh, in case you were wondering DeCare Dental is a wholly owned subsidiary of WellPoint, Inc. WellPoint CEO compensation slipped in 2011:

WellPoint Inc.'s earnings sank last year, as the health insurer struggled with losses in its Medicare Advantage business, and the total compensation delivered to Chairwoman and CEO Angela Braly slipped as well.

Braly, 50, received 2011 compensation valued at $13.2 million, according to an Associated Press analysis of the Indianapolis company's annual proxy statement. That represents a 2 percent drop compared to 2010.

Welfare for millionaires, anyone?