Everything Connecticut needs to know about its economic condition has been demonstrated by the Malloy administration’s “First Five” development program, lately renamed the “Next Five” program, since the corporations being subsidized now total eight.
The program’s big lesson is that hardly any business of any size wants to move here. For seven of the eight corporations being subsidized are in the state already and either undertaking normal expansion or just relocating from one town to another.
The program’s latest participant is a mindblower — $115 million in state tax credits, forgivable loans, and grants are being given to the Bridgewater Associates investment house to consolidate its operations from five buildings in Westport to a headquarters campus to be built on the waterfront in Stamford. It’s not just that Bridgewater was likely to consolidate in Connecticut anyway, as it has more than 1,200 employees in Westport and relocating them even to New York or New Jersey would be disruptive. It’s also that the company’s president, Ray Dalio, earns billions each year and has a net worth of about $10 billion. Dalio and his company can well afford to build their new headquarters without $115 million from state government, money that will be drawn from far less prosperous taxpayers.
Governor Malloy portrays the subsidy to Bridgewater as a matter of developing Stamford into the hedge fund capital of the world. But the Stamford area is already full of investment houses, and downtown Stamford is already doing well — spectacularly well compared to most Connecticut downtowns. And even if Bridgewater seriously considered moving out of Connecticut, no company can be bribed to stay here without inviting more extortion from other large employers — which is what the “First Five / Next Five” program has done. Each successful extortion breeds another one.
Presumably with the blank checks at its disposal from “First Five / Next Five,” if the Malloy administration could have enticed any major employer to move to Connecticut from out of state, it would have done so by now.
That is the economic issue the administration and the General Assembly should be addressing urgently.
If Connecticut can’t keep its major employers here without bribing them, much less lure employers from elsewhere, what’s wrong?
Is the problem a matter of general business costs, or particular costs like energy? Is it demographics, such as the unpreparedness for skilled work of young people coming out of high school and college, a problem the governor himself has cited?
Is it some deficiency in the state’s transportation system, like the deterioration of the heavily used Metro-North commuter railroad between New Haven and New York even as Connecticut is throwing hundreds of millions of dollars into a bus highway between Hartford and New Britain for which no public demand is evident? Is it the social disintegration of Connecticut’s cities and inner suburbs? Or maybe state government’s tax hunger and inability to recognize and correct failed policies and to get value out of the government?
What are more economically successful states doing differently?
Pursuing such questions would be far more profitable than continuing to pass out state money to any big business claiming to be thinking of moving out.
Chris Powell is managing editor of the Journal Inquirer in Manchester.
