If you want to play word association with a Republican, say “Solyndra”. Most likely, you will hear the response “crony capitalism”. If you allow the conversation to expand, you’ll likely hear that in a free market economy the government shouldn’t pick winners and losers.
And then you can bring that conversation home to Georgia. Except you can change the word “Solyndra” to “Invest Georgia Fund” and the answer you will hear will be “economic development” or as it is commonly abbreviated around here, “Jobs!”. It is amazing how quickly the perspective changes when the party proposing to direct taxpayer dollars into the capitalistic pursuit of unproven technology also changes.
Last week a bill to establish a seed-capital fund to provide venture capital for emerging Georgia technology companies was proposed in the Georgia House of Representatives. HB 285 proposes to set up an independent board to direct funds to companies in technological areas for “the establishment and growth of innovative enterprises that create new, value added products, processes and services and encourage growth and diversification in the economy of the state.”
Worthy goals indeed. And the bill’s sponsors are well intentioned people, seeking to replicate in Georgia what has been done in other states. And yet, the question must be first asked (as it should be before any new government program is created or initiative undertaken) is this something government should be doing?
The fact of the matter is that venture capital is an industry that already exists and is available to Georgia companies. The thought that the state will create a government owned entity to replicate what already exists in the private sector is but one of the first causes of concern.
The Invest Georgia Fund is to be managed by an unpaid, “independent” board appointed by the Governor, Lieutenant Governor, and Speaker of the House. For those who believe that these boards can be truly independent, try another word association. Ask any sponsor of this bill to change “independent board” to “independent redistricting commission” and then ask their definition of independence. They will likely tell you there is no such thing.
If that doesn’t work, then ask the governor’s Deputy Chief of Staff about the role of Governor’s appointees on independent boards. If he needs help answering, refer him back to those that lost their appointments when they disagreed with this Governor. These are called “teachable moments”, so it is important we learn what “independent” really means from them.
There was a time when pro-business conservatives sought to create level playing fields with broad low tax rates and minimal government interference from regulation so that market forces could choose winners and losers. That time appears to have been when they were the minority party in this state.
Last year’s tax reform package was little more than a laundry list of picked winners that included electricity producers, manufacturers, big box retailers, and car dealers. Winners in this state’s business environment seem to be directly correlated to the amount of fees paid to the right lobbyists.
Given the environment of patronage and legislation for hire in this state, it is difficult to imagine any current system that would be truly independent or free from political influence.
There also remains the deficit of trust in government and the elected officials over ethical dealings at the capitol. Adding an insiders’ fund of capital before ethics problems are fixed at the capitol seems less than prudent.
The state has many roles in which it can properly address economic development. Improving education and maintaining acceptable infrastructure should be chief among those roles. Creating a board of political appointees to replicate activities currently available from the private sector should be significantly lower on that list – if at all.