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More Links of the Day:

- Rochester’s David Cay Johnston, a tax expert who writes for Reuters, took on the Medley Centre project in a must-read column. He calls developer Scott Congel’s proposal to use sales tax incremental financing for mall construction a form of corporate socialism:

Nationwide state and local subsidies for corporations totaled more than $70 billion in 2010, as calculated by Professor Kenneth Thomasof the University of Missouri-St. Louis

In a country of 311 million, that’s $900 taken on average from each family of four in 2010.

(snip)

Subsidies for retail businesses are the worst kind of corporate welfare because, as the end of the economic chain, retailing grows only when population and incomes increase. If population or income falls, then subsidies for new projects like Congel’s damage existing businesses, where people would otherwise be spending their money.

(snip)

My due diligence shows that total inflation-adjusted income in Monroe County fell by $2.5 billion, or 13 percent, from 2000 to 2008, the latest data. With such a steep drop in incomes it seems unlikely that Medley Centre sales could grow 14-fold.

(snip)

Congel may never get $250 million of taxes, but if he does it will cost taxpayers whether they visit his mall or not, while weakening or destroying existing local businesses.

That’s how corporate socialism works — privatize gains, socialize losses and destroy competitors who do not get subsidies.

I am very much hoping Congel will come forward and discuss his plans in detail. We don’t even know what the project looks like right now, as it has expanded since first announced. He will have to make his case to the public. Until then, the public thinks it’s crazy.

Johnston’s column can be applied to so many taxpayer-financed projects in our area, including College Town, Xerox’s call center and the Greece Ridge mall renovation. It’s worth reading again and again.

- Wegmans is closing a Syracuse store, its smallest store in the chain.

- A University of Rochester researcher found a couple booze drinks a day – 14 drinks week – can be good for you. But if you drink 14 drinks in one weekend, you have problems.

- Rochester police want to know “Where the party at?” The city launched a campaign to get people to report house parties, which can be potentially dangerous. I’m not sure how I feel about this campaign. The lingo strikes me as condescending and almost mocking of youth.

– Attention journalism majors! My young friend Amanda Seef lost two jobs in the last year, despite being hard-working and passionate about the industry.

5 Responses to Corporate Socialism Explained

  1. Hmm. This post was well crafted until you ruined my weekend plans with the binge drinking link…..

  2. June 1, 2012 at 10:50 pm Lynn E responds:

    Medley Center has to go. We could use it as a beautiful park and make Irondequoit look attractive again. Right now it looks like an aging mess.

  3. June 1, 2012 at 11:07 pm Marci Wolcott responds:

    It is not the function of government to subsidize business. It abuses the taxpayers and distorts the marketplace. I own a small business and have not had any subsidies from the taxpayers, nor do I want any. In fact, owning a business means paying extra taxes, higher utility rates and so forth. Level the playing field and let corporations fund their own projects, just as small business owners do. All I want from my local neighborhood is their patronage and I work to earn that myself as well.

  4. After working in City Hall for 23 years, I am convinced that local governments should not be money-lenders, and it does not matter whether we are talking about loans or grants.

    There is often a misconception that if the federal government gives a municipality a grant for business or home improvements that it is free money. Nothing in life is free, and this includes grants, because the original source of this income is taxes paid by U.S. citizens.

    In an earlier post, there was discussion about the Sibley building. This was a perfect example of unwise use of public funds. If this funding had been provided by a bank, foreclosure against the building would have been implemented several years ago.

    Another perfect example of wasted grant money was the ill-conceived home improvement loans offered by the City of Rochester to residents around 20 years ago. Under this arrangement, 50% of a loan was forgiven if residency was maintained for 10 years, and then the remaining 50% became due. Approximately half of persons with this type of loan either defaulted on the remaining 50% or failed to meet the residency requirement and therefore had to pay most of the loan back (many persons in this category did not comply and I had to testify on behalf of the City in small claims court in attempt to collect the debts).

    I’m all for promoting residential and business growth in the Rochester area. However, after seeing default after default with grant money that originates from tax-payers, I am thoroughly convinced that lending should be left to the banks, as opposed to government entities.

  5. Take it from a life long Syracusan…

    NEVER TRUST A CONGEL

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