Human Behavior

There is definitely no logic to human behavior.

Bribing big business

icon_perdue2.jpgKudos to Carrie Teegardin for an excellent article in the Journal-Constitution detailing the state’s offer of $96 million to persuade NCR to relocate its corporate headquarters to Gwinnett County and open a manufacturing plant in Columbus.


State economic development officials dissembled last week when asked by reporters about the size of the financial package being promised to NCR.  They claimed the incentives package was worth a little more than $60 million.  Thanks, Carrie, for exposing that particular falsehood.

This is yet another example of the Perdue administration’s approach to bringing new jobs to Georgia:  you offer CEOs what amounts to a legal bribe, with the taxpayers – that’s you and me, bub – picking up the tab for this corporate largesse.

NCR’s move to Georgia will create an estimated 2,000 jobs (unless state officials are fudging about that also).  Since we’re bribing them with $96 million, that breaks down to about $48,000 per job.

Of course, that’s small potatoes compared to what Perdue threw at Kia automotive officials back in 2006.

Kia announced in March of that year it would build an auto plant on a site in the West Point area that would employ 2,500 people after Perdue offered the automaker a package of financial incentives worth $410 million, which averaged out to an unprecedented $164,000 per job.

Perdue’s generosity toward the Korean industrial giant constituted massive hypocrisy on his part.  After he was elected governor in 2002, one of the unresolved issues he had to deal with was the finalization of an agreement between the state and the company then known as DaimlerChrysler for the location of an auto assembly plant on a state-owned site in Chatham County.

Outgoing governor Roy Barnes had put together a package of financial incentives to persuade the German-American automaker to open a factory that would employ 3,400 people.  Shortly before he was sworn in as governor, Perdue was given the details of the Barnes package:  it was worth $320 million, which amounted to about $96,000 per job.

“When Sonny read the secret details of the contract, his jaw hit the floor,” Perdue’s spokesman, Dan McLagan, said later.  “However, the state had made a commitment. All we could do was honor it while muttering under our breath, ‘Never again, never again.'”

“Never again,” as it turned out, didn’t really mean never again.  It meant “never again until I’m so desperate to announce an auto plant that I’ll throw a car load of cash at them.”

DaimlerChrysler, you see, reversed its earlier decision to locate in Chatham County, one of the most embarrassing foulups of the early Perdue administration.  In early 2006, with a reelection race looming that fall, Perdue was exceedingly anxious to show some kind of accomplishment to the voters.  Thus, the dumping of huge amounts of taxpayer funds into the laps of Korean auto executives (several of whom were the target of criminal investigations back in their home country).

So here’s the scoreboard:  according to Perdue, Barnes was a profligate spender because he offered a German-American automaker a $320 million incentive package.  But there was absolutely nothing wrong with Perdue giving a Korean firm $410 million worth of taxpayer-financed incentives.

Yeah, that makes a lot of sense to me too.

Here’s the punch line to the joke:  more than three years after being promised all that money by state officials, Kia has yet to roll a single vehicle off the assembly line at that Troup County plant.  I’m skeptical that the factory will ever go into production.  With a worldwide recession that has reduced vehicle sales by about five million units a year in the U.S., does anyone really think that a bunch of bottom-line-oriented executives are going to open a new plant that adds to that glut of inventory?  Me neither.

The Kia and NCR projects combined are costing the state a little more than $500 million.  There have been some smaller projects announced by Perdue over the years, so you can figure the state has spent somewhere between $500 million and $1 billion on this legalized bribery during the Perdue administration.  (To be fair here, Roy Barnes was equally misguided when he promised $320 million to DaimlerChrysler.)

What might have happened if those financial incentives had not been paid and the money instead had been used for such purposes as improving the state’s transportation infrastructure or enhancing state funding for public education?  

The money Perdue threw at corporate executives amounted to almost half of the $2 billion he has cut in state funding for K-12 education.  If we had spent the money on schools, we might have a better educated workforce that would be more attractive to a wider array of companies – more than the few who hit the taxpayers’ jackpot with Perdue.

But of course, if you spend the state’s money on luxuries like roads, education and healthcare, you won’t have any left to hand out to your CEO colleagues.  We certainly can’t have that.

Tags: economic development , financial incentives , Kia , NCR , Sonny Perdue

2 Comments

  1. CatherineAtlanta
    Posted June 10, 2009 at 2:13 pm | Permalink

    This story has been really bugging me. As a small business owner it really irks me that all these giveaways go to the giant corporations when it’s the small businesses in this country and keep the economic engine humming along.

    The AJC article was really good. This little tidbit really struck me:

    “But the big money in the incentive package will come to NCR when it deducts payroll taxes from its workers’ paychecks — and then keeps the money instead of forwarding it to the state Department of Revenue.”

    I mean, seriously, WTF?

  2. Tim
    Posted June 10, 2009 at 3:23 pm | Permalink

    heaven forbid this Christian man actually work on something of substance like making our public schools better and safer, bringing low-cost health insurance to those in need, and doing something about the traffic gridlock.

    I’ll be so frakkin happy when Sonny is gone from office!

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