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Wednesday, 08 February 2012 21:15

Counties don’t need to be in the banking business

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In this country built on capitalism, it’s a constant source of antagonism among politicians and citizens. I’m talking about the intersection of government aid to private businesses, and when is too little and when is too much.

Jackson County has had a poor record of success in this arena. It has a revolving loan fund that lends money to private businesses that the county thinks can create valuable jobs. County leaders have helped nine businesses over the last 18 years, and seven of them are out of business. Five of those that went out of business still owe the county money, dollars that likely won’t be repaid. Two of those still doing business owe the county money, and two who went out of business had paid in full prior to closing their doors.

There are two loans pending: one to the prospective new owners of AM radio station WRGC and one to Jackson Paper.

Critics say the money was given out with too few parameters. Supporters, like Jackson County Commissioner Joe Cowan — the longest serving commissioner on the board — say the whole plan was job creation at any price.

“The whole purpose was to create jobs,” Cowan said. “Whether you made money, you didn’t, or even if you lost a little.”

Now Macon County is considering using taxpayer money to create its own revolving loan pool, wanting to help entrepreneurs gain footing in today’s tough economy. And so those leaders too — if they go this route — will face hard questions in deciding who to help, and why, and for how much. But what the heck, it’s a tough economy and businesses need help, right?

Today, everything is about the tough economy, or so it seems. Interstate 40 closed due to rockslide, how will it affect the economy? No snow in the mountains this winter, how will it affect the economy? New trail plan released by forest service, how will it affect the economy? Macon County considers land-use regulations, how will it affect the economy?

Last week I had an email dialogue with an old friend who has strong opinions about the automobile industry bailout and whether the government should have gotten involved or just them go through bankruptcy. Two weeks ago a Charlotte Observer article called into question training programs at North Carolina’s community colleges that are geared specifically for industries, industries who might just up and leave the state as their business fortunes change. Remember Dell Computers, which shut down five years after getting millions in tax breaks and incentives, including millions in worker training programs paid for by North Carolina taxpayers?

All governments are in the business of taking our money and spending it. Or, looked at from the other side of the coin, all of us are voluntary members of a society in which we agree — through who we elect — to hand over a certain amount of our earnings in order to receive certain benefits.

This is where political ideology gets into the mix. Wall Street bailout or auto industry bailout? Which suits your idea of where the government ought to get involved?

At the local level, it seems support for helping out the private sector cuts across party lines. Both Democrats and Republicans at the county level defend their revolving loan program even though on paper it seems a dismal failure.

It’s the entrepreneur in me that has a hard time swallowing government aid to businesses of any type, whether it’s a direct loan or a recruitment incentive. That’s because I can walk out my door, look up and down Church Street, and then take a few steps and do the same on Main Street and see dozens of small businesses who could easily take a low-interest $100,000 loan and turn it into several new jobs that would lead to increase revenues for that business.

That would increase local consumer spending, put money into the state and federal government pipeline through payroll taxes, and help those businesses succeed and thereby boost the local economy.

But those businesses up and down Main Stret won’t get that money. It will  go to some unproven entrepreneur who may or may not succeed. So I don’t support local government loans to small businesses. As Jackson’s track record shows, these leaders aren’t equipped to determine who should get these loans, and in the end the process just smacks of favoritism.

(Scott McLeod can be reached  at This email address is being protected from spambots. You need JavaScript enabled to view it. .)

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