By Marc Kilmer
While the state budget impasse remains unresolved, legislative leaders are fighting over which government programs to cut. Unfortunately, one area of state spending seems sacrosanct — corporate welfare. As long as state politicians continue to lavish money on ineffective programs like the Third Frontier or the Department of Development instead of working on real reforms to promote economic growth, Ohio’s unemployed will continue to find little relief.
With a deficit of $853 million, it seems a strange time for state policymakers to be proposing to borrow $1 billion to spend on corporate welfare. Yet this, along with Governor Ted Strickland’s recent executive order to refinance the Ohio Venture Capital Program, shows that Ohio’s politicians have learned little about job creation.
Politicians support these programs because they think they provide jobs. This reflects a mindset that is all too prevalent among those who work in Columbus (or Washington, D.C.) — an inflated view of how much the government affects the economy. Instead of viewing job creation and economic growth as the result of the daily interactions of business owners, workers, and consumers, too many politicians see it as a top-down process that can be heavily influenced by government programs.
The constant talk of the jobs “created” by the government is a symptom of this peculiar mindset. The Obama Administration, for instance, claimed its stimulus plan would create or save 3.5 million jobs. As Buckeye Institute fellow Sam Staley wrote about in a recent National Review article, though, this estimate was entirely lacking in credibility. As he pointed out, the Obama Administration estimated Ohio’s Sixth Congressional District would benefit from 7,200 stimulus jobs. Between 2001 and 2007, the area had only seen 3,500 real jobs created. It strains one’s imagination to think the stimulus bill would double the job growth occurring during the national economic boom.
In early November the Obama Administration said that 640,000 jobs had already been created or saved by the stimulus. Of course, as this claim was investigated it quickly became apparent that this was just wishful thinking. Lynn Walsh of the Buckeye Institute pointed out that many of the jobs in Ohio were created or saved in Congressional districts that didn’t even exist. The Columbus Dispatch noted that many of the education jobs claimed to be “saved” by the stimulus weren’t in danger. Other news organizations around the nation also found that local job creation claims were just as bogus.
At the state level, supporters of extending the Third Frontier program tout the 40,000 jobs it has allegedly created. While this number comes from a consulting firm and is on firmer ground than the Obama job creation numbers, it too is suspect. To truly gauge the impact of this program on employment, the analysis should determine whether these jobs would have been created without government spending. It also needs to take into account the jobs destroyed by government taking this money out of the economy through taxes and borrowing.
While Ohio politicians have been relying on the Third Frontier, the Department of Development, and other government agencies to create jobs, the state’s economy has declined. Even before the current recession, Ohio’s job growth lagged behind the national average. Where is the evidence that the top-down, corporate welfare mentality so popular in Columbus has worked?
Instead of expanding state debt and wasting more money on the Department of Development, state policymakers should enact an economic growth platform of tax reduction, ending mandatory unionization, eliminating the prevailing wage law, and cutting state bureaucracy. Ohio will once again be an economic powerhouse when its politicians recognize that the only effective government job creation program comes from creating an environment for individuals to start businesses, employ workers, and grow the economy.
Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.
