The column I wrote earlier this week about GE's $90,000 in political contributions to the New York State Democratic Party's housekeeping account in the months before Governor Cuomo announced a silicon carbide fabrication facility in Albany that would benefit GE with a portion of a $135 million taxpayer subsidy has gotten some resonance on the web. Daily News columnist Bill Hammond tweeted it, as did NY1 anchor Errol Louis. Cafe Hayek picked it up, as did the Empire Center, in a wonderful blog post that concluded with a quote from a wonderful dissent by Judge Robert S. Smith (father of Buzzfeed editor Ben Smith) in the 2011 case Bordeleau v. State of New York:
It is an illusion—one that seems to have the persistence of original sin—that prosperity can be attained by taking money from taxpayers and handing it to favored businesses. A recent article restates well-established economic doctrine: "The idea of government intervention to influence the composition of a country's output has long been derided by economists for breeding inefficiency, reducing competition, encouraging lobbying and{**18 NY3d at 323} saddling countries with factories producing products nobody wants" (Tinker, tailor, Economist, Oct. 1, 2011, available at http://www.economist.com/node/21530958 [last visited Nov. 9, 2011]).
The New York Legislature's devotion to this self-destructive practice is no small matter. Among the expenditures at issue in this case is one described by the State as a commitment of "$140 million to support the construction of a wafer packaging facility and continued research and development efforts" to a joint venture of which International Business Machines Corporation is a member. This expenditure, it is said, will "result in the creation of at least 675 jobs" and the "retention" of 1,400 others. That works out to roughly $60,000 of state money per job. Another is an expenditure of $300 million to help an "international consortium of semiconductor manufacturers" expand a research and development program. This, we are told, will result in the creation of 450 jobs and the saving of 250 others: more than $400,000 per job. And the brief of defendant Globalfoundries U.S., Inc. discloses that the Legislature has appropriated $650 million to subsidize that company's semiconductor manufacturing (an appropriation distinct, as far as I can tell, from the $300 million semiconductor subsidy described by the State). Globalfoundries says that its manufacturing facility "is expected to employ more [*12]than 1,500 people, with an additional 5,000 jobs created by supplier firms"—implying a cost to the State of roughly $100,000 per job.
I seem to remember a time when IBM could make money by selling its products for more than it cost to produce them. I would have thought semiconductor manufacturers could do the same. If they cannot, a bailout for their shareholders is not a prudent use of more than a billion dollars in taxpayer funds.
Of course, the New York Legislature, so long as it stays within constitutional limits, is free to disregard both received economic teachings and common sense. I have defended before, and will no doubt defend again, the right of elected legislators to commit folly if they choose. But when our Legislature commits the precise folly that a provision of our Constitution was written to prevent, and this Court responds by judicially repealing the constitutional provision, I think I am entitled to be annoyed.{**18 NY3d at 324}
The Reason version of the column has been shared on Facebook 530 times as of this writing, which is pretty healthy.
Why hasn't the story traveled even further? I was puzzling over the matter the other day and then into my inbox popped Mike Allen's Politico Playbook with a link to a video about the Future of News using, unexplained, the hashtag #pressing. It turns out GE is deep into a content sponsorship deal with Vox, Politico, the Atlantic and Slate. Maybe some outlets that are part of GE's #pressing sponsorship campaign will demonstrate that the sponsorship has no effect on editorial content by picking up the story of the GE subsidy and campaign contributions, but so far none has.
It's certainly possible that the story doesn't meet the news threshold even absent the corporate sponsorship, or that the editors at those outlets were unaware of the story, so didn't have a chance to pass judgment on it. But one problem with these sorts of deals, which go beyond traditional advertising, is that they leave readers in doubt about such matters.
