Buffalo Should Not be Minding Others’ Businesses
Tags: Buffalo, Byron Brown, Economy, fund, funding, jobs, stimulus
City Hall can’t run the economy properly. City Hall can barely run City Hall. Buffalo has not quite been dragged into financial utopia by its government; that’s especially seen in the folly of redistributing our money among companies of the bureaucracy’s choosing. But at least one politician has noticed that we’re not getting richer:
The city-run Buffalo Economic Renaissance Corporation or BERC has been around since 1978 helping start-up businesses. But, Buffalo Common Councilman Joe Golombek is introducing legislation to at least take a look at making big changes to the organization, even dissolving it.
It’s nice to hear, even if just for novelty’s sake. Those who live in Golombek’s district should vote for him; those who don’t should move within its boundaries. He’s saying what everyone knows: this area could gain so much if the city would lose its investment arm. It may feel risky to let citizens work the economy without assistance. But our leaders have to let go and give us the shot to grow up someday. Will promising to lug our futons out of the basement help?
As for the story itself, the BERC hasn’t helped despite the first-sentence claim. While it’s admirable of WGRZ to cover the representative’s effort, we can do without the shady “helping start-up businesses” part: the claim is as dubious as announcing that the stimulus has helped create or save jobs. That said, they do quote the councilman’s pithy summary of why we should value privacy:
“Having people that are currently entrepreneurs work with us and put together an entrepreneurial fund which they have in places like Cleveland and actually have entrepreneurs work with these people that want to open up a business and learn from their mistakes,” said Golombek.
The city should take one step further and strive to do nothing. Residents are already infuriated that wheelbarrows of cash have been delivered to disreputable enterprises like One Sunset. But Leonard Stokes tricking the city into buying the equivalent of Florida swampland or a prominent New York City bridge only displays the program’s most egregious flaw.
Aside from falling for obvious cons, the city’s government is still favoring certain businesses with communal fund. They’re determined to prove the warped maxim that you have to spend others’ money to possibly make money. The mayor at least concedes the approach needs improvement, which he’ll get right on once he’s done coming up with more innovatively classy ways to let his subordinates know they’ve been terminated:
“There are certainly more changes that will be made to improve the operation,” said Mayor Byron Brown (D-Buffalo).
The mayor says he’s open to some change in the system, but Golombek says the business people with development track records need to be in control.
If City Hall drones need proof of the veracity of Golombek’s words, they can look out the window and see a fantastic hotel in an ideal location on the verge of being mothballed. Letting the city tinker with the economy creates a literally empty feeling. It would be fun trying to find someone who honestly thinks the BERC has on the whole helped since 1978.
The present system of providing certain private enterprises with public funding is worse than doing nothing: if we were allowed to keep the money, we might, oh, spend it at retailers and eateries. That just might help the economy.
Golombek deserves a medal and a gift card for broaching the subject. He’s one of the few area officeholders who apparently gets that his job is not to directly manufacture other jobs. People are supposed to do that on their own; the municipality should have the sense and faith to stand aside while recognizing that we don’t need a shady bagman.
The other option is to let Brown continue to spearhead economic development. If voters find that notion distasteful, imagine how Golombek feels: he knows firsthand why giving City Hall any discretion will lead to financial ruin. After all, he’s one of the poor souls who has to work with the mayor. If you’re religious, ask your deity that he be blessed with patience.
Anthony Bialy is a freelance writer and “Red Eye” Conservative in Western New York. He also blogs at Smart Girl Nation. Follow Anthony on Twitter.
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The less gov’t involved in entrepreneurship the better…
We must move away from firm-specific property tax abatements and subsidized lending capital (the current BERC and Empire Zone model), because neither tool creates jobs. These tools may nominally improve the valuation of a given investment, but that slightly improved valuation will not translate to job creation (which must remain the focus of our region’s economic development apparatus).
A venture capital fund, on the other hand, can be used to rapidly capitalize promising start ups in high growth industries, which will allow for the aggressive cultivation of high-growth firms that are endogenous to Buffalo. Unlike the BERC model, a venture capital fund would be a catalytic tool that would directly translate to job creation and industrial development.
While the BERC model is cash flow negative in the long run, a well managed venture capital fund has the potential to generate significant earnings from the appreciation of the fund’s equity holdings which can be reinvested in the development fund. In the long term, this can generate significant sums of wealth for taxpayers while robustly creating new firms and more jobs.
Perhaps most importantly, the venture capital fund is a tool that is relevant in industrial development. Unfortunately, BERC’s tools are ineffective beyond nominally assisting low-growth retail and restaurant enterprises which are typically low-wage.
This would be an enormous step forward, and would be a far more sophisticated approach to “jobs-oriented” economic development.