Fred V. Carstensen, director of the University of Connecticut's Center for Economic Analysis, gives his view of the need for economic incentives for projects like Cabela's and Rentschler Field.
The state Department of Economic and Community Development did an analysis of the benefits of Cabela's proposed development. Its analysis found strong confirmation in two separate, transparent studies.
The Connecticut Center for Economic Analysis, of which I am director, as part of a comprehensive analysis of the long-term economic impact of the entire Rentschler Field development, projected the likely economic benefits that Cabela's would generate. Global-Insight, a major consulting firm, then did a much more detailed assessment of Cabela's impacts. That report used detailed industry data to evaluate the reliability of Cabela's own projections and claims.
In the case of Cabela's, the hard numbers in all studies show a substantial benefit flowing to the Hartford region and the state.
Another consideration is whether the form of public funding comes with appropriate controls, preventing a recipient from receiving funding without delivering benefits. In this instance, the form of funding for Cabela's comes through tax increment financing. It is a most disciplined form of public support, because the funding flows only after the benefits - job creation, new economic activity - have arrived. Unlike some forms of public funding, this is difficult for firms to abuse.
A final consideration is whether a particular project facilitates achievement of larger policy objectives. Connecticut is struggling mightily with sprawl, a process eating up its open space at a prodigious pace, pulling housing and jobs away from its urban cores, and diminishing its quality of life. Connecticut is also struggling to attract new, high-paying jobs to sustain its economic vitality.
The comprehensive plan for Rentschler Field envisions an organic, live-work community, with a business focus on research and development of leading-edge technologies. Cabela's is the retail centerpiece for the mixed-use development, one that both fulfills the objectives of "Smart Growth" and quality job creation. Seen from this perspective, and given both the positive numbers and the form of financing, attracting Cabela's with the help of public funding to the Rentschler Field redevelopment makes good sense.
- Fred V. Carstensen, director of the University of Connecticut's Center for Economic Analysis
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Greg LeRoy, author of "The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Jobs Creation," says the assistance is just another form of corporate welfare that has to be stopped.
Subsidizing big-box retail is usually a poor investment and unfair to local merchants.
Cabela's is the nation's No. 1 outdoor sporting goods retailer, and Bass Pro is No. 2 in what is still a highly fragmented market. Combined, the two chains have been promised well over a half-billion in state and local economic development subsidies as they rapidly build new stores to grab market share from smaller competitors.
But why do two mega-chains deserve taxpayer subsidies to take sales away from locally owned retailers? You and I do not have more money for fly rods just because we have more places to buy them. America is already grossly overbuilt with retail space, including hundreds of dead malls, euphemistically called "greyfields," and empty big-box "ghostboxes." Why on earth should we subsidize more?
Big-box retail does not boost a local economy, but rather drains it. As Stacy Mitchell explains in her terrific new book, "Big-Box Swindle," when we allow chains to undermine local retail businesses, we also undermine American factory jobs, local business linkages, civic participation and entrepreneurial capacity. Locally owned businesses buy more, reinvest more, donate more and participate more in the community than big-box chains.
Besides, retail is a poor bang for the economic development buck. As input-output models used by development agencies demonstrate, retailing packs a poor bang for the buck compared to most other sectors. That's because most of the "upstream" jobs manufacturing retail goods are overseas, where chains have often driven them. And retail's "downstream" ripple effects are paltry because store jobs are mostly part-time and low-wage.
Finally, there is the market saturation issue. Cabela's may claim an East Hartford store will draw tourist dollars and tax revenue, but what happens when the two mega-chains build out? "We see a world out there where every major market in the United States will have a Cabela's store," the company's CFO told the Omaha World-Herald. Cabela's already has 17 stores open and 11 more slated; Bass Pro has 33 stores open and 23 more planned. Why would anyone drive a long distance to East Hartford if they have another store nearby?
-Greg LeRoy, author of "The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Jobs Creation" |
