OP-ED | Big Ideas Are Needed to Grow the Economy and Solve the Budget Mess
by Barth Keck | Jun 9, 2017 5:29am
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Posted to: Analysis, Business, Economic Development, Workforce Development, The Economy, Energy Sector, Technology sector, Manufacturing Sector, Jobs, State Budget, Danbury, Torrington
The recent economic news in Connecticut is Dickensian.
On the one hand, it’s the best of times: “The formal opening [on June 2] of the $60 million refurbished United Technologies Corp. research center handed Gov. Dannel P. Malloy a much-needed opportunity to celebrate some good news.”
On the other hand, it’s the worst of times: “An Aetna spokesman said [on May 31] the company is in ‘negotiations with several states regarding a headquarters relocation with the goal of broadening our access to innovation and the talent that will fill knowledge economy-type positions.’”
Mostly, however, it’s the worst of times: “While the health of the state’s economy has improved in the past half-decade, its rebound looks feeble compared with many other states. Since the end of the national recession, Connecticut has increased its number of jobs by about 4 percent, according to federal Bureau of Labor Statistics. That ranks 45th among all states, ahead of only Louisiana, New Mexico, Maine, West Virginia, and Wyoming.”
That’s not good news for a state facing a budget deficit of $5.1 billion and whose Republican and Democratic legislators are bickering over solutions ranging from adding highway tolls to taxing hedge funds and soft drinks.
Regrettably, these are short-term, stop-gap measures. The real solutions to Connecticut’s budget problems are long-term strategies that build the state’s economy, which means adding jobs — real jobs.
Connecticut should place its efforts on “high-paying jobs and nothing else,” said Fred Carstensen, director of the Connecticut Center for Economic Analysis at UConn. The finance professor explained in an email response to my questions that “low-paying jobs create costs for public services larger than the taxes they generate. Never retail; focus on IT, bioscience, and advanced manufacturing.”
Carstensen was particularly critical of DEEP’s rejection in December of a fuel-cell proposal to power a state-of-the-art data facility in New Britain, opting instead for solar and wind.
“That decision by the state Department of Energy and Environmental Protection was perhaps the most maddening stumbling block for the industry because it made sense only narrowly, based on per-kilowatt-hour bids,” wrote the Hartford Courant’s Dan Haar. “It ignored the big picture of the state’s struggling economy or the hidden costs, and risks, of solar and wind power.”
Moreover, real jobs were at stake — and were lost.
“At Danbury-based FuelCell Energy, the sting was especially sharp, and contributed to a round of layoffs,” added Haar. “FuelCell had already started construction to more than double the size of its main factory in Torrington. It aimed toward boosting Connecticut employment from 550 people to nearly 900 in five years.”
That won’t happen now because wind and solar, while an inexpensive option for homeowners and businesses, is “not the bargain it seems for ‘grid-scale’ projects — especially if the difference was fractions of pennies per kilowatt-hour.”
Classic small thinking — like taxing soda tomorrow to balance the budget today. What’s needed are big ideas that grow the economy — ideas like those seen just to our north.
“Massachusetts made a huge investment in a state-of-the-art, high-performance computing center to support MIT, Harvard, UMass, and Northeastern,” said Carstensen. “It has been very alert to how the global competitive environment has changed and has pushed especially to have high-end IT infrastructure. That has created thousands of jobs, made Harvard and MIT much stronger as research institutions, and helped attract companies like GE that understand the importance of Big Data and the Internet of Things.”
Additionally, “there should be a major effort to build a world-class aerospace engineering program at UConn,” added the professor, “and, insofar as possible, engage Yale as well. But we don’t see any of that kind of thinking. It is all bilateral, one-off efforts without any unifying strategy.”
Big ideas, indeed, as outlined in the 2010 report by the CCEA, “Driving Recovery: 2020 Vision for Connecticut”,
including the use of stranded tax credits — “unused tax credits earned while spending on research and development” — to fund major capital projects.
“There are $2 billion in stranded credits, perhaps more,” said Carstensen. “Each billion used to support a major capital project generates 35,000 to 45,000 net new permanent jobs.”
Big ideas, big jobs. The best formula for eliminating “the worst of times” in Connecticut.
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