Published Thursday 12 January 2017 by Peter Burrows – email@example.com
Crony capitalism is when the government favors private industry with subsidies or non-cash help such as import quotas, tariffs, etc. It is not something confined to Washington, D.C., where examples abound, some quite outrageous. Who, for example, do you think is the biggest beneficiary of the subsidies given to windmill operators? None other than mega-billionaire Warren Buffet, longtime Democrat.
Piker stuff compared New Mexico’s Spaceport America, perhaps the dumbest crony capitalist deal of all time. You’re thinking, “What do you mean Burro? The Spaceport was ‘only’ $250 million or so. How is that so bad compared to, for example, the solar panel company Solyndra that cost U.S. taxpayers over $500 million?”
Solyndra? Ha! Chump change on a per capita basis. At $125 for every New Mexican, a national boondoggle comparable to the Spaceport would be $40 billion. Add in the fact of New Mexico’s relative poverty, and I bet a comparable D.C. boondoggle would be over $50 billion.
The Spaceport saga started back in 2004 when Democrat Governor Bill Richardson met with British multi-billionaire Richard Branson and agreed to build a spaceport, at New Mexico’s expense, so billionaire Branson could play Buck Rogers and have a place from which to launch “space tourists” into suborbital flight. Flights were supposed to start as early as 2009, with hundreds of thousands of tourist gawkers coming to inundate us with their money.
In addition to the hundreds if not thousands of jobs that the Spaceport would create, New Mexico’s grade-schoolers and high-schoolers would be inspired to take science classes, study math, and learn how to use slide rules. (OK, I made that last one up.) When a government spending proposal has as one of its justifications that it will be good for our children, you can be sure — YOU CAN BE SURE — that it doesn’t make economic sense.
Now it’s 2017 and nothing has happened and nothing will ever happen. Branson’s test spaceship crashed on Oct. 31, 2014, from an altitude of 70,000 feet, delaying indefinitely a commercial launch. Note that 70,000 feet is only about 25 percent of the target altitude of 60 miles. Also, the 66-year-old Branson almost killed himself recently in a high speed bicycle crash.
This brings up an embarrassing detail: The contract between New Mexico and Branson’s company, Virgin Galactic, has no clauses that protect New Mexico from adverse events. An example of such a clause: If Richard Branson were to suffer an untimely death prior to the commencement of commercial operations, New Mexico would receive the proceeds of a “key man” insurance policy of $200 million, or something like that. Another example: If commercial flights did not start before 2015, New Mexico could demand payment for the cost of the Spaceport, in full, from Virgin Galactic.
I will hazard an unscientific guess that ninety-nine percent of private sector entrepreneurs would include such clauses, and ninety-nine percent of government sector “entrepreneurs” wouldn’t have a clue.
Why, why, would a poor state like New Mexico agree to build a $200+ million facility for a foreign multi-billionaire? One answer is that it is easy to be a visionary with other peoples’ money, when you have NO PERSONAL RESPONSIBILITY if the project fails.
Governor Richardson had nothing to lose by building the Spaceport. It was a “heads he wins, tails we lose” proposition. If the Spaceport lived up to expectations, Richardson would be remembered as a great, visionary governor. If the Spaceport became a huge failure, as it is in fact becoming, that would be a long way down the road and it’s the taxpayers who’d get stiffed. Big Bill? Who’s he?
The really big bill is the one we taxpayers are footing. The very least we should demand in return is that the white elephant be renamed. “Spaceport America” is pretentious, risible, and embarrassing. Somebody should suggest to Governor Martinez that she issue an executive order renaming it ” The Bill Richardson Spaceport.” Maybe she can’t do that, but it would be interesting to see what response she would get if she tried.
In fairness, Democrat Richardson had plenty of Republicans backing the Spaceport. Republican Dianne Hamilton, longtime State Representative for District 38, was one of them. Also, then-Chairman of the Dona Ana County Republican Party, Sid Goddard, wrote a long letter to the Sun-News urging Dona Ana voters to vote for an additional tax to help build the spaceport. Bernie Sanders could have written it.
More recently, at a meeting discussing the state’s budget shortfall, I suggested to Republican State Representative John Zimmerman, District 39, that the state consider selling the spaceport, or even giving it away. Oh, no. The spaceport needed “only” a million dollars of support this year. Silly me. Only a million. I notice Zimmerman lost his reelection bid.
Here in Silver City, we’re no better than the state pols. Back in 2011 a “quality of life” bond was passed that approved, amongst other projects, a half million dollars to build a clubhouse out at the golf course, sold as a necessity to attract people who deemed a nice golf course essential to their life styles, e.g. retirees and WNMU executives.
Well, the clubhouse was finished just as the private group leasing the course threw in the towel. Thankfully, Western New Mexico University stepped in to run the course so that now the losses are spread over the entire state, not just Silver City.
In 2013, Grant County proposed a quality of life bond, totaling $10 million, which as I recall, included over $2 million to build a multiplex theater and then lease it to a private operator. This idea was strongly supported by a couple of prominent Republicans and at least one outspoken business owner.
My Progressive friend Lynda Aiman-Smith wrote an excellent analysis of Deming’s experience with a similar project that turned into a huge white elephant, supported to this day with taxpayer dollars. Her conclusion: “The Deming Starmax multiplex is a case example of terrible judgment and terrible use of taxpayer money.” She strongly recommended against such a project in Grant County and also recommended a NO vote on the bond.
Think about it. If a multiplex movie theater made economic sense here in Silver City, investors wouldn’t need to have public financing. THEY WOULD USE THEIR OWN MONEY. Too many elected officials think that THEY can and should use the public’s money to make such investments because private investors obviously lack the necessary “vision.” Investment geniuses aren’t born, you see, they’re elected.
There is hope: The bond referendum lost two-to-one.