If at first you don’t succeed, try, try again. That might be the motto of the New York City Economic Development Corporation which recently announced an incentive program to pump more public monies into the city’s financial sector. Exact dollar figures aren’t clear but news reports suggest the plan could pump $45 million from the city, state and federal governments along with private foundations into programs for unemployed Wall Street-types.
Among the 11 initiatives laid out last week are plans to create an “Angel Fund” to help harvest venture capital dollars in small start-up firms and a “crash course” training program starting next month for entrepreneurs to develop business strategies. These proposals seem to be moving forward to the chagrin and suspicion of some.
Public investment in small companies is nothing new, but this news struck a cord for two reasons. Our city and state budget is living history of what happens when one industry dominates the economy and hits a snag or collapses; the impact is paralyzing. Second, the return thus far on gambling with tax incentives on Wall Street hasn’t paid off on the jobs we’ve been promised.
No one expects the city to ignore the needs of those who lost their Wall Street jobs but this group is better equipped than most with its educational background and work experience to reinvent itself. Shouldn’t the city be helping unemployed New Yorkers without the Ivy League MBA? How about the laid off cook or manufacturer who wants to learn how to access capital funds or participate in a business development program? Already the majority of funds from the city’s Economic Development Corporation go to commercial interests including its recent obsession with baseball stadiums. So we argue it’s time to stop putting all the tax-break eggs in one basket.
Last week’s proposal mimics plans put in place after the attacks of September 11, 2001; shore up the financial industry even if working families and small businesses were impacted more and expect the benefits to trickle down. Cash grants and tax-free bonds mostly went to large firms (think Goldman Sachs, American Express, Deloitte & Touche) and to build luxury housing. These plans did wonders for developers, landlords and bond attorneys at the expense of everyone else, especially residents and firms in Chinatown.
Before another incentive program is created, EDC needs to engage with its colleagues in city government whose directive it is help small businesses, (Department of Small Businesses Services, Mayor’s Office of Industrial and Manufacturing Businesses, for example) and those outside of government like the New York Industrial Retention Network and come up with a plan that mitigates the silos of economic development subsidies to benefit the city’s numerous business sectors.