Here’s my theory on why towns and cities fail: At the first sign of decline, as the tax base begins to shrink, and as these cities increasingly become wards of their respective states, the truly intelligent and productive people that grew up there leave as soon as they can. Most of the time, they have little choice as better opportunities lie elsewhere. Those with lesser abilities, lower ambitions, and fewer opportunities stay behind to muddle along. They advance or get elected to positions, establishing connections with others in this mediocrity that allow them to develop a power base, and they run the show with a combination of chronic ignorance, grim determination, and cynical ineptitude.
In other words, show me a municipality going absolutely nowhere, and I’ll show you a city hall run by dopes.
Granted, properly managing anything of any significant size poses a challenge for just about anyone, but you can really test the mettle of someone by their response to a crisis. In the Northeast, cities have faced this crisis of decline for sixty years -- this is no secret. Some have rebounded. Most others have not.
New London, Connecticut has fallen into the latter category. Despite its spectacular waterfront location, it’s rail-fed port, and its long, proud maritime history, the city ranks as one of the poorest in New England and suffers from higher crime than most.
In the late 1990s, the city with help from the state of Connecticut convinced Pfizer Incorporated to build a brand new research facility on the riverfront and reclaim long-dormant industrial area. To seal the deal, New London gave a corporation that made $48.3 billion in 2008, a substantial property tax break, requiring it to pay only one-fifth of the normal tax levy for ten years.
Ten years later, guess what? Pfizer announces that it will close the facility and take its 1400 jobs with it across the river to Groton and elsewhere.
Adding insult to injury, Pfizer figured prominently in a national eminent domain controversy when the Supreme Court ruled 5-4 in favor of New London’s plan to condemn an entire adjacent neighborhood, allowing private developers to build a new commercial district primarily for the use of Pfizer employees. The case known as Kelo vs. New London brought to fore a practice going on since Robert Moses wielded his block-busting meat-axe upon the urban fabric of post-war New York City and beyond. Back then, it was said that if he desired, Moses could “take Gimbels and give it to Macy’s.”
There are a lot of bad guys in this story, and I can hardly tell who wears the blackest hat. Is it Pfizer, that despite its ability to generate obscenely large profits from drugs such as Lipitor and Viagra, needed to save less than one percent of its total earnings by moving its personnel from a government subsidized facility? Is it the Supreme Court that upheld — in my opinion — a brazenly unconstitutional practice used against homeowners? Or is it the New London city officials so desperate for development they’d stoop so low as to effectively prostitute themselves to their corporate drug overlord?
When I lived in Worcester, Massachusetts, I witnessed the city engage in this practice all the time, albeit in a much more limited fashion. I see it in Philadelphia as well. They call it providing “tax abatements,” where the city gets so hot to have a particular company or industry relocate, they roll out the red carpet and open the treasury. Sometimes it gets downright obscene. Just before I moved away, Worcester proposed to sell a centrally located piece of real estate across from the newly restored, palatial train station for one dollar to the Comfort Inn chain. City Hall regularly slashed the property tax rate for all kinds of other companies upon the whiff of a rumor that they might move away.
What often happened, of course, was that the company shut down or moved away anyway, usually as the abatement period expired. Did the city gain anything in the long run? Other than the everlasting ire of the businesses and people that did not get the break, no, not really.
This is what happens when your community is run by dopes — people who do not understand the value of what they have or its potential, nor do they have any clue for what makes a city attractive to business and residents alike.
Abatements are essentially an admission by city officials that their rates are too high, but if they like you, they’ll give you a break. City Hall fails to understand that providing anything beyond basic services to these businesses, such as police, fire, and street maintenance sends a signal to the business that your town has a prostitute’s mindset, willing to submit to just about any indignation for money, which only earns it the same respect any john might give a crack whore.
Pfizer’s actions certainly make it that much harder for anyone to defend the free enterprise system. Had they stayed in New London, they wouldn’t have lost any real money in the grand scheme of things. The “extra expense” of staying would barely dent their balance sheet. The few hundred thousand in savings will likely go to fund bonuses for the company's executives.
In no way can Pfizer dare call itself a good corporate citizen since they’ve essentially spit upon New London’s gestures, as ill-considered as they were. However, as any student of business knows, the CEO’s first responsibility goes to the shareholders, not the citizens of New London, and certainly not to Susette Kelo, who lost her home for a development that never got built.
One would hope that New London has learned its lesson and that other cities with similar ideas will now think twice. Sadly, I doubt this will come to pass. Why do you think we call them dopes?
Link to the New York Times story.
(Updated November 21, 2009)
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After Kelo, there literally is no such thing as private landownership any longer. Any and all real estate can now be owned by the richest person who wants it, and they can now use the police power to evict anyone, not just for legitimate eminent domain purposes such as schools, or, as in the case of Robert Moses, highways, but for any private purpose whatsoever.
Kelo changed this country.
The fact that the property that Kelo was mercilessly evicted from by a criminal corporate oligarchy represented by the so-called "Supreme Court" now sits empty and overgrown with weeds just adds insult to injury.
Sorry to make a mean and bitter post but what happened here outrages me in a way that few other things ever have.