Column: GE’s Move: Stop With the Doom and Gloom
By John Blankley
Unless you’ve been on Mars, or even further away, in Yonkers, you’ll know that GE has decided to move its headquarters to Boston. Republicans have reacted in predictable Pavlovian style, blaming the move on what they call high taxes, overregulation and a “poor business climate.” This is a perfect example of the logical fallacy of post hoc ergo propter hoc – the confusion of temporal with causal connection – for there were many corporate reasons for the move totally unconnected with state tax policy. There is nothing credible in Republicans’ ideas and what’s more, their continued bad mouthing only harms our economy. I say let’s hear some positive talk about new policy prescriptions. After all, whatever our political persuasion, we surely all want the best for our state.
So here are some real positives. We have the highest per capita income of any state in the union. We rank 6th using OECD criteria for most livable places in the US. Recognizing the need to diversify away from our reliance on the financial and defense sectors we have promoted new investment in bio-sciences and fuel technology; we promote the hospitality industry with the “Connecticut Still Revolutionary” campaign and the Let’s Go Connecticut initiative is a plan to tackle our transportation problems. The Small Business Express program uses loans and grants to create jobs and growth.
Unemployment is down to pre-2008 levels and contrary to sensational reports our population grew from 2010 to 2015. That said there continues to be a net outflow of older residents to Florida: it’s hard to compete with a state that has year-round sun and no taxes. Unless of course you have a family and want a good education for your kids then you’ll stay in Connecticut! If economic growth is modest it’s because Connecticut’s large mature industries do not by their nature grow any faster. But we’re not letting that be an excuse for inaction; a State-commissioned study on competitiveness is on its way.
As for state government ours is one of the most efficient in the nation at just over 200 state employees per 10,000 residents. Unfortunately this is offset by the legacy of Governor Rowland’s large contract concessions in the 1990’s: fortunately coming up for renegotiation within the year.
So why did GE want to move? GE is going through a total rebranding. Have you seen the advertisements about GE programmers who make things and organizations work? Their new focus is to be tech-centric so they’ve been shedding non-core assets like NBC and GE Capital (staying in Connecticut incidentally) and as part of all this have been studying alternative locations for three years.
And the overwhelmingly attractive alternative is the one that invests more in research than any other place on earth –more than Silicon Valley, more than Shenzhen, and that’s Boston. GE wasn’t “shoved” by tax considerations; corporate tax rates are actually higher in Massachusetts than in Connecticut! It was “pulled” by the attraction of Boston’s tech hub or eco-system as GE calls it. I’m sure the “incentive” of the $145 million in tax breaks didn’t hurt but in the context of a corporation worth $145 billion it is less than a rounding error.
On the metric of research and innovation Connecticut ranks 5th . However if you’re out for a remake as GE clearly was, then nothing could compete with Boston. We’re doing well but not as well as Massachusetts. If we fell down in the competition it was by not yet having the “eco-system.” If taxes had been the determining factor GE would have gone to Georgia, reportedly ready to match or exceed any offer made by any other location. GE still went to Boston.
Our taxes are comparable with all the other North East states and we actually have a good business environment, contrary to all the negative rhetoric. We know we have long-term liabilities to deal with as well as budget deficits but we absolutely must remember all the positives. Time now to redouble our efforts along the lines we have already been pursuing. We have a lot of good news so let’s stop with the doom and gloom over GE’s departure.
John Blankley came to America with his young family 32 years ago and has lived in Greenwich ever since. A former corporate executive and now small business owner and entrepreneur, he has served on the RTM and currently sits on the BET.