Hartford’s troubled Front Street project got good news this week when Gov. Dannel Malloy announced $1.3 million in state funding to bring Infinity Hall, a live music venue, to the site. After more than a decade of problems this is welcome on Front Street. For the state’s taxpayers though, it is just the latest chapter in a saga of crony capitalism.
Named for the Italian neighborhood once located nearby, Front Street was conceived as a retail, commercial, and residential hub at the center of the Adriaen’s Landing development. Taxpayers provided $500 million of the $770 million it took to complete the project, which included the Connecticut Science Center, the Convention Center, and the Hartford Marriott Downtown.
Front Street lagged behind though, cycling through three different developers, two governors, and countless other headaches just to get started. It was broken into two phases, with the restaurant/entertainment component in Phase I and the residential/retail aspects to follow in Phase II. The state paid $10 million of the $30 million it took to complete Phase I construction. State officials approved a bond request in June for $1.5 million associated with Phase II.
The Governor’s announcement means that taxpayers, having already paid to construct the building as well as the whole neighborhood around it, are now paying businesses to set up shop there.
The state now just needs to pay customers to patronize the businesses there, too. The circle will be complete.
Whether you call it crony capitalism or corporate welfare, this isn’t the capitalism you read about in school. As one scholar recently noted, “[crony capitalism] misdirects resources, impedes genuine economic progress, breeds corruption, and undermines the legitimacy of both the government and the private sector.”
Yet crony capitalism cuts across party and ideological lines. Earlier this year, for example, Alabama Gov. Robert Bentley negotiated a $158 million deal to bring airplane manufacturer Airbus to his state. This is from the same Governor who recently pledged to cut $1 billion from his state budget.
In Connecticut’s case, crony capitalism is Gov. Malloy’s principal economic development strategy. In less than two years, he has doled out more than $315 million in taxpayer-funded promises to Cigna, ESPN, and others.
These politicians seem to forget that their economic development doesn’t happen in a vacuum. Successful, taxpaying entrepreneurs are forced to subsidize their competitors.
On Front Street, this banner is most prominently carried by the Arch Street Tavern, a pub owned by Jerry Collins since 1977. It is known for its live music and fun atmosphere, especially on Monday nights when they have live big-band music.
Music and atmosphere, however, are the very attributes trumpeted by Infinity Hall, the taxpayer-subsidized competitor that will set up shop barely a block away. Having somehow survived more than a decade of construction that made it difficult for customers to make it inside, Mr. Collins’ pub must face this new challenge.
Were this situation the byproduct of entrepreneurship and competition, it might be desirable. When it is the result of politicians choosing winners and losers, it moves us backward as a society, not forward.
It also gets in the way of real economic development. Instead of focusing on things that would benefit everyone, like reducing the tax burden, driving down the cost of energy, or fixing the state’s infrastructure needs, wheelbarrows of cash gloss over the economic landscape’s structural weaknesses.
But hiding those weaknesses does not make them go away. It allows them to get worse.
Heath W. Fahle is the Policy Director of the Yankee Institute for Public Policy and a former Executive Director of the Connecticut Republican Party. Contact Heath about this article by visiting www.heathwfahle.com.