Patrick’s economic development plan is flawed

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Gov. Deval Patrick’s new economic development plan is well intended and for  the most part worthy. Released last month by the state’s Economic Development  Planning Council, “Choosing to Compete in the 21st Century” is welcome evidence  that the governor understands that Massachusetts can only address the state’s  persistent unemployment and generate revenues for public services by making the  Bay State an attractive place to grow businesses.

Elements of the plan are realistic and wise steps toward that goal.   For example, the plan calls for government to execute on its core functions,  such as upgrading infrastructure.  It calls for government to remove  barriers to hiring by cutting the tangle of regulation, streamline permitting,  and make the corporate tax structure predictable and competitive.  These  pledges are important; the hard work is to get them done.

The plan, unfortunately, also suggests that the administration has not yet  learned from mistakes of the very recent past. The new plan continues to call  for government to manipulate the private economy with increased funding for  favored industries and/or companies. The continued emphasis on picking winners  and losers is a cause for worry, that the state is not creating policy on the  basis of evidence–and it should especially worry taxpayers, who will foot the  bill.

The administration’s most glaring market manipulation debacle is now famous,  or infamous. A 2008 package of $58 million in state resources, including grants  and loans, to Evergreen Solar, designed to help lift the state’s economy through  the growth of a supposedly soon-to-boom renewable energy industry, went up in  smoke when the company closed its taxpayer-supported, $430 million Fort Devens  facility last March. It then filed for bankruptcy in August. The promise of 350  new jobs turned into a loss of 800 jobs.

The reason for the collapse was that Evergreen could not compete with China  in the production of solar panels. That should not have been a surprise.

Four years earlier, at meetings of the MassDevelopment’s Board of Directors,  questions about Evergreen’s financial strength were brushed aside, as were any  concerns about rival Chinese solar manufacturers, even though that nation’s  solar energy boom had been widely reported by the New York Times and  Reuters.

Government documents that our investigation team analyzed demonstrate that  there was little due diligence by the state to evaluate the financial health of  Evergreen, and that at least one of the funders, the Massachusetts Technology  Collaborative, has not been able to produce any evidence that decision-makers  had experience with the solar industry.

Also seen in Herald News, The Boston Herald and World News.