Allegheny County Airport Authority CEO Christina Cassotis is defending the government agency’s latest exercise command economics.
More’s the pity.
The story is well-told of the authority’s repeated, failed, attempts to bribe airlines to fly in and out of Pittsburgh International Airport (PIT). In far too many cases, the public authority has used public dollars to pay “incentives” to airlines only to either see them exit when the subsidies run out or fold.
The former is bad public policy on its face. The latter suggests the Airport Authority isn’t much for conducting financial due diligence.
Now, in a complex deal as reported by the Post-Gazette, the authority has teamed with a developer to erect a giant building to store powder used in additive manufacturing (i.e. 3D printing) that appears to, at least at this juncture, benefit one company that will being doing such work.
It’s a company that will set up shop on authority land, in a building leased to it by the developer, and even be the beneficiary of a deal in which the authority will lease from the developer a pricey 3D printer (for $500,000 annually for seven years), then take ownership of it.
The authority then will lease the printer to the one company benefitting from the pricey powder storage operation.
As the P-G further reports:
“Cassotis … said she views the 3D printer as part of the infrastructure package needed to bring tenants to the site. She added it was no different than clearing the land or providing utilities.”
Really? Since when is it in the proper purview of government to front the primary capital expenses that are at the core of one’s business operations?
Apologists for such a practice might argue that this is no different than government, using taxpayer dollars, being the primary funder, builder and landlord of, say, sports stadiums and arenas for professional sports teams.
Well, that’s not the proper purview of government, either.
But this Airport Authority deal is more akin to government buying or leasing or financing, say, coke and iron ore storage for a steel company and then buying or leasing or financing a continuous caster to make that steel.
The authority defends the 3D printer deal by saying, as the P-G again reports, it “wants to make sure tenants have ‘quick and immediate access to the printers they need to produce the materials they want to produce’” at the nearly 200-acre site, one which it hopes will become a hub for such manufacturing.
But as Michelle Clark Neely reminded a number of years ago, writing for the St. Louis Federal Reserve:
“When a government directs resources toward some industries … it effectively takes them away from others. Economic theory and practical experience teach us that individual entrepreneurs and firms are better equipped to make these choices.”
But that should not include allowing these same individual entrepreneurs and firms to turn public dollars into venture capital dollars and offload the economic risks that private firms alone should bear.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
