Photo credit: Brett Levin via Flickr, CC BY 2.0

Why Is This Brewery Receiving Millions in Taxpayer Dollars?

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Recently, liberal New York state assemblyman Anthony Brindisi stirred controversy by claiming that Rochester-based ‘Genesee Brewery’ was using state tax dollars to purchase Chinese fermentation tanks.

While Brindisi is outraged that Genesee didn’t ‘Buy American’ when expanding their brewing capacity, the assemblyman’s remarks reveal how clueless he is to the real economic malfeasance at play — the millions of dollars in corporate welfare New York residents are paying to a single company.

Genesee Brewery stands to receive $9.5 million from New York taxpayers, provided it meets the Empire State Development Corporation’s development standards. Although the funds won’t be dispersed until 2020, Brindisi (perhaps unaware of this fact) attacked the company’s recent decision to purchase fermentation tanks from overseas:

It disgusts me to know that state economic development dollars were used to support a project where goods were manufactured in China, when we have companies like Feldmeier Equipment that produce products like this right in the Mohawk Valley.

It is interesting that Brindisi is “disgusted” by Genesee’s allegedly taxpayer-funded purchase, rather than the millions of tax dollars funneled to benefit a single brewery.

There are over 180 breweries in New York; what makes Genesee Brewery deserving of this massive windfall? Ironically, New York taxpayers who work for the other breweries will wind up paying for their competitor’s slush fund — as well as teetotalers with little interest in Genesee’s products.

All states, including New York, should focus their economic development efforts on creating a level tax and regulatory playing field for industries to compete on — not relying on government’s infinite wisdom to handpick winners and losers.

Why? Because when state governments attempt to pick ‘winners,’ you wind up with selections like 38 Studios, The Revel, and American Dream (formerly Xanadu).

The pattern of failure in taxpayer-funded corporate welfare is unsurprising given the fact that these projects, by definition, are more likely to be ones the private sector has shunned. If the private sector is unwilling to invest in an idea, there is likely good reason.

As John Tamny noted in his new book Popular Economics:

One response to complaints about ‘wasteful government spending’ (a redundant phrase if there ever was one) is that government must invest where even the most intrepid of private investors will not. More to the point, government must play the role of the venture capitalist for projects that are seemingly too risky for even the boldest of investors.

[…]

The notion that private investors lack the nerve to put capital into the most perilous new ideas is belied by history. Recall the early days of the automobile. Investment in that new contraption was the very definition of risky.

Lastly, while Genesee Brewery’s corporate handout is wasteful enough as is, Brindisi’s demands that they purchase American-built fermentation tanks wouldn’t make it any less so.

Genesee Brewery presumably purchased the Chinese-built tanks because they are either cheaper or more efficient than American-built tanks (otherwise Genesee likely would have bought local in the first place).

Forcing Genesee Brewery to invest income in ways they don’t see fit presumes the government knows more about how to run their business than they do. It is in Genesee’s logical self-interest to allocate funds in ways that they believe will give their business the best opportunity for success.

But if you believe that giving $9.5 million to a single brewery is the best way to spur economic growth in New York, you’ve probably already had a few.

Photo credit: Brett Levin via Flickr, CC BY 2.0


Jonathan Decker

Jonathan Decker is the Chief Economic Correspondent for TheNationalPulse.com.