Privatized patronage and the Emerging Technology Fund

The Dallas Morning News has an in-depth story on the connections between the distribution of state subsidies for tech firms and contributions to Rick Perry’s campaigns that raise a lot of interesting questions for any student of Texas government.

The Emerging Technology Fund (ETF) was approved by the Texas Legislature in 2005 under the leadership of Governor Perry. Since its creation $173 million of ETF funds have been awarded as grants to private firms to subsidize the development of new technologies. Another $161 million has gone to the state’s universities. The law requires that approval of grants from the governor, the lieutenant governor and the Speaker of the House.

The Governor’s office claims that the governor does not look over the disclosure forms that list investors in the projects requesting funding. Still, officeholders know there major donors and major donors often aren’t shy about reminding officeholders about their financial interests and political generosity. Perry has offered his own defense of grants given to David G. Nance, a major donor. In any case, a governor would not have to be involved for staff to favor donors on such grants.

The Partisan Angle

A few people will view this story in the narrow light of the current political campaign. Democrats will claim that this is something new and Republicans will say this is common to administrations of both parties. Both sides are missing the point. This problem is not new and it’s one of the reasons so many citizens have lost trust in government. When Republicans and Democrats rationalize that “we can do it because the other side did it,” they descend into a kind of moral relativism that ignores the fact that it’s not in the public interest.

This isn’t a partisan problem (except that some partisans want to ignore it for now). This is an institutional problem.

The Institutional Angle

It’s clear that institutional reform is needed. In fact, Florence Shapiro, a sponsor of the original legislation, has expressed some support from removing the Governor, Speaker, and Lt. Governor from the approval process. Some of Rick Perry’s supporters may feel completely comfortable with entrusting the governor’s office to dish out this money. I suspect they’d feel differently about ETF if Bill White is elected governor. American government is often designed to separate the process of money coming into candidates from the process of handing out government dollars.

Early in U.S. history people who backed the parties got government jobs. The ETF could be abused in a similar problem and turn into something new: privatized patronage. Supporters wouldn’t get government jobs–they’d get private sector jobs financed by public money. As The Who once sang (in “Won’t Get Fooled Again“): “Meet the old boss–same as the old boss.”

Why couldn’t the current arrangement be turned into something every bit as corrupting as the old spoils system? Is there some way of insulating these programs from campaign fundraising?

The Economic Angle

There’s also the question of whether or not Texas should be spending hundreds of millions of dollars in subsidizing private firms. Yes, the a governor can brag about job created in Texas, but such “private sector” jobs created with public money looks remarkably like a continuously operating stimulus package. Regardless of how this money is doled out, there will be legitimate questions that can be raised about whether or not such subsidies are a good idea.


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