Skip to comments.State (MI) Gives Company $1.65 Million, Creates Zero Jobs and Goes Out of Business
Posted on 07/28/2012 11:14:01 AM PDT by Mikey_1962
The state of Michigan gave one company $1.65 million, with which zero jobs were created or retained after the business went bankrupt.
This is one of several instances where projections fell short for a state fund designed to support select businesses.
The money was given through the Michigan Strategic Fund, a state program that administers the 21st Century Investments program to strengthen and diversify Michigans economy by investing in venture capital, private equity, and mezzanine funds as a method to create jobs and provide financial assistance for the creation of new businesses or industries.
To date, the direct investment category consists of a single direct investment worth $1.65 million made in Microposite Inc., which was supposed to produce "environmentally friendly" siding products. The state received $55,373 from the investment before Microposite terminated its entire staff on June 30, 2009, and went out of business. The company also received other state support.
The 21st Century Jobs Fund progress report states that zero jobs were created or retained from the $1.65 million investment in Microposite.
"This is redistribution of wealth from the average taxpaying citizen to a privileged few," said Arnold Kling, an adjunct scholar with the Cato Institute and an economist formerly on the staff of the Board of Governors with the Federal Reserve system.
Kling has written extensively on what he calls "expert failure."
"The experience from the 50 states is that when government attempts to compete by picking winners and losers, it usually means the state is failing in terms of overall competitiveness," said Jonathan Williams, director of tax and fiscal policy at the American Legislative Exchange Council. "Additionally, government officials open themselves to charges of cronyism and corruption when they engage in economic micromanagement."
"The best approach is when states work to create a competitive environment for all."
These investments were made as part of 21st Century Investments, a program of the 21st Century Jobs Trust Fund. In total, the state committed over $100 million toward investments that have yielded a little more than $1 million in proceeds and created or retained just 267 jobs.
According to the progress report from Sept. 30, 2011, the program had spent $47 million.
The program was created by the 21st Century Fund Act of 2005, which was sponsored by former State Rep. Bill Huizenga, R-Zeeland. Huizenga is now in Congress.
The 21st Century Investments program is a joint collaboration between the Michigan Strategic Fund and Credit Suisse. The Credit Suisse Customized Fund Investment Group manages the investment funds.
The 21st Century Investments program is comprised of four categories. The categories are venture capital investments, private equity investments, mezzanine investments, and direct investments.
The state has committed nearly $60 million toward venture capital investments. All investments made in venture capital are required by law to be focused on competitive edge technologies. This restriction does not apply to the other categories.
Despite zero reported spending on the private equity program, three jobs were reported to have been created or retained from the private equity program.
In 2010, an analysis of the program by the Detroit Free Press found that the 21st Century Jobs Fund returned only one-third of the projected jobs. At the time, Ned Staebler, a vice president at the Michigan Economic Development Corp., predicted that "the loans and investments will end up making money for the state in the long run."
The Michigan legislature expanded the 21st Century Jobs Fund in 2011. The bill to do so was passed nearly unanimously 36-0 in the Senate and 104-5 in the House.
Representatives from the Michigan Economic Development Corp. and Credit Suisse did not respond to requests for comment about the status of the 21st Century Investments program.
They don't care, they don't have to, its not their money.
I'm so tired of MI folks complaining about their situation. Heck, MI folks created their situation. So, now live with it or, if you have the guts, Change it. Either way, MI folks, stop the faux complaints. If you truly want to change it, then, by God change it!
Virtually every state in the country is doing the same sort of thing with the same results.
BTW, Democrats are practically powerless in Michigan at this point.
Are you part of the Ohio State U administration by any chance?
The Democrats are good at using taxpayer money to create a business. They like laundries. They put a lot of cash through laundries. They should change their name from “Democrat” to “Front Load Spin and Dry” for all the money they launder.
“The 21st Century Jobs Fund progress report states that zero jobs were created or retained from the $1.65 million investment in Microposite.”
The burning questions? Where’s the MONEY? Who stole the MONEY?
I’m so glad government has all the answers.
What makes you think this was the democrats?
The 2011 vote came with a GOP house, senate, and governor.
“Microposite terminated its entire staff on June 30, 2009”
And the legislature voted to continue the program in 2011.
The fact is that the program could only come into existence with the help of the GOP who have held the house all along.
I wonder how much of it ended up as campaign donations.
It’s not a failed investment-it’s a successful political payback. Let’s get real. Solyndra was about Obama kicking back hundreds of millions of dollars to his bundlers who poured big bucks into his campaign. As Deep Throat counseled decades ago: FOLLOW THE MONEY!
The Michigan Strategic Fund was started in 1984. Which party controlled the governorship, house and senate in Michigan in 1984?
Offhand I don’t know nor do I care. I do know that the GOP has kept the crap going.
Guess I’m just one of those radicals who doesn’t care whose fault it is, I just want it fixed.
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