French Fries Anyone?
Feb 9th, 2010 by David Anderson
Guest Opinion by Shaun Fink
In a recent edition of the Wilmington News Journal (Tuesday, Feb 2 2010), we were reintroduced to the saga of the table top French Fry machine which claimed its fame last year when it received $50,000 from Delaware’s FY 2010 Bond Bill in a rather conspicuous fashion.
The back story on the machine’s inventor, Fry Manufacturing’s ties to State Senator Robert Venables has been well documented (Venables chairs the Bond Bill Committee and is related to the company’s co-owner, Mike Ruggiero by marriage).
So, what was the issue this time? Well, it seems that Fry Manufacturing is upset with our very own DEDO (Delaware Economic Development Office) for not supporting their bid to take even more of our taxpayer’s dollars. They are threatening to go out of state, and take their jobs with them. Virginia, they say, is the next state they will peddle in an attempt to garner easy money.
Now, this is the part that needs to be examined: why does Fry Manufacturing believe that the state of Delaware ought to be in the capital investment game? Is it the state’s place to place taxpayer dollars at risk in a venture capital fashion? Isn’t that the role of the private sector, and why is Fry Manufacturing not seeking to capitalize in the same way as any other enterprise? So many questions, with one simple answer; risk assessment. It is much easier and requires much less risk to assume debt in the form of governmental economic development because no one will come lock the doors if you are late on a few payments as happens when dealing with a bank. Additionally, to seek assistance from a private venture capital source, such as an Angel Fund, requires the forfeiture of a large portion of business ownership. Neither of those avenues are as attractive as simply seeking to take more of our money in the form of low-interest government loans.
The government itself doesn’t deserve all of the blame. Many individuals share the credit for expecting the government to provide, provide, provide well beyond its constitutional scope. In fact, it brings to mind the famous quote of President John F. Kennedy, “ask not what your country can do for you—ask what you can do for your country.” Somewhere in all the recent talk of hope and change, the message of personal initiative and perspiration has been replaced by the idea of spreading the wealth.
It begs the bigger question of government’s role in the economy. Should the State of Delaware be in the business picking winners and losers? Should taxpayers be on the hook for a private company’s failure – whether that company is AIG, a bank, or an upstart French fry vending company? Or, is government’s proper role to simply set a fiscal and tax policy that is conducive to an entrepreneurial society full of hardworking men and women who are indeed willing to take the necessary risks involved with starting or expanding a business and creating jobs.
There is one silver lining to this cloud, however. DEDO said no. They chose to do the right thing, and kudos for it. The government, of course, cannot and should not pick winners and losers. Who are they to know who will succeed and who will fail? And they most certainly should not be using taxpayer dollars to make investments such as the $50,000 included in the FY 2010 Bond Bill for Fry Manufacturing, LLC. 50k which will be lost is Ruggiero is successful in obtaining funds from Virginians.
There were no strings attached to the $50,000, and now, the company is looking to Virginia for more funding following the state of Delaware’s refusal to provide more money. According to Alan Levin, Director of the Delaware Economic Development Office, the decision to not award more money was made back in October.
Typically, funds such as those received by Fry Manufacturing, LLC would be approved through the Council on Development Finance which would have the ability to build in requirements for the recipient to produce a certain number of jobs or meet various other metrics. However, because this money was dispersed through the Bond Bill, no such stipulations were built in.
The way this situation unfolded serves as reinforcement for increased transparency in government – specifically as it pertains to spending decisions. Fortunately, the budget committees are now supposedly open for any and all to see – a move which should limit similar situations in the future.
As Secretary Levin points out in The News Journal coverage of this recent development, if the company was poised for success and had orders for the machine, then a bank would likely provide the loan. Given the state’s fiscal situation, the absence of private support and the nepotistic nature of the original funding, the state rightly decided to not invest more money in the company.
In the end, if the only way we can convince Fry Manufacturing, LLC to stay in Delaware is to keep feeding them taxpayer dollars, then there is only one word left to say. Goodbye.
In terms of this blog article I have to say I’d much rather have a French fry than a Delaware fry. I prefer to pay for my food one time and one time only. (Though I realize that it is rarely posible anymore.) I think it is regretable that our state can be extorted by a fry machine company.
We should be bringing companies and industries to the state through policies that are good for business, not through cash payouts.
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The larger question of the role of the government needs to be addressed. The role should be one of providing stability and a framework which rewards and encourages innovation, entrepreneurs and hard work.
Too much government effort is focused on ‘fairness’ which is a laudable goal bit totally unrealistic.
I supported in the 2008 race focusing a very small part of the Delaware State Pension fund (less than 5%) on local/regional business.Not picking winners and losers but real money to real efforts here in this area.
Mike Protack
Legalized theft; that is our government’s primary function.
“Call ‘The Scooter Store’ today!”
Where does the SBA fit into this? The U.S. Small Business Administration rooted way back to Herbert Hoover, then made law in 1953 by President Eisenhower. 1955 State of the Union Address President Eisenhower:
“The prosperity of our small business enterprises is an
indispensable element in the maintenance of our economic strength. Creation of the Small Business Administration and recently enacted tax laws facilitating small business expansion are but two of many important steps we have taken to encourage our smaller enterprises. I recommend that the Congress extend the Small Business Act of 1953 which is due to expire next June. We come now to the third great purpose of our government–its concern for the health, productivity and well-being of all our people.”
“Every citizen wants to give full expression to his God-given talents and abilities and to have the recognition and respect accorded under our religious and political traditions. Americans also want a good material standard of living–not simply to accumulate possessions, but to fulfill a legitimate aspiration for an environment in which their families may live meaningful and happy lives. Our people are committed, therefore, to the creation and preservation of opportunity for every citizen to lead a more rewarding life. They are equally committed to the alleviation of misfortune and distress among their fellow citizens.”
“The aspirations of most of our people can best be fulfilled through their own enterprise and initiative, without government interference. This Administration, therefore, follows two simple rules: first, the Federal Government should perform an essential task only when it cannot otherwise be adequately performed; and second, in performing that task, our government must not impair the self-respect, freedom and incentive of the individual. So long as these two rules are observed, the government can fully meet its obligation without creating a dependent population or a domineering bureaucracy.”
During the past two years, notable advances were made in these functions of government. Protection of old-age and survivors’ insurance was extended to an additional ten million of our people, and the benefits were substantially increased. Legislation was enacted to provide unemployment insurance protection to some four million additional Americans.” . . . .
President Eisenhower frequently talked about the value of hope as well as the need for change. Faith, hope, and charity are also the words designating the three key Christian virtues mentioned in Apostle Paul’s First Epistle to the Corinthians (1 Corinthians 13:13). Hope and change are bedrock American principles. The very foundation of who we are. Let us not mock our Christian values as a way to satisfy our political ambitions.
Thanks to the welfare state, governmental over-regulation, printed ‘money,’ military adventurism and the high taxes necessary to perpetuate the above, industry is nearing extinction, capital is fleeing, cities and crumbling, real incomes are stagnating and the nation is bankrupt.
Thanks, Big-Government.
I like the idea of a french fry vending machine.
The problem with these guys machine is that it is designed for inside use only. If i have to go inside to get fries i may as well go to McDonalds or the like.