Please, no taxpayer funded handouts to the tech startup sector – WP Original

Ubi est mea.

-The motto Mike Royko assigned to how things work around here (“where’s mine?”)

By: Mark Glennon

Should Illinois taxpayers fund a grant for expansion of a co-working space for tech entrepreneurs, which was announced today? How about other subsidies to promote tech and entrepreneurship? And if public financing is sensible, shouldn’t we pay for it ourselves instead of borrowing it from our kids through bond sales? What happened to “ask not….”?

My opinion, as one who has spent a large part of his adult life promoting that same entrepreneurial community, is that state money for such things is usually wrong.

It’s a story well-documented from other places. The leading scholar on this subject is Josh Lerner at Harvard, and the title of one of his books reflects the results of his research: Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship Have Failed. It was certainly the same in Austin, Texas, where I worked in a small way in the 1980s on some of their groundwork to build the tech community they now have. Handouts from the city or state were not part of what made Austin become what it is today.

That announcement today is for the 1871 tech center, which has been a spectacular, internationally recognized success. It’s getting a $2.5 million grant from the state to retrofit 25,000 square in the Merchandise Mart in Chicago to expand workspace for digital entrepreneurs. In light of its success, maybe a case can be made that state money, which funded part of its launch, was smart, then. Maybe a case can also be made for giving it further money today, though I suspect it could have been raised privately, albeit with more time and work.

But political reality is that grants towards even reasonable bets like 1871 mean people in other cities will ask, “what about us?” Just yesterday we wrote about how that works out. Money then goes to grants for things like decorative lights on a bridge in Quincy, which the state just awarded, and hundreds of millions of dollars to other questionable projects over the past couple years. So, giving $2.5M even to a worthy project in fact entails a much larger price. And there are lots and lots of other incubators that can rightly ask why they are left out.

Even if we were able to fund just smart projects like 1871, should we send the bill to our kids? That’s what we did. Instead of paying for it ourselves, now, we borrowed the money. If it’s a sensible investment for the tech community, I think it should have been paid for by those who work in the community who will benefit the most — people like me.

More generally, a vibrant startup community in Chicago, that so many people here have long worked to create, is now a splendid reality. Why?

State programs and grants contributed little, if anything, towards that success. Since at least the 1990s, the message from the tech community to Springfield was mostly just a request to be let alone. Success derived from many things, one being the superb work ethic in the community —  a special attitude towards work and independence — that distinguishes it from the clock-punching, employee mentality shackling so much of the state.

That it’s indeed a community also accounts for much of its success. Mentors, contributors, event sponsors and angel investors motivated partially by an instinct to give back have provided enormous amounts of time, skill and money.

Most importantly, Illinois is burning. Our state and local fiscal crises are a calamity — taxpayers and employers are fleeing, and it’s a humanitarian crisis for folks on the wrong side of the tracks.  Every sector in Illinois should be doing its best to “ask not.”

It seemed clear to me in 2002, as I wrote then, that Illinois needed “a new economic policy handicapped by the crushing reality that the state is broke.”

That’s still truer today. Chicago’s startup community has flown on its own over those twelve years, making huge contributions to employment, innovation and the economy — with no taxpayer help.

Why stick its hand out now?

4 Comments
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Mark
9 years ago

Who would want money from this dysfunctional government. Associate with functional people who can add value like a laser beam.

Janice88
9 years ago

Wasn’t aware they had government money from the start. How much and from what program?

captainZ
9 years ago

More of Quinn vote buying with our money.

Kapil
9 years ago

Glennon, ballsy of you to say this, as part of that community. Good job. Your right.

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