The Connecticut Business and Industry Association is what it sounds like, but don’t be fooled. It’s more than that. Much more.
After Gov. Dannel Malloy signed a 2015 law increasing taxes on state businesses, the trade group turned political. It funded GOP candidates to beat Democrats in the state Senate in 2016 and to push back against what it saw as Hartford’s “anti-business” agenda.
That effort went into overdrive after General Electric announced it was leaving for Boston. Its decision had almost nothing to do with taxes, but the CBIA and the Republicans crafted a media narrative that stuck in which taxes were driving businesses out of the state.
After raising taxes, Malloy was too weakened to mount a counter-narrative, and because he was weak, he made a bunch of bad decisions to appear more business-friendly, like awarding grants and aid to a gigantic hedge fund in Greenwich and doing his best to block the General Assembly from taking stock of those subsidies.
Malloy is now bowing out. The state Senate is evenly split between Democrats and Republicans. All in a year’s work for Joe Brennan, the group’s CEO and president. Like I said, the CBIA is what it sounds like. But don’t be fooled. It’s more than that. Much more.
But is the CBIA’s narrative correct?
It’s not beyond doubt.
Taxes may be what big businesses care most about, but not small ones, start ups and entrepreneurs. The Kauffman Foundation’s Victor Hwang told CNBC last month that voluminous polling shows access to capital, resources and networks are top-of-mind for most entrepreneurs. Taxes and regulations, he said, are lower priorities.
I take a dim view of the idea that what’s good for big business is good for everyone. Protein Sciences’ flu vaccine is said to be superior to the old egg-based shots, but big drug makers have in effect blocked the Meriden company’s access to big pharmacy chains.
And higher taxes do not equal less purchasing power on the part of individuals and businesses. This cognitive error has continuously plagued economics and prevented reasonable people from coming to reasonable solutions as how to pay for things everyone wants.
None of the above of course means the CBIA is wrong. It’s to say one narrative isn’t necessarily the correct one. In a healthy economy, we would have competing narratives, and in a healthy democracy, the strongest narrative would win in the race for good policy. After months of monopoly, the CBIA’s story now faces competition.
The labor union AFL-CIO commissioned a study by economists at Central Connecticut State University showing the state’s business climate is better than you think. The state’s competitiveness is “quite robust,” it found. So is its quality of life. Both factors play a role in the state’s business climate. If we chose “austerity” over investment, the lead economist said, “these strengths can be diminished.”
Union president Lori Pelletier was more forceful. We should do what Minnesota and New York did: Raise revenues and invest for the long term in education, workforce development and infrastructure. “Connecticut provides businesses the lowest share of business taxes as a percentage of state and local taxes not only in New England, but in the country,” she said. “This is a significant advantage for business and makes Connecticut an attractive location to do business.”
Well, maybe. It’s sounds good. But as the CBIA’s Joe Brennan told CT News Junkie: “It’s all in how you measure these things.”
That’s the problem.
For the CBIA.
It has enough clout to push a governor off his game and to even the score in the state senate. But while the CBIA and the Republicans usually have the advantage of money and resources, the Democrats have the advantage of numbers. For instance, the AFL-CIO survey was based on interviews with 16,000 Connecticut residents. If one set of metrics is as good as another, and I presume they are based on empirical data using sound methodologies, then the choice becomes who likes which set of metrics more, and for what reason.
The CBIA began this narrative.
Let’s see if it knows how to end it.
John Stoehr is a lecturer in political science at Yale, a business columnist for Hearst Newspapers, an essayist for the New Haven Register and a U.S. News & World Report contributing editor.