John Locke Update / Research Brief

Businesses are closing forever as Cooper plays favorites

posted on in COVID-19 Series, Economic Growth & Development, Economics, Spending & Taxes
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Raleigh’s historic Rialto Theatre on Sept. 14, 2020. (Photo: JPS)

Back in September, a survey of Raleigh businesses conducted by Shop Local Raleigh found that 60 percent of small businesses in Raleigh were threatened with closure. That same month Lynn Minges, president of the NC Restaurant and Lodging Association, warned of a “closing tsunami” in the restaurant industry, also projecting “as many as 60% [of restaurants] say that they likely won’t survive another six months if relief doesn’t come fairly quickly.”

Those numbers are backed by a September 2020 report from Yelp, a platform-based company that provides information and consumer reviews about local businesses. Yelp found that over 60 percent of businesses that have closed since March will not reopen, and that restaurants and retail are hardest hit.

Yelp listed North Carolina businesses among the hardest hit in the nation.

Where are the Most Businesses Closed?

Geographic areas with the largest number of business closures since March 1

Source: Yelp

To judge from Yelp’s graphic, roughly 4,000 businesses in North Carolina have closed since March, most of them forever. Hardest hit are restaurants and retail, which are not coincidentally also the hardest hit by Cooper’s executive orders. Most of them are forbidden by the governor to do any better at any point in time than 50 percent capacity, a limit that cripples their business model and keeps many from reopening.

In September, North Carolina had lost over 267,000 jobs since last September, with 115,000 of those lost jobs being from the leisure and hospitality sector. That’s a lot of employers suddenly out of business, and lots of jobs suddenly gone.

Central planning and cronyism to the rescue?

Cooper is doing something to help some employers bring in some jobs, however. No, he is not relaxing his open-ended restrictions against businesses and individuals. He is not trusting people to know their own business, implement their own risk-mitigation policies, and balance their own safety needs as they perceive them against the needs to earn a living for their families’ survival.

What he has done is pledge half a billion dollars in state money so far this year to just 38 corporations to support 10,202 jobs.

On September 29, I provided a list of the 22 corporations so far to which Cooper had pledged state money in corporate welfare. Since then, Cooper has added 16 more corporate recipients of his cronyism:

  • Sept. 19: $120,000 to Pamlico Air (One North Carolina fund, “OneNC”)
  • Sept. 30: $4,310,000 to Nestlé Purina PetCare Company (Jobs Development Investment Grant fund, “JDIG”)
  • Sept. 30: $1,344,000 to Merchants Distributor, LLC (JDIG)
  • Oct. 2: $210,000 to Triple Aught Design (One)
  • Oct. 13: $10,320,000 to UPS (JDIG)
  • Oct. 13: $1,212,000 to Benestar Brands (JDIG)
  • Oct. 14: $50,000 to Hamilton Drywall Products (One)
  • Oct. 15: $80,000 to RMC Advanced Technologies, Inc. (One)
  • Oct. 22: $15,543,000 to Pratt & Whitney (JDIG)
  • Oct. 26: $75,000 to Texwipe (One)
  • Oct. 27: $1,078,2000 to Eastern Wholesale Fence, LLC (JDIG)
  • Oct. 28: $60,000 to East Coast Steel Fabrication, Inc. (One)
  • Oct. 29: $18,885,000 to BioAgilytix Labs, LLC (JDIG)
  • Oct. 30: $1,173,750 to Nuvotronics (JDIG)
  • Oct. 30: $100,000 to Cornerstone Building Brands, Inc. (One)
  • Nov. 12: $200,000 to Wolf and Flow X-Ray (One)

All the while this was going on, Cooper left in place his bevy of tight restrictions against small businesses statewide. Never has a central planner’s picking winners and losers been so stark — or so serious.

While thousands of small businesses have shut down under the crushing weight of Cooper’s orders, destroying tens of thousands of jobs with them, the greater part of them never to return, Cooper has pledged state money to a handful of corporations on the promise of a few thousand jobs.

The central planning math doesn’t add up, either. Cooper has so far this year pledged $499,648,050 to those 38 corporations on their promises they’ll add 10,202 jobs. That’s $48,975 per job.

Meanwhile, the small businesses that survive Cooper’s unprecedented string of executive orders severely affecting their industries will do so despite the governor’s actions.

“You didn’t build that”

Here’s the glory a central planner craves. He can credit himself, by pledging other people’s money to a select few handpicked corporations, for the jobs they bring and the investments they make. Other employers can merely look to him for a few crumbs of yesterday’s freedoms, awaiting his next announcement in the grim hope that it might be the one where he finally allows their businesses to get back to normal.

Jon Sanders is an economist studying state regulations, that spreading kudzu of invasive government and unintended consequences. As director of regulatory studies and research editor at the John Locke Foundation, Jon gets in the weeds of all kinds of policy… ...

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