Adam Millsap and Anthony Randazzo of the Reason Foundation have op-ed on RealClearPolicy.com cites examples of federal job training programs being used to favor certain commercial interests. fragment:
Crony capitalism occurs when private interests cooperate with the government to obtain subsidies or economic benefits that give them an advantage in the marketplace. Many job training programs, such as the On-the-Job Training (OJT) program, serve this purpose.
In many cases, the OJT program provides subsidized job training for specific positions in specific areas – because funding is circumscribed, only certain employers will receive it. For example, in 2009, the OJT program provided a 50 percent wage subsidy to train chemical composite technicians in Renegade Materials in Dayton, Ohio. Both the company and employees benefited from the program, but the subsidy gave Renegade an advantage over its competitors, which did not benefit from free taxpayer money.
Similarly, the Canadian company Energuy built its US headquarters in Sacramento, California, be close to the OJT program called JobLink. Energuy, which employs workers to assess the energy efficiency of home appliances, is also expanding its operations in other parts of California, particularly focusing on areas that have subsidized training. The company became so dependent on the availability of training subsidies that, according to its CEO, Energuy “actually held meetings where we said we would only proceed if we could get a subsidized employee; otherwise we will have to wait until we are financially ready.”
Sometimes job training grants facilitate different companies in a particular industry, as was the case with $22 million provided in 2010 to facilitate Northeast lobstermen improve their operations through government-funded business plan training. These subsidies favor people currently working in the business over those who might want to enter the industry.
Millsap and Randazzo also point out that job training programs are ineffective and that funding allocated to states is haphazard. They rightly point out that there are alternatives in the private sector, which is responsible for training workers. Over at Government downsizingCato’s essay on federal employment and training programs covers many of the topics discussed by Millsap and Randazzo in detail.
Unfortunately, both Republicans and Democrats support the federal government, which continues to stick its nose where it doesn’t belong. As with almost every political issue that Washington gets (mis)handled, the two sides largely differ only in the details.
