The adage fools rush in where angels fear to tread comes to mind in the aftermath of the Harford County Council approving a $750,000 government back loan package for the British-based tech firm Smith's Detection Inc.
The move was specifically foolish because the firm is planning to open an additional manufacturing site in the county that's expected to generate roughly 100 new jobs each paying in the $75,000 a year range.
If a loan — presumably at a favorable interest rate — of $750,000 is going to make or break the deal, something is askew from a business perspective. The annual payroll for the new jobs will be 10 times the amount of the loan. At best, the deal seems to be little more than an exercise in government bottom smooching.
The move was generally foolish because the government has no business being in the business financing business, and the distasteful consequences of such activities have come to the fore time and time again.
Business financing is what banks and venture capitalists are for. It's bad enough when the government has to step in to prevent the collapse of so-called too big to fail institutions like major banks and car companies. It's downright ridiculous for a government to believe it has the wherewithal to evaluate loan customers and the willpower to resist making deals for enterprises that sound too good to be true – and in most instances usually are.
Lately, a series of TV commercials for medical professionals has been using the image of doctors doing things they're not trained to do, like play the violin. You wouldn't want your doctor doing your job, so goes the line of reasoning, so don't risk your health by doing things that should be left to your doctor.
The same line of reasoning could well be applied here: Governments are well-qualified to do things that need to be done that wouldn't get done if left to the private sector. Things like providing public education, police protection and paved roads.
Governments are as ill-suited to making loans to businesses, as banks are to teaching literature or venture capitalists are to investigating robberies and purse snatchings.
Still, the Harford County Council insisted on rushing into the loan business last week, just like similar fools at all levels of government.