Tuesday, August 14, 2012

Minority Business Set Asides are a Poor Policy Choice

The NY Times is reporting that Speaker Quinn is looking to expand contract set asides for minority businesses:

"Responding to longstanding appeals from civil rights groups, the City Council speaker, Christine C. Quinn, plans to introduce a bill that would significantly expand New York City’s efforts to direct contracts to companies owned by women and minorities."

Typical response from the clueless about how business grows-it's not from government handouts but from removing the yoke of government from the necks of entrepreneurs. What this approach signifies is a crony capitalist mentality whereby those politically connected minority firms use their access to feed at the government trough-or even worse, glom on to non-minority firms to get public funds through a charade.

What the city should be doing if it were really interested in helping minority entrepreneurs, is to reduce fines and taxes so that these burdens don't impeded economic growth. To her credit, Quinn is looking to do this with restaurant fines-but she would be better served if she dismantled the entire regulatory structure as an unnecessary burden.
Which gets us to the city's economic development policy-from the Bronx Terminal Market and the Kingsbridge Armory, to Flushing Commons and Willets Point-where each initiative has been at the expense of immigrant entrepreneurs. In these cases, the city has used tax subsidies for retail shoppping malls that have either directly or indirectly replaced existing minority businesses.
What the city needs is a policy that enhances economic opportunities for immigrant and minority businesses-and set asides is a poor alternative to an approach that reduces the regulatory state and lets these business owners prosper.