Will the "Third Frontier" Create High Tech Jobs?
The stated purpose of the 10-year, $1.6 billion Third Frontier Project is “to create high-paying jobs for generations of Ohioans through the expansion of Ohio's high-tech research capabilities and promotion of start-up companies.” [1] In practice, this seems to involve handing out “after-the-fact” grants to companies that are already moving technology forward in Ohio. The recent awarding of an $860,000 Technology Action Fund grant to Findlay’s OptiCast, Inc., is a case in point. [2]
OptiCast is an eyeglass firm with an innovative new method of molding lenses. Their machines reduce both the cost and time involved. Where it once required an entire day to cure the glass of prescription lenses, for instance, the process now takes only five minutes. [3]
Congratulations would seem in order. The question is, why is a taxpayer-funded grant necessary? It’s unclear why a goal of the Third Frontier is to reward success since the market already does this. The company has hundreds of its devices placed worldwide and the U.S. Army has plans to purchase forty more units in the near future. OptiCast president Carmel Monti has even admitted that the company is not entirely sure how they will use the windfall. [4]
Granted, there are worse things that the money could be used for. Handing out grants to companies that consistently fail is probably a worse investment. Or the company receiving the grant could be successful yet move elsewhere. High-tech manufacturer Cincinnati Machine, for instance, was part of a group that received $895,000 in Technology Action Fund grants shortly before departing to Kentucky. [5]
Beyond this concern, good government policies generally ought not be based on those currently in office acting in a prudent and forthright manner. The rules under which politicians and bureaucrats will operate in the long run are far more important than how programs are currently operated.
The final installment of the Third Frontier Project will face voter approval in November. The measure will increase Ohio’s debt by an additional $500 million and permanently alter the state’s constitution to allow policymakers to invest in private businesses.
This change is problematic for a variety of reasons, one of which is that policymakers, by virtue of now having the power to do so, will face pressure to invest in some companies and divest from others for reasons other than performance. No matter how committed the current administration is to operating the Third Frontier in a careful and straightforward way, once the rules are changed there is no way for the current administration to constrain future administrations from acting in the same way.
These concerns should be kept in mind when weighing the costs and benefits of the proposal.
Footnotes:
[1] “Taft Celebrates Grand Opening of Astro Instrumentation,” Press Release, The Ohio Third Frontier Project. Available at: http://www.ohio3rdfrontier.org/.
[2] Mike Sobczyk, “Innovator awarded big grant,” The Findlay Courier, 24 October 2003. Available at: http://www.thecourier.com/.
[3] Mike Sobczyk, “Taft to visit Findlay firm,” The Findlay Courier, 23 October 2003.
[4] Ibid.
[5] Matthew Hisrich, “Banking on the Future - and Going Bust,” The Buckeye Institute, 21 May 2003.
