Publicly Funded Training and Private Enterprise

Should states foot the bill for training potential employees for private corporations?  An article in today’s New York Times raises this question. The article looks at the example of a North Carolina state program to pay for the training of workers for a Caterpillar factory, but it cites similar programs in Louisiana and Wisconsin.  The arguments in favor of these types of tax-payer funded job-specific vocational education are that they draw employers to regions that badly need economic activity and help job-seekers obtain work. These are reasonable points and I think they deserve serious consideration. Still, I’m leery of this kind of public subsidization.

Government funding for training employees, whether it takes place at the state or federal level, entails underwriting private entrepreneurial efforts. When a business sets up a factory, it takes a number of risks, one of which is that it will be able to find or prepare the right kinds of labor for its tasks. Providing the cushion of a training subsidy socializes this risk, while privatizing profits, in somewhat the same fashion that bail-outs secure businesses against the risk of failure. Money from government, whether state or federal, also tends not to go to small entrepreneurs or mom-and-pop businesses. The big firms, like Caterpillar, not only have the potential to bring in lots of jobs, they also have the pull to convince public officials to invest in training. Since these officials can’t fund everything, they have to choose among firms, naturally inclining toward the ones that have the greatest influence. Public training for private business, then, lends itself to crony capitalism while giving lip service to private enterprise.

All public funds, of course, come from taxation and greater taxation depends on and promotes an active public sector. The subsidization of large-scale business, whether through training programs or bailouts, results in a corresponding growth of large-scale government.  It also makes the distinction between public and private increasingly unclear, bringing them together as gears in a single machine of social efficiency. What is done at the level of the state can also be done at the federal level, as this type of cooperative arrangement achieves popular acceptance. Is it unrealistic to see public-private partnerships like this as steps toward the “Great Trust” envisioned in Edward Bellamy’s Looking Backward?  I think we should think carefully about where public-private collaborations will lead, as well as assess their value as responses to current economic problems.