General Electric has no problem with state tampering with the economy when they are the direct beneficiaries of that tampering. We have seen this with their push for the renewal of the Ex-Im bank, and their shameless use of campaign donations to pressure politicians. However, when a government’s tampering with the economy leaves the economy at the point of an impending crisis, GE doesn’t want anything to do with it.
The Chicago Tribune reports, “State Pension Crisis Hurt Chicago’s Chances for GE Headquarters, Sources Say.”
Chicago was a finalist to score General Electric’s corporate headquarters — and 800 jobs — but the state’s pension crisis and the condition of Chicago’s public schools helped remove it from the running, sources close to the selection process told the Tribune on Wednesday.
GE’s selection of its next headquarters city comes the same week that Chicago received a consolation prize of sorts from the company. GE Healthcare said it would move its corporate headquarters and an unspecified number of jobs to Chicago, from the United Kingdom.
Mayoral spokesman Grant Klinzman said “The $18 billion arm of GE joins the long list of companies that have relocated their headquarters to Chicago in the last six months, including Kraft Heinz, Oscar Mayer, ConAgra and Motorola Solutions.”
Decades of underfunding mean the city’s four public pension funds have around $20 billion in unfunded obligations, while Chicago Public Schools is in financial meltdown, with a $480 million hole in its budget for the current school year and a rock-bottom credit rating.
Political gridlock in Springfield isn’t helping. Nor is the $111 billion of state pension debt.
“It seemed too big of a risk,” the source said of the problems. “That played into the decision to take Chicago off the short list and top tier” of around five finalists.
Thanks to Mish for quoting the Chicago Tribune article. General Electric merely avoided the regret of many state residents who say they would flee Illinois if they could.
This should be a warning to all of us that, once a government has built up an unsustainable debt load, it is impossible for the economy to recover. Those same businesses that milked the government for special favors, won’t stick around when times get hard, as they inevitably will. They will move on to more business-friendly locations.