Opinion: Does S.C. Have a Private Sector?

March 3, 2015

Inside Insight

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public sector

PUT DIFFERENTLY: IS THERE ANYTHING
THAT’S NOT THE PUBLIC SECTOR?

Last month I received in the mail a copy of the Columbia Business Monthly. The cover story – about the “50 Most Influential People” of the Midlands in 2014 – caught my attention. It’s a business magazine, so I thought the 50 Most Influential People would be business-owners or company executives in the private sector.

I was mostly wrong. In fact, this issue of the capital city’s biz magazine is enough to make you wonder whether we even have a private sector anymore.

The great majority of these influencers aren’t from the world of business at all. They are all influential, for sure. But only a minority of them make their living in the world of profits and losses, supply and demand, risk and investment. Between 28 and 30 – a clear majority – draw government paychecks. Some of them are well known: Gov. Nikki Haley, Coach Steve Spurrier, Speaker of the House Jay Lucas, Supreme Court Chief Justice Jean Toal. But most are heads of agencies or government programs: Secretary of Commerce Bobby Hitt; Willie Calloway, Executive Director of the South Carolina State Museum; Gary Goodman, General Manager of the South Carolina State Fair; University of South Carolina President Harris Pastides.

Then there are the heads of “public-private partnerships” and nonprofits so packed with public money they couldn’t survive without it and might as well be government agencies. There’s the head of Riverbanks Zoo, the chairman of the USC/Columbia Technology Incubator, and the CEO of United Way of the Midlands.

Let me stress: I am not criticizing these people or claiming they don’t provide valuable services. I’m also not criticizing Columbia Business Monthly, which is only reporting the truth. I’m looking for the private sector in a biz mag. Bear with me.

The list contains several influential people whose organizations that may or may not get direct federal, state, or local appropriations, but they definitely get favors the State House. How do I know this? Because they spend hundreds of thousands of dollars on lobbyists in Columbia. On the list are the heads of the South Carolina Chamber of Commerce, AT&T, SCANA, and many other lobbyist principals. In 2013 the Chamber, for example, employed four lobbyists at a cost of $174,000. In a typical year AT&T spends a bit more, SCANA – a “private” utility company – a bit less.

A number of these 50 influencers are presidents and CEOs of companies well and truly in the private sector, but their companies have been heavily “incentivized” by the state. That’s true, for example, of the CEO of Nephron Pharmaceuticals. She must be influential indeed: three or four years ago she persuaded the South Carolina Department of Commerce to fork over $4.5 million for “site preparation and infrastructure” for the company’s manufacturing plant in Lexington County. Nephron also gets job development tax credits from the state, and the state is providing training for its workers through the ReadySC program.

Oh, and speaking of Nephron: the president of the Central SC Alliance, one of the “economic development” organizations that brought Nephron to South Carolina, made the list. The Alliance receives direct state appropriations and has no fewer than six politicians on its board.

I’m still looking for the private sector, or something close to it. A restauranteur, perhaps? Or a hotelier? I’ll keep looking.

Naturally the heads of hospitals and health insurance providers are among the 50 influencers: corporate officers at Palmetto Health, Lexington Medical Center, and BlueCross BlueShield of South Carolina. Are non-government hospitals really “private,” though? Maybe, but when you tally up the millions upon millions they receive from Medicaid, Medicare, and innumerable state and federal grants – plus the armies of lobbyists they keep on the payroll – it’s at least debatable.

Several of the influencers are businessmen, but their businesses are so bound up with government contracts you wonder if they’re really businesses in, say, Calvin Coolidge’s sense of the word. One of them, for instance, owns minor league baseball teams; he “promised City Council members if they approved a stadium for Columbia Commons, he would definitely bring a team.” So he’ll come – if taxpayers assume responsibility for the facilities he’ll use.

There are three bankers on the list, but banks are heavily protected, regulated, and subsidized by the federal government. I thought for a moment that one of the influencers works in a sphere relatively free from direct government involvement: the CEO of Holder Properties. So: a developer, right? Ah, but his company, the magazine says, “is developing another student housing project with 878 beds, retail, and a 110,000 square foot research office building.” In other words: his “client” is the University of South Carolina.

Nowhere on the list is anyone who has started a business in the absence of direct and massive government handouts and protection. Which raises the question: Are there such businesses anymore?