Photo credit: Ban Secret Deals Coalition
As regular readers know, I am a pretty big critic of the use of non-disclosure agreements in economic development deals. These agreements — signed by governors, members of state legislatures, mayors, city council members, and other local leaders — prevent public officials from disclosing anything about a corporate subsidy deal they’re working on, often including the literal recipient, until it’s finished, cutting many key stakeholders, and most importantly the public, out of the process.
It sounds absurd, but it’s true: Public officials sign contracts with private interests, promising that they won’t talk about how they intend to spend public money until it’s too late for the public to weigh in. Just recently, there have been two massive NDA-covered deals approved at the state level: One for $1.2 billion to a still-unnamed corporation in Kansas, and another for more than $600 million for General Motors in Michigan.
Elected leaders literally voted to hand out huge sums of public money to corporations, with some of them not knowing the intended recipient and the rest bound by contract not to divulge its identity or what its specific plans are. It happens all over the country, all the time, in deals involving Amazon, Facebook, Google, Rivian, and on and on.
This practice is corrupt and needs to be banned. Instead of just complaining, today I’m going to explain a new effort to do just that.
My shop, the American Economic Liberties Project, teamed up with a group of state-based and national organizations to form Ban Secret Deals. It’s a coalition that, like it says on the tin, is going to push for state-level bans on NDAs in economic development deals. You can check out our website here.
The members, so far, are: Good Jobs First, The Center for Economic Accountability, Responsible Incentives, the Mackinac Center, Reinvent Albany, Strong Economy for All, and Fight Corporate Monopolies. These are groups from the left and the right, because this isn’t an issue that is about conservatives versus liberals or Democrats versus Republicans, but elites, political leaders, and corporate interests versus the public.
The coalition will be supporting the bills that were introduced this year at the state level in New York, Illinois, Michigan, and Florida, and pushing for other states to take up similar legislation in future years and actually get it across the finish line.
The use of NDAs in economic development is a problem best dealt with at the state level, because legislators there can give definitive direction to all of the folks dealing with corporate subsidies in their states, but bans could certainly be implemented at the county or city level, as well.
But this effort isn’t just about new laws, though those are clearly quite important. It’s also about alerting the public to the harms NDAs in subsidy deals cause in their communities, and working with them to shed a light on dirty dealing when they see it happening in real-time.
So we’ve included a database of secret deals, tips on how to spot secret deals in your community, and a way to get in touch with both us and political leaders if you think there’s a subsidy deal going down that you want to get details on.
As I’ve said before, these NDAs are harmful both economically and democratically. On the first, the research shows corporate subsidies don’t work as intended when it comes to boosting jobs, income, or GDP, but instead just wind up subsidizing moves corporate leaders wanted to make anyway.
They also tend to be gobbled up by large, dominant, national or multinational corporations and chains, disadvantaging the local businesses that don’t receive anything from the public and then have to try to outdo their publicly-subsidized competitors.
By facilitating these harmful deals, NDAs support the transfer of public funds into private hands with no payoff in the end.
They harm democracy, meanwhile, by keeping members of the public in the dark about the goings-on in their communities and preventing them from obtaining information they can use to assess the performance of their public officials.
Remember, corporate leaders have admitted that the point of NDAs in economic development is to keep the public out of the discussion when it comes to individual subsidy deals. The goal is to circumvent the democratic process until it’s too late for democracy to do its thing and let the people have a say.
Ban Secret Deals is meant to be a counterweight to those forces. Drop me a line if you’d like to get involved, and in the meantime, any promotion is very much appreciated. Use the hashtag #BanSecretDeals on social media.
Hope to see you all out in the trenches.
This post initially appeared in a slightly different form on the author’s Substack, Boondoggle, on March 31, 2022.
Pat Garofalo is the author of The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs, the Boondoggle newsletter, and the director of state and local policy at the American Economic Liberties Project.