Too much woo was pitched to lure 7E7

Success has some interesting side effects. One result of the meteoric popularity of the television show "The Apprentice" is that people are again paying attention to the things Donald Trump says. Not surprisingly, many of the bits of wisdom he delivers are tempered by his own experience, such as his divorces. So when he is giving advice to business wannabes, he includes, "Get a pre-nup."

At this stage in his life and business career, he undoubtedly sees the court-enforceable, contractual side of marriage as being very important. And we certainly can understand that. His divorces were, by almost any definition, expensive.

One of the things about a marriage contract that is different from the usual commercial agreement is that while it has a beginning, it has no end. Its provisions go on forever, "till death do us part" — or until the marriage is dissolved, at which point a judge decides on how, when and to what extent the contract provisions are enforced.

So in recommending prenuptial agreements for aspiring business tycoons, Trump is really just trying to remake marriage contracts in the image of commercial contracts — that is, where the key provisions have a beginning and an end, and where the "if and when you do this, we will do that" parts are clearly spelled out. A commercial contract might include a provision, for example, that says something like, "If you deliver the stuff we ordered within 60 days, we will pay you $500." It defines the rights and duties of the parties, and, importantly, has a beginning and an end.

This distinction was apparently lost on state government when it drew up its $3.2 billion seduction plan to lure Boeing’s new 7E7 Dreamliner assembly plant to the state. In some ways, it resembles a marriage contract more than a commercial agreement. And one of those ways is that the obligations aren’t structured as ,"If you do this, then we do that," but as permanent commitments.

If you thought legislators were just putting together a deal to save some Boeing jobs in the state, you were misinformed. In fact, all that is missing from this agreement is for someone to attach "Just Married" signs to our cars. And we don’t even have a pre-nup.

Clearly, our state government could have used some advice from Trump. But, of course, he wasn’t invited to the contract drafting session. Neither was the public, which would eventually pay the bill for it. The incentive proposal for Boeing was put together in secret and was kept secret for an inordinate amount of time.

The secrecy of the drafting process probably contributed to the contract’s serious flaws. And the continuing secrecy hid some of the millions of dollars that the state, Snohomish County and the Port of Everett must cough up long before production begins.

That same secrecy also concealed the fact that the incentive contract makes the state into Boeing’s workforce training department, and even puts the state itself in the airplane business — wrangling 747 freighters to haul 7E7 parts and subassemblies to Paine Field.

Boeing is not really a bad marriage partner, and eventually the dustup over the incentive contract will subside. But its content and the way it was handled raise four basic questions of economics for us:

The first is whether such incentive proposals in general are a good thing for our state economy. The economic models supporting the $3.2 billion tax break for Boeing, for example, are imprecise at best, and it is difficult to shake the notion that large companies play states against each other to get incentives that perhaps don’t make good economic sense for the taxpayers.

The second is whether the Legislature or the public can provide informed consent to such incentives when significant obligations are kept secret under the "trade secrets" portion of the Public Disclosure Act.

The third is whether economic incentives for individual companies are fair, and therefore economically efficient. While it is not at all clear that corporations have a legal right to equal economic treatment under our state constitution, it seems questionable to place a different value on a job at Boeing than a job at, say, Weyerhaeuser or Wal-Mart.

The fourth and final question is this: Why did we have to offer Boeing more than $3.2 billion to build the 7E7 in Washington when it already had the facilities and a qualified workforce here? The answer is that our state has become, if not actively hostile to business, a pretty close approximation. We can’t keep that secret.

James McCusker is a Bothell economist, educator and consultant. He also writes "Business 101," which appears monthly in The Snohomish County Business Journal.