In the Boston Herald, columnist Jessica Heslam writes that Brian Maloney, the owner of the Roxbury trucking company that Mitt Romney visited yesterday, made it without any help from anybody, dadgummit:
The government didn’t help — at all. No tax breaks. No “Good guy, Brian.” Just hard work did that and a few other dedicated people that came along with me. Who’s going to pay for Obamacare?
In the Boston Globe, Callum Borchers reports:
Maloney founded his company as an auto body shop in Cambridge in 1966, while pursuing an MBA at Boston College. In the late 1970s, according to a 1986 Globe profile of the business, “he approached Boston city officials because a preferential bank loan was possible if his firm relocated to the Crosstown Industrial Park,” where Middlesex Truck & Coach remains to this day.
In its first year at the new location, Maloney’s company accepted a $560,000 federal government contract to overhaul 10 buses. Within a half-decade of the move, Maloney reported, his company had quintupled its annual revenue.
And political analyst Jon Keller of WBZ-TV (Channel 4) coaxes a rather different quote out of Maloney:
The only way I was able to come here, because I had no money, was with an industrial revenue bond.
That would be a government industrial revenue bond.
No one would question the hard work and dedication Maloney put into building his business. The only point President Obama was trying to make — and which Romney is now distorting beyond recognition — is that we’re all part of a larger community, and even the most successful among us didn’t make it entirely on our own. As Obama put it, “There’s no question your mom and dad, your school teachers, the people that provide roads, the fire, the police. A lot of people help.”
Oh, wait — sorry. That was Romney.
Maloney’s sincerity aside, he turns out not to be the best spokesman for the I-made-it-alone argument. Then again, Joe the Plumber’s name wasn’t Joe, and he wasn’t a plumber.
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But he WAS (and is) a rampaging douchenozzle. And terrifyingly, he is also the Republican nominee in Ohio’s Ninth Congressional district.
(And technically his middle name is “Joseph” so I guess the name thing wasn’t totally inaccurate, but yeah, he just worked for a plumbing company but was not a plumber.)
Funny, but when my wife and I started our own small business decades ago we were alone in our rotted-out ’66 Chevy wagon delivering new telephone books as we both took on a number of odd jobs in an effort to keep our fledgling business fiscally afloat, we’re still in business today.
When the economy crashed a few years ago the government didn’t offer us any TARP money, once again we were on our own like so many other small business owners. After all these years of making it over every economic obstacle imaginable except for what I fear is coming, I told my wife recently that we should live in a birdhouse since we’ve been out on a limb so long.
This is nut-picking no doubt, but look at the comments on the Herald site. Notice how when a commenter points out the story’s error, that the guy DID get a government loan, that commenter is attacked and down-rated.
@Mike Rice: But what you and your wife didn’t have to do was pay for and build those roads you drove that rotted-out wagon on. Someone else did.
When the fur-trappers were squatting on the Detroit River many years ago, did government pay for the cart tracks or landing coves?
Didn’t think so.
I know of a town in upstate New York where an entrepreneurial family built a town to service the industry that they established there. They then went on to help build and pay for a portion of the Erie Canal that serviced their town. When the marketplace out-sourced their industry in the 1860’s and 70’s — yea, outsourcing in the 19th Century — a branch went to Wisconsin and funded a couple of start-up towns there, and another branch founded a well-known dry-goods concern that is one of the foundations of one of the biggest department stores in the world.
Sure, they didn’t have to pay for and build those roads and the canal. They just did it anyway.
This is a fairly good illustration of the level of public sophistication about how commercial real estate and banking work, i.e., not very high. EVERY company that uses tax exempt financing (typically a mini bond issue IDB or an SBA 504 loan)would not have done so without the loan. The enabling legislation demands that the borrower swear to that. These loans are not grants. They are not GOVERNMENT money. They are the proceeds of a bond issue that essentially renders income on taxable bonds nontaxable. (Originally a reaction to the sky-high interest rates of the Carter Administration, as I recall.) The borrower gets a cheaper loan because the interest is not taxable to the lender (buyers of the bonds), presumably because the expansion of the company serves an economic development purpose for the municipality or state. The legislation says that these loans are only for firms that couldn’t expand without them, so unsurprisingly that is what everyone says. One could make the case that these are less common when corporate taxes are lower (along with interest rates)so that the legal expenses eat up the savings on interest. Companies have a fiduciary responsibility to maximize profits to shareholders by lowering costs, including borrowing costs. Demonizing borrowers (or taxpayers) for following the law that the same politician supported and passed is disingenuous in the extreme but politics as usual by those wishing to demagogue the issue. Don’t hate the player, hate the game. If people were a bit more financially literate, they could protest this process if they wanted or the merits of an individual bond issue. But that would require not talking out of their ….ear.
(FWIW, I have been doing this work since 1979 so I have seen my share of people like Mr. Maloney. He’s a Boy Scout. I submit he is worthy of criticism only from those who paid the higher voluntary MA income tax last year.)
@Rick: Here’s a good FAQ about industrial revenue bonds. It begins: “Most states and many local governments offer industrial revenue bonds …” I haven’t seen anyone criticize Brian Maloney. He should be congratulated for the hard work he put into building up his business. It’s just too bad that he now feels compelled to kick the government that helped him get a leg up. I thought his quotes had a “keep the government’s hands off my Medicare” quality to them.
Well, I suppose that bit of knowledge will come in handy when we all go back to trapping furs for a living.
Sharpen your fur-trapping skills, Mikey, the need for them is closer than you think, and government isn’t going to have the capacity or the will to bail everybody out.
@Dan: this one of those subjects where we need to agree to disagree. Not to get too deep into the weeds here but the simplistic New Mexico(?)info is inartfully worded. I appreciate your FAQ but technically, IRB’s are usually issued by CDC’s, “Community Development Corporations” sometimes affiliated with the public entity or entities like MassDevelopment (but not always). Good benchmark is whether the person you speak with enjoys state employee benefits. (I am on the board of a non-profit CDC affiliated with my local Chamber of Commerce. We do tax exempt loans where the borrower never speaks to a public employee.) The “good faith and credit” of the state or public entity may or may not stand behind the loan, depending on whether a “Letter of Credit” from a bank backs it up. At the time Mr. Maloney started his business, “MIFA” revenue bonds were essentially the ONLY way to finance around here because of interest rates in the 15-21% range on real estate. To blame the victim of Carter’s policies here is unfair, IMHO. In those days, you borrowed money via IRB’s or you didn’t borrow at all on industrial real estate. To now call the guy an ingrate because he used the only available vehicle to mitigate punitive government policies is just not right. (I don’t know the guy but his business start-up coincided with mine, when I helped open the Boston office for CB Richard Ellis Commercial Real Estate, now the world’s largest such firm. Try to imagine the payments on a 20% mortgage. I remember them vividly. Not a lot of commissions.) That IRB was the least the government could do for him. Rather than giving the gentleman “a leg up”, the government in those days was creating an environment that resulted in the election of Ronald Reagan, a subject where I suspect we also need to agree to disagree.
“This one of those subjects where we need to agree to disagree.”
@Rick: Huh? This isn’t a matter of opinion. Brian Maloney got his start thanks to the Massachusetts Industrial Finance Agency, a government agency “established in 1978 to administer a variety of economic development financing programs to assist expanding businesses throughout Massachusetts.”
Here is some excellent background from 1982.
As Ronald Reagan said, “Facts are stupid things.” Maloney got his start with government help. Whether that assistance merely offset even worse things the government was doing, as you contend, does not change that — and is truly just a matter of opinion.
@Dan: I love how some things are “not a matter of opinion”.
I was there. I know as much about this subject as you do about the Industriplex site in North Woburn, maybe more. I saw first hand what MIFA could do. (Great idea for that big Digital Equipment plant at Crosstown Park. Really turned around the neighborhood. I once pitched EDIC to be the city’s agent for that park.) You’re preaching to the converted that these things can work. (The guy you linked to worked for the company that got me my first real estate job. Great guy but as the guy who later ran MIFA, his pride of authorship is to be expected. MassPort publishes similar marketing documents. “Success has many parents but failure is an orphan”.) All I’m saying, to repeat, is that THIS IS NOT GOVERNMENT MONEY any more than your home mortgage somehow flows from the FDIC. All they (and my little CDC) are doing is making a publicly approved investment of private money. But your comments indicate that “public servants” are somehow doing me a favor by not screwing me. (We no longer expect Sect 8 tenants of privately owned housing to say “thank you, kind sir” to their landlords. Fair treatment is their right but an evil job creator should expect antagonism? Tom Menino would disagree.) Tell you what, I won’t pretend to understand the intricacies of “fair use” and community newspapers if you understand that in 33 years of doing these things in Boston, I picked up some expertise and opinions, one of which is the “contention” that 20% mortgages are a bad idea that creates a “malaise”. (For once, I’m not bloviating beyond MY expertise.) We should both leave our computers and enjoy the summer day. I know I’m about to. Cheers.
@Rick: Not doubting your expertise, but your claim that this wasn’t a government program is pedantic at best. I’m taking a chance with a minor copyright violation that I think sheds a bit more light on the subject. Click here.
Found another story about the head of MIFA threatening to resign because he didn’t like what Gov. Michael Dukakis was doing. You know, the guy who held the highest elected office in the state at the time.
Brian Maloney got his business started with the help of a government program. End of story.
Just got back from a five-mile run at Bradley Palmer. No worries.
@Mike Benedict: Most of the roads that my wife and I traveled way back when while delivering phonebooks here in our neck of the woods were overgrown, old sand-ways and looking back I have to tell you, that old Chevy wagon of ours could really take a punch.