Theft at the Public Till
that had long owned and operated its own flight training center selling the facility to a government agency for $270 million. Then leasing back the same facility for an annual fee to cover the interest on the bonds. A memorandum to the airport commissioners noted the significant economic impact that Northwest’s operations and presence have on the region. Northwest’s strategies and business plans called for significant finan- cial improvement, but the carrier lacks the financial safety net a strong balance sheet would provide and was more vulnerable than financially stronger carriers as it relied solely on credit lines to weather unexpected events. By the time the airports commission came through with the cash for Northwest in 1992, the airline was on its way to losing $1.1 billion for the year. When this was added to losses of $316.9 million in 1991 and $302 million in 1990, Northwest had run up total losses of $1.7 billion under Checchi. Throughout this period, Northwest laid off workers, extracted wage and benefit givebacks from remaining employees, instituted stringent cost-cutting measures, sold assets, and restructured its debt. What the tax- payers got was a huge risk - a loan to a failing carrier which might never be paid off with a subsidy that could never be recaptured. And why? Because no one could face what would happen if Minnesota said no. But then again, who was consulted when Minnesota said yes? Did the taxpayers have a say? No. When resources grow scarce, the politics of who gets what from govern- ment will get more bitter. Politicians understand the simple fact that in our complex economy, governments do not just protect private economic power; they can create it. Through the shrewd distribution of utility franchises, tax abatements, contracts, jobs, inside information, regulatory exemptions, politicians can capitalized on any government decision that might fetch a price from business owners or other interests dependent on it. A govern- ment facing annual gaps between resources and demands has to carefully ration and discriminate between the various claims for tax exemptions, tax payments, and social services; it has to choose among conflicting pressures and demands, giving in to some interests, denying support to others. Anyone
143
Made with FlippingBook - professional solution for displaying marketing and sales documents online