The Third Frontier: a financial black hole

Ohio's Third FrontierAt the risk of irritating all of you, I can’t keep myself from urging you to not pour more money down ratholes like the Third Frontier Bond issue. That’s Issue 1 on the May ballot.
This noble sounding idea (make investment money available so jobs can be created) is at its root no different from Washington’s recent stimulus act, the “saving” of General Motors, or the billions invested in the conversion of heavy tars to fuel by past administrations.
In essence you are asked to believe that our politicians in Columbus are the best judges of how to allocate scarce investment funds and therefore our personal investment dollars should be turned over to them. Of course it is structured as a bond issue as opposed to outright taxes so the money can be borrowed from the Chinese with no pain to us. If that is the case, why do you and I need to guarantee this bond?
In 2002 we already agreed to borrow $1,600,000,000 for the original Third Frontier bond issue which, as everyone can see, was so wildly successful that Ohio now has almost no unemployment. The state tells us that in 8 years this has created 9,519 new $65,815 jobs (which have indirectly created 45,000 jobs). You may recall that the federal stimulus head count included 3 week part time jobs in their count, so I remain somewhat suspicious of how these jobs are measured. If the state “invests” $100,000 in a venture and the shareholders come up with another $200,000, who gets credit for the jobs created?
I personally have also made a habit of investing in ventures over the last 30 years, some very successful and some that have been flaming failures. When my ventures were successful I have been rewarded with very nice cash flows. When they flamed out my money was gone. All of these ventures created jobs. The failures just did so for a very short while. The successes largely funded the subsequent ventures. This makes me wonder why we need a Second Third Frontier of $700,000,000?
The answer is that our leaders in Columbus make most of these “investments” as grants. That is government speak for giving money away, which at root is what government does well. Investments, on the other hand, are supposed to increase the investor’s wealth and further investing opportunities.
There is a very large venture capital industry in this country that is always looking for new opportunities, whether government is providing the funds or not. Most of these folks actually have training and education in this area and are taking risks with their own capital as well as that of others. All of them expect a return on investment.
When you think of the Third Frontier just consider Dennis Kucinich as your investment advisor.

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