Star Struck or Struck Dumb?

If there's anything worse than jumping on a bandwagon, it's jumping on a bandwagon after everyone else and their cousins are aboard and it's broken down in a ditch with two flat tires and a shattered axle.

Handing-out tax "incentives" (read bribes) to filmmakers was quite the fad a few years back. A bunch of states, all dreaming of becoming "another Hollywood," jumped aboard the bandwagon, each trying to outdo the other in throwing taxpayer money at television and movie producers. And this seemed to "work" well enough for some of the star-struck states, at least from the filmmaker's vantage point, since most people are more than happy to take money that's thrown their way.

But regular readers of this blog know that Hollywood handouts have been a losing long-term proposition for most states, generating little lasting return on investment and only a short-term economic bump, while lending themselves to abuse and fraud. Most "studies" commissioned by handout backers show benefits; but more objective research indicates that the primary beneficiaries are those getting the subsidies, not those giving them. Why Colorado would want to jump aboard this broken-down old bandwagon is a mystery, at a time when many states that pioneered this new kind of corporate welfare are having second thoughts and backing away. And why two Colorado Republicans would be pushing this is even more baffling, if they're hoping to rehabilitate the party's reputation for fiscal responsibility.

Proponents of the idea want to slap a tax on movie tickets to fund the subsidies, which seems self-defeating, given that higher ticket prices are likely to result in lower attendance and reduced profits for some of the same filmmakers these "incentives" are supposed to help. Filmmakers may shrewdly prefer to get some cash up-front, given the box-office bombs so many of them bring to the big screen, but forcing all movie fans to bankroll the select few production companies that would get the subsidies is unfair and counterproductive.

Even The Denver Post recognized this as a dumb idea. Let's hope a majority of legislators will too.

Dude, Where's My Handout?

Documentarian Michael Moore is a collectivist who has become rich bashing capitalism. But that isn't stopping him from acting like a corporate welfare mother, as the Michigan Capitol Confidential reports, by seeking $1 million in filmmaker subsidies from his old home state.

The Mackinac Center, a Michigan think tank that opposes the state's extremely generous film-fare program, has Moore on tape at a 2008 film festival decrying such taxpayer handouts. “Why do they need our money, from Michigan, from our taxpayers, when we’re already broke here?" Moore asks. "I mean, they play one state against another, and so they get all this free cash when they’re making billions already in profits. What’s the thinking behind that?”

Yet here comes Moore, only a few years later, with greasy old baseball cap in hand. Maybe someone should do a documentary called "Hypocrisy: The Michael Moore Story."

Ex Post Facto "Incentives"

IBM probably spends more than $35,000 a year on ballpoint pens and paperclips. So does anyone really believe that the city of Boulder landed a new IBM service center, and the 500 jobs that go with it, because of $35,000 in tax "incentives" it will give the company?

The Boulder Daily Camera seems to believe it, judging from its diligence in drawing these causal connections. "IBM gets $35,000 business incentive from Boulder, will add 500 jobs," reads the headline. And Boulder city officials may also choose to believe it, since it would seem to justify this obvious misuse of public money. But does anyone else really, truly, honestly believe that a corporate behemoth like IBM made this decision based on a penny-ante $35,000 handout from the city?

You'd have to be a PhD to believe anything so far-fetched.

The company has been a presence in Boulder for years. It actually has a "campus" there. It made this move based not on a measly $35,000 in tax rebates, but because it makes compelling business sense, unrelated to this payment. The company apparently is shameless enough to take "free" money when "free" money is offered: the widespread bidding for jobs with public funds has created a mercenary culture inside too many board rooms. But no sensible person would in this case connect one event with the other.

I'm not saying "incentives" never matter. In some cases, they may make a difference, at the margins. But other factors still matter more -- like the fact that IBM already has a campus in Boulder. Corporate executives have become very shrewd about collecting "incentives" for choices they would probably have made without them.

If folks in Boulder want to believe that this $35,000 offering played a pivotal part in the decision, and congratulate themselves on their economic development prowess, who's going to pop their big green balloon? Certainly not the top brass at IBM, who are laughing about this all the way to the bank.

High-Tech Corporate Whores

I almost hesitate to write unflattering things about Google, given its Big Brother-like power as the world's most popular search engine -- and its NSA-like ability to monitor what we're all up to on the Web. It very kindly provides the template and system on which this blog operates, all for free. So if this blog suddenly vanishes tomorrow, and they find my body floating in the Arkansas River, you'll know where to look for suspects.

But it still has to be said, even if it gets me blackballed by a great search engine: Google is a shameless corporate whore that is ripping off the taxpayers. And it's not alone among highly-profitable high-tech companies. While most of the nation is debating whether to throw a lifeline to an old-style "heavy" industry based in Detroit, and focused on the shameless pleadings of Big 3 CEOs, Silicon Valley and the high-tech sector are also taking taxpayers to the laundry -- though quietly and stealthily, by calling the handouts "incentives" instead of "bailouts."

Google, for instance, though it recently made news by turning down a $4.7 million grant from the state of North Carolina, to help the company build a new data center in the town of Lenoir, still has commitments from the state for an "incentives package" worth more than $260 million, in electricity subsidies, sales tax exemptions and property tax waivers. All for agreeing to do business in the state. Read the complete story here.

This obviously isn't a company in trouble. Google is a highly profitable enterprise that could and should pay its own way. But like many American companies, Google can resist anything but temptation -- which means it isn't going to turn down the money states and localities are throwing its way, in a cutthroat bidding war for economic development and jobs.

These company-pouching activities create the illusion of "job creation," when, in fact, they're only moving jobs around the map, based on who is willing to pay more in corporate bribes. This does nothing to grow the economy as a whole. It fosters a mercenary mindset in corporate boardrooms, state legislatures and city halls, all across the country. And worst of all, it's exploitative of taxpayers, who ultimately foot the bill for these corporate welfare payouts.

But not all North Carolinians are thrilled about subsidizing one of the most successful companies in the world. "The Google incentives are being challenged in state court by the North Carolina Institute for Constitutional Law, which alleges that special breaks for the company violate the state constitution's requirement of fair and equitable tax treatment," reports the AP.

Few such objections are being heard in Tennessee, however, where Hemlock Semiconductor (an interesting name) just received a total of $200 million in state and local "incentives" to relocate to the town of Clarksville (read the whole nauseating story here.) Nor is much of a fuss being made in Utah, where eBay, the very successful on-line flea market that keeps me supplied with second-hand shirts, just shook down taxpayers for $27 million in "incentives," in order to bring a computer center to the Salt Lake Valley.

In fact, such corporate welfare scams are endemic today. If you doubt it, follow this link to the archive of "corporate welfare"-related news stories posted at LocalLibertyOnline.org. It will blow you away. And it won't stop until the taxpayers rise up and collectively say they've had enough.

Polls indicate that most Americans are wary of a federal bailout of the Big 3, and understandably so, yet these same Americans seem sanguine, and sometimes even supportive, about the corporate welfare giveaways proliferating under the guise of "economic development incentives." We'll have to overcome this sort of cognitive dissonance if we're going to get the "panhandlers in pinstripes," of all stripes, out of our pockets.