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.
Showing posts with label economic development. Show all posts
Showing posts with label economic development. Show all posts
Tuesday, February 15, 2011
Sunday, November 21, 2010
Hollywood Handouts Revisited
It's time to revisit one of my biggest corporate welfare pet peeves: the bribes that a significant number of states pay to movie and television production companies that shoot in those states.
A few conservative think tanks have taken aim at these "incentives," including Michigan's Mackinac Center, but the critiques might get more traction with the "mainstream media" coming from a left-leaning think tank like the Center on Budget and Policy Priorities, which just published a damning analysis of the effectiveness (or ineffectiveness, in this case) of Hollywood welfare programs.
Here are the key findings:
State film subsidies are costly to states and generous to movie producers. Today, 43 states offer them, compared to only a handful in 2002. Over the course of state fiscal year 2010 (FY2010), states committed about $1.5 billion to subsidizing film and TV production — money that they otherwise could have spent on public services like education, health care, public safety, and infrastructure. The median state gives producers a subsidy worth 25 cents for every dollar of subsidized production expense. The most lucrative tax subsidies are Alaska’s and Michigan’s, 44 cents and 42 cents on the dollar, respectively. Moreover, special rules allow film companies to claim a very large credit even if they lose money— as many do.
Subsidies reward companies for production that they might have done anyway. Some makers of movie and TV shows have close, long-standing relationships with particular states. Had those states not introduced or expanded film subsidies, most such producers would have continued to work in the state anyway. But there is no practical way for a state to limit subsidies only to productions that otherwise would not have happened.
The best jobs go to non-residents. The work force at most sites outside of Los Angeles and New York City lacks the specialized skills producers need to shoot a film. Consequently, producers import scarce, highly paid talent from other states. Jobs for in-state residents tend to be spotty, part-time, and relatively low-paying work — hair dressing, security, carpentry, sanitation, moving, storage, and catering — that is unlikely to build the foundations of strong economic development in the long term.
Subsidies don’t pay for themselves. The revenue generated by economic activity induced by film subsidies falls far short of the subsidies’ direct costs to the state. To balance its budget, the state must therefore cut spending or raise revenues elsewhere, dampening the subsidies’ positive economic impact.
No state can “win” the film subsidy war. Film subsidies are sometimes described as an “investment” that will pay off by creating a long-lasting industry. This strategy is dubious at best. Even Louisiana and New Mexico — the two states most often cited as exemplars of successful industry-building strategies — are finding it hard to hold on to the production that they have lured. The film industry is inherently risky and therefore dependent on subsidies. Consequently, the competition from other states is fierce, which suggests that states might better spend their money in other ways.
Supporters of subsidies rely on flawed studies. The film industry and some state film offices have undertaken or commissioned biased studies concluding that film subsidies are highly cost-effective drivers of economic activity. The most careful, objective studies find just the opposite.
Such findings aren't sitting well with many in Hollywood, according to the Los Angeles Times, who until now could dismiss them as the nit-picking of fiscally-conservative fussbudgets. Now they simply dismiss the conclusions as "slipshod" and "politically-motivated," although most Tinseltown liberals would be hard pressed to explain how CBPP's politics differ from their own.
The truth always hurts -- but no more so than when it comes from natural allies.
Colorado legislators flirted in recent years with embracing such incentives, lead, in at least one case, by a fiscally-conservative Republican, but ultimately demurred. We ought to be glad this idea ended-up on the cutting room floor.
A few conservative think tanks have taken aim at these "incentives," including Michigan's Mackinac Center, but the critiques might get more traction with the "mainstream media" coming from a left-leaning think tank like the Center on Budget and Policy Priorities, which just published a damning analysis of the effectiveness (or ineffectiveness, in this case) of Hollywood welfare programs.
Here are the key findings:
State film subsidies are costly to states and generous to movie producers. Today, 43 states offer them, compared to only a handful in 2002. Over the course of state fiscal year 2010 (FY2010), states committed about $1.5 billion to subsidizing film and TV production — money that they otherwise could have spent on public services like education, health care, public safety, and infrastructure. The median state gives producers a subsidy worth 25 cents for every dollar of subsidized production expense. The most lucrative tax subsidies are Alaska’s and Michigan’s, 44 cents and 42 cents on the dollar, respectively. Moreover, special rules allow film companies to claim a very large credit even if they lose money— as many do.
Subsidies reward companies for production that they might have done anyway. Some makers of movie and TV shows have close, long-standing relationships with particular states. Had those states not introduced or expanded film subsidies, most such producers would have continued to work in the state anyway. But there is no practical way for a state to limit subsidies only to productions that otherwise would not have happened.
The best jobs go to non-residents. The work force at most sites outside of Los Angeles and New York City lacks the specialized skills producers need to shoot a film. Consequently, producers import scarce, highly paid talent from other states. Jobs for in-state residents tend to be spotty, part-time, and relatively low-paying work — hair dressing, security, carpentry, sanitation, moving, storage, and catering — that is unlikely to build the foundations of strong economic development in the long term.
Subsidies don’t pay for themselves. The revenue generated by economic activity induced by film subsidies falls far short of the subsidies’ direct costs to the state. To balance its budget, the state must therefore cut spending or raise revenues elsewhere, dampening the subsidies’ positive economic impact.
No state can “win” the film subsidy war. Film subsidies are sometimes described as an “investment” that will pay off by creating a long-lasting industry. This strategy is dubious at best. Even Louisiana and New Mexico — the two states most often cited as exemplars of successful industry-building strategies — are finding it hard to hold on to the production that they have lured. The film industry is inherently risky and therefore dependent on subsidies. Consequently, the competition from other states is fierce, which suggests that states might better spend their money in other ways.
Supporters of subsidies rely on flawed studies. The film industry and some state film offices have undertaken or commissioned biased studies concluding that film subsidies are highly cost-effective drivers of economic activity. The most careful, objective studies find just the opposite.
Such findings aren't sitting well with many in Hollywood, according to the Los Angeles Times, who until now could dismiss them as the nit-picking of fiscally-conservative fussbudgets. Now they simply dismiss the conclusions as "slipshod" and "politically-motivated," although most Tinseltown liberals would be hard pressed to explain how CBPP's politics differ from their own.
The truth always hurts -- but no more so than when it comes from natural allies.
Colorado legislators flirted in recent years with embracing such incentives, lead, in at least one case, by a fiscally-conservative Republican, but ultimately demurred. We ought to be glad this idea ended-up on the cutting room floor.
Friday, July 9, 2010
B-Ballnomics 101
You know you're officially a "policy wonk" when you begin seeing economic lessons in the LeBron James team-jumping story.
Who really cares whether he plays basketball in Miami, Cleveland or some other city?
Aren't the tax policy implications the really important point?
Who really cares whether he plays basketball in Miami, Cleveland or some other city?
Aren't the tax policy implications the really important point?
Friday, April 3, 2009
Beware the Blank Check
Those caught up in the heat of every campaign tell voters the outcome will be pivotal. Therefore, one risks sounding cliche, and a little like the boy who cried wolf, by saying this in regard to the city election now entering its final days. But I think the decision involving ballot issue 1A really could be pivotal, in at least two ways. That's why I've been working so hard to defeat it.
The most obvious problems with 1A, as a policy prescription, have already been highlighted. No point in repeating them at length (click on the "panhandler in pinstripes" at LocalLibertyonline.org if you're that interested). It's just not a smart way to do economic development. It will crack open a can of worms the city will have a hard time keeping a lid on.
But it's a less obvious danger from 1A I'll focus on today. And that's the fact that it's a blank check.
It's a point of frustration with many local political and business leaders, but a point of pride for me personally, that voters in Colorado Springs and El Paso County have been notoriously reluctant to issue blank checks. When you step forward with a tax increase proposal around here, you had better have specifics to offer about how the money will be spent. Just crying poor won't cut it. And scare tactics can backfire, as those supporting a county sales tax hike found out last fall.
But if you do your homework, and if you make a convincing and detailed case, you'll be rewarded with a "yes" vote. We've seen that happen with RTA. We've seen it happen with TOPS. We've seen it happen with a cops and firefighter tax. It's unfair to say locals are robotically or reflexively anti-tax. They just have higher standards, and a healthier dose of skepticism, than a lot of voters do.
They won't be played for suckers. They won't be stampeded by scare tactics. They won't be shamed into giving more of their hard-earned money to government than is necessary. And I think that's a strength rather than a weakness, a virtue, rather than a vice.
But that could all change if 1A is approved. 1A is the ultimate blank check. There's no plan, and no specifics, for how the money would be used. It's a half-baked idea, cooked up by a few people on the city's Sustainable Funding Committee and hurriedly slapped on the ballot by City Council. Backers of the proposal are betting -- and betting big, given the significant money they're pouring into it -- that they can win without specifics, without a plan.
They believe that glossy mailers, deceptive ballot language, big billboards and vague promises will be enough to get the taxpayers to issue the city a $51 million blank check, breaking with long precedent. They believe a down economy, and the anxiety it brings, might lead voters to suspend their normal skepticism, drop their guard and buy into the panacea they're pushing.
On Tuesday we'll find out if local voters will hold with tradition, and reject tax increases that aren't accompanied by detailed plans and specifics, or whether they'll break with tradition and issue blank checks. If it passes, 1A will have demonstrated that you can overcome the natural caution and common sense of local voters with an empty slogan -- "jobs now" -- and a slick media blitz. And that will indeed be a pivotal -- but not promising -- moment in local politics.
The most obvious problems with 1A, as a policy prescription, have already been highlighted. No point in repeating them at length (click on the "panhandler in pinstripes" at LocalLibertyonline.org if you're that interested). It's just not a smart way to do economic development. It will crack open a can of worms the city will have a hard time keeping a lid on.
But it's a less obvious danger from 1A I'll focus on today. And that's the fact that it's a blank check.
It's a point of frustration with many local political and business leaders, but a point of pride for me personally, that voters in Colorado Springs and El Paso County have been notoriously reluctant to issue blank checks. When you step forward with a tax increase proposal around here, you had better have specifics to offer about how the money will be spent. Just crying poor won't cut it. And scare tactics can backfire, as those supporting a county sales tax hike found out last fall.
But if you do your homework, and if you make a convincing and detailed case, you'll be rewarded with a "yes" vote. We've seen that happen with RTA. We've seen it happen with TOPS. We've seen it happen with a cops and firefighter tax. It's unfair to say locals are robotically or reflexively anti-tax. They just have higher standards, and a healthier dose of skepticism, than a lot of voters do.
They won't be played for suckers. They won't be stampeded by scare tactics. They won't be shamed into giving more of their hard-earned money to government than is necessary. And I think that's a strength rather than a weakness, a virtue, rather than a vice.
But that could all change if 1A is approved. 1A is the ultimate blank check. There's no plan, and no specifics, for how the money would be used. It's a half-baked idea, cooked up by a few people on the city's Sustainable Funding Committee and hurriedly slapped on the ballot by City Council. Backers of the proposal are betting -- and betting big, given the significant money they're pouring into it -- that they can win without specifics, without a plan.
They believe that glossy mailers, deceptive ballot language, big billboards and vague promises will be enough to get the taxpayers to issue the city a $51 million blank check, breaking with long precedent. They believe a down economy, and the anxiety it brings, might lead voters to suspend their normal skepticism, drop their guard and buy into the panacea they're pushing.
On Tuesday we'll find out if local voters will hold with tradition, and reject tax increases that aren't accompanied by detailed plans and specifics, or whether they'll break with tradition and issue blank checks. If it passes, 1A will have demonstrated that you can overcome the natural caution and common sense of local voters with an empty slogan -- "jobs now" -- and a slick media blitz. And that will indeed be a pivotal -- but not promising -- moment in local politics.
Monday, January 19, 2009
Lights. Cameras. Subsidies?
Everyone else feels entitled to a government handout; why not Hollywood?
The movie and television industry last week began lobbying Colorado legislators to subsidize filming in the state, reports The Rocky Mountain News, arguing that other states are going it and our failure to follow suit will cost us economic development dollars. But this is one idea I hope Colorado leaves on the cutting room floor.
I object to this in principle, but there are practical questions, too, about whether giving handouts to Hollywood really pays dividends. I’ve seen nothing indicating that show biz is suffering recession-related hardship. And even if it is, it ranks low on the list of American industries one might classify as “too big to fail.”
The jury is still out on whether this form of corporate welfare delivers the economic benefits that backers promise. In New Mexico, which began subsidizing the film industry in 2003, two recent reports paint starkly different pictures of the situation. One study, commissioned by the office of Gov. Bill Richardson, a film subsidy supporter, found that the strategy is paying off, bringing in an estimated $1.50 for every dollar doled out. But that’s contradicted by another analysis, done for the Legislative Finance Committee by The University of New Mexico, which found that the state gets about 14.4 cents in tax revenue for every dollar it spends on these efforts.
The study commissioned by the governor’s office might be slightly more suspect, given the political and economic capital Richardson has invested in the issue. But even that report concedes that the direct economic benefits don’t make up for foregone tax revenues, dollar for dollar. It manages to find a net benefit by estimating the present and future impact of "film tourism.”Does anyone really choose New Mexico as a vacation destination because some scene in an Indiana Jones movie was shot there? Could be. But this seems a slender thread on which to hang a program that has handed out an estimated $67 million in tax breaks since 2003 -- in a state that’s facing a $450 million budget shortfall. And does Spielberg really need the handouts? I think not.
While Hollywood welfare still has many boosters, the fiscal squeeze is prompting second thoughts in many states, according to a recent piece in The New York Times. A cost-benefit analysis of one film shot in Wisconsin (another state that offers subsidizes) found that it was a virtual wash, according to The Chicago Tribune, stirring debate about whether the program should continue. Florida slashed its subsidies, which has the industry working furiously to restore them. And in Michigan, where the economy is in the dumper and existing businesses are being pummeled by higher business taxes, some legislators want to cap the subsidies, while economically-desperate cities like Detroit and Bay City pin false hopes on becoming the next Tinseltown.
I’m not saying Detroit isn’t a suitable location for shooting movies – especially if they ever get around to making Omega Man II. But how many post-Apocalyptic backdrops does Hollywood need? Telling shell-shocked Detroiters that they’re on the brink of becoming another Hollywood borders on cruelty, given all the other empty promises they’ve endured. The Mackinac Center for Public Policy, a conservative Michigan think tank, has been asking hard questions about where the money is going -- here and here – but has had a hard time getting straight answers or reliable data from the state’s film promotion office.
How much gaming of the subsidies is going on is anyone’s guess, but it's almost certainly occurring. Manipulation of Louisiana's film-fare program already has led to one case of criminal corruption, in which New Orleans lawyer and film promoter Malcolm Petal pleaded guilty to federal corruption charges for bribing the state's top film official. “To get artificially inflated tax incentives on a festival film project, Petal paid $135,000 to Hammond attorney William Bradley, who acted as an intermediary to pass half that amount to the state's former movie-business recruiter Mark Smith,” according to the New Orleans Times-Picayune.
That's probably just a preview of coming attractions -- and potentially costly future distractions -- if Colorado legislators head down this road. Backers of film-fare promise an economic blockbuster, but, like virtually everything else that comes out of Hollywood, it's mostly fantasy and hype.
The movie and television industry last week began lobbying Colorado legislators to subsidize filming in the state, reports The Rocky Mountain News, arguing that other states are going it and our failure to follow suit will cost us economic development dollars. But this is one idea I hope Colorado leaves on the cutting room floor.
I object to this in principle, but there are practical questions, too, about whether giving handouts to Hollywood really pays dividends. I’ve seen nothing indicating that show biz is suffering recession-related hardship. And even if it is, it ranks low on the list of American industries one might classify as “too big to fail.”
The jury is still out on whether this form of corporate welfare delivers the economic benefits that backers promise. In New Mexico, which began subsidizing the film industry in 2003, two recent reports paint starkly different pictures of the situation. One study, commissioned by the office of Gov. Bill Richardson, a film subsidy supporter, found that the strategy is paying off, bringing in an estimated $1.50 for every dollar doled out. But that’s contradicted by another analysis, done for the Legislative Finance Committee by The University of New Mexico, which found that the state gets about 14.4 cents in tax revenue for every dollar it spends on these efforts.
The study commissioned by the governor’s office might be slightly more suspect, given the political and economic capital Richardson has invested in the issue. But even that report concedes that the direct economic benefits don’t make up for foregone tax revenues, dollar for dollar. It manages to find a net benefit by estimating the present and future impact of "film tourism.”Does anyone really choose New Mexico as a vacation destination because some scene in an Indiana Jones movie was shot there? Could be. But this seems a slender thread on which to hang a program that has handed out an estimated $67 million in tax breaks since 2003 -- in a state that’s facing a $450 million budget shortfall. And does Spielberg really need the handouts? I think not.
While Hollywood welfare still has many boosters, the fiscal squeeze is prompting second thoughts in many states, according to a recent piece in The New York Times. A cost-benefit analysis of one film shot in Wisconsin (another state that offers subsidizes) found that it was a virtual wash, according to The Chicago Tribune, stirring debate about whether the program should continue. Florida slashed its subsidies, which has the industry working furiously to restore them. And in Michigan, where the economy is in the dumper and existing businesses are being pummeled by higher business taxes, some legislators want to cap the subsidies, while economically-desperate cities like Detroit and Bay City pin false hopes on becoming the next Tinseltown.
I’m not saying Detroit isn’t a suitable location for shooting movies – especially if they ever get around to making Omega Man II. But how many post-Apocalyptic backdrops does Hollywood need? Telling shell-shocked Detroiters that they’re on the brink of becoming another Hollywood borders on cruelty, given all the other empty promises they’ve endured. The Mackinac Center for Public Policy, a conservative Michigan think tank, has been asking hard questions about where the money is going -- here and here – but has had a hard time getting straight answers or reliable data from the state’s film promotion office.
How much gaming of the subsidies is going on is anyone’s guess, but it's almost certainly occurring. Manipulation of Louisiana's film-fare program already has led to one case of criminal corruption, in which New Orleans lawyer and film promoter Malcolm Petal pleaded guilty to federal corruption charges for bribing the state's top film official. “To get artificially inflated tax incentives on a festival film project, Petal paid $135,000 to Hammond attorney William Bradley, who acted as an intermediary to pass half that amount to the state's former movie-business recruiter Mark Smith,” according to the New Orleans Times-Picayune.
That's probably just a preview of coming attractions -- and potentially costly future distractions -- if Colorado legislators head down this road. Backers of film-fare promise an economic blockbuster, but, like virtually everything else that comes out of Hollywood, it's mostly fantasy and hype.
Thursday, December 18, 2008
The National Freeloader's League
It must be serendipity. Or maybe it's just confirmation of how completely out-of-hand and shameless the corporate welfare racket has become. But on the very day that I tee-off on the corporate welfare whores in high tech (see previous post), this story appears in the Kansas City Star, explaining how the Kansas City Chiefs are scalping the taxpayers in a $25 million "deal" that will bring their summer training camp back to the state from Wisconsin, where it's been held since 1991.
Given all the other taxpayer handouts that the millionaires who own and play in the league receive -- including, most egregiously, the public financing of football stadiums -- perhaps the letters "NFL" should stand for National Freeloader's League, rather than National Football League.
Yes, the Chiefs also are chipping in for practice facility upgrades. And yes, bringing the team closer to home will please fans, provide an economic boost for St. Joseph and (perhaps) help the franchise with slumping ticket sales. So what? None of this justifies dragging taxpayers -- many of whom couldn't care less about the Chiefs, can't afford to see a game in person and may even root for the Broncos -- into the "deal." The team owner stands to benefit far more from these changes than the average football fan does. He or she should foot the bill entirely.
It's a private, profit-making enterprise that has no business reaching into the citizen's pocket. Yet shrewd characters in the team's front office, working with wheeler-dealers on the Missouri Development Finance Board, shamelessly exploit fan loyalty and sentiment to orchestrate the shakedown. And it isn't the first time the Chiefs have scalped the taxpayers. "These new projects are in addition to the renovation work already under way at Arrowhead and Kauffman stadiums," notes The Star. "That $575 million project won $50 million in state tax incentives in 2006 and is financed primarily by a voter-approved sales tax."
All involved, including the gullible fans, ought to be ashamed of themselves.
Given all the other taxpayer handouts that the millionaires who own and play in the league receive -- including, most egregiously, the public financing of football stadiums -- perhaps the letters "NFL" should stand for National Freeloader's League, rather than National Football League.
Yes, the Chiefs also are chipping in for practice facility upgrades. And yes, bringing the team closer to home will please fans, provide an economic boost for St. Joseph and (perhaps) help the franchise with slumping ticket sales. So what? None of this justifies dragging taxpayers -- many of whom couldn't care less about the Chiefs, can't afford to see a game in person and may even root for the Broncos -- into the "deal." The team owner stands to benefit far more from these changes than the average football fan does. He or she should foot the bill entirely.
It's a private, profit-making enterprise that has no business reaching into the citizen's pocket. Yet shrewd characters in the team's front office, working with wheeler-dealers on the Missouri Development Finance Board, shamelessly exploit fan loyalty and sentiment to orchestrate the shakedown. And it isn't the first time the Chiefs have scalped the taxpayers. "These new projects are in addition to the renovation work already under way at Arrowhead and Kauffman stadiums," notes The Star. "That $575 million project won $50 million in state tax incentives in 2006 and is financed primarily by a voter-approved sales tax."
All involved, including the gullible fans, ought to be ashamed of themselves.
Tuesday, October 21, 2008
Ritter Called Out on Questionable Jobs Claim
Like many a politician, Colorado Gov. Bill Ritter is prone to exaggerating the blessings his policies have bestowed on constituents. His over-selling of the state’s “new energy economy” – a windy catch-phrase Barack Obama has appropriated, without attribution – offers the best case in point. But thankfully there's at least one skeptic in the Colorado media who will bring the governor back down to earth when he embarks on these flights of fancy.
Ritter last week told energy conference attendees that his push for renewable energy and energy efficiency had directly or indirectly created 90,000 jobs in Colorado -- 90,000 -- citing an un-published report by the American Solar Energy Society. “We're quickly becoming a national and international hub for renewable energy," Ritter said of Colorado (though I've read or heard a lot of other governors make similar claims).
I’ve written before about this phantasm called “the new energy economy,” so I’m alert to Ritter's hucksterism on the issue. But apparently I wasn’t the only one taken back by the audacity of Ritter’s claim. Vincent Carroll, editorial page editor of the Rocky Mountain News, on Friday called Ritter out on the issue, in one of his always-incisive columns.
Here’s Carroll’s column, for readers who may have missed it.
"Gov. Bill Ritter made the startling claim this week that "the renewable energy industry is creating directly or indirectly 90,000 jobs" in Colorado - in other words, 20,000 more than the estimated employment associated with the booming oil and gas industry.
Is that possible?
Probably not, even if the figure does eventually appear in a study scheduled for release in a few weeks by the American Solar Energy Society in Boulder. Ritter got a sneak preview of the results - little wonder, as his office co-commissioned the research - which reinforced his New Energy Economy theme. So he started trumpeting the findings.
Let's put the figure of 90,000 jobs in perspective. It's nearly twice the number of cops, firefighters, security guards and prison guards in Colorado - combined. It's more than the combined total of every teacher in K-12 schools together with every lawyer and paralegal.
Ninety thousand is twice the waiters and waitresses in this state, twice the number of fast-food workers, and only 10,000 or so less than the total for all major health-care occupations (see the Bureau of Labor Statistics for the occupational employment totals).
Here's another reality check: After the legislature increased the renewable energy standard for utilities last year from 10 percent to 20 percent for 2020, the League of Conservation Voters - not known for soft-pedaling the impact of green energy - told its members that the measure would create a grand total of 4,100 jobs.
So what's up with the 90,000 claim?
For a clue, go to the American Solar Energy Society Web site and review a report called Renewable Energy and Energy Efficiency: Economic Drivers for the 21st Century. The first thing you'll realize is that Ritter defined the industry more narrowly than the study apparently will. It will measure jobs not only in renewable energy but in the "energy efficiency" industry, too - which casts a very wide net.
The report admits that the energy efficiency business is "much more nebulous and difficult to define" than renewables, but that doesn't stop it from trying. For openers, its definition includes "partial segments of large industries such as vehicles [those considered energy efficient], buildings, lighting, appliances, etc." And don't sneer at that "etc." because it covers a lot of ground, too, including "insulation sales" and the recycling industry.
Never mind that people have been blowing insulation into walls for decades: That activity has now been drafted into the New Energy Economy, where it can be displayed by politicians as a trophy of their economic leadership.
According to the solar energy society, "one in four jobs in 2030" could be in the renewable-energy and energy-efficiency industries. One in four! You could be an autoworker, plumber, architect, welder, bureaucrat, furnace salesperson - you name it - and apparently be counted.
"Do you have a green job?" the society asks. "You will."
Now, there is always a certain amount of stretching and reaching in a study whose purpose is to magnify the importance of a particular activity. If the authors become too greedy, though, the exercise begins to take on the features of a farce. Maybe there are 500 renewable-energy companies in Jefferson County, as the governor also said - three times the number of public schools - but it's going to be interesting to see just what that list includes.
Who knows, maybe you're in charge of one and didn't even know it."
Carroll is at something of a disadvantage, trying to critique a report that isn't out yet. But it's not hard to anticipate that the conclusions will be skewed to advance Ritter's agenda, given that it's a state-funded "study" conducted by what's obviously an advocacy group.
A guess the next question should be: Is this an appropriate use of taxpayer money?
Ritter last week told energy conference attendees that his push for renewable energy and energy efficiency had directly or indirectly created 90,000 jobs in Colorado -- 90,000 -- citing an un-published report by the American Solar Energy Society. “We're quickly becoming a national and international hub for renewable energy," Ritter said of Colorado (though I've read or heard a lot of other governors make similar claims).
I’ve written before about this phantasm called “the new energy economy,” so I’m alert to Ritter's hucksterism on the issue. But apparently I wasn’t the only one taken back by the audacity of Ritter’s claim. Vincent Carroll, editorial page editor of the Rocky Mountain News, on Friday called Ritter out on the issue, in one of his always-incisive columns.
Here’s Carroll’s column, for readers who may have missed it.
"Gov. Bill Ritter made the startling claim this week that "the renewable energy industry is creating directly or indirectly 90,000 jobs" in Colorado - in other words, 20,000 more than the estimated employment associated with the booming oil and gas industry.
Is that possible?
Probably not, even if the figure does eventually appear in a study scheduled for release in a few weeks by the American Solar Energy Society in Boulder. Ritter got a sneak preview of the results - little wonder, as his office co-commissioned the research - which reinforced his New Energy Economy theme. So he started trumpeting the findings.
Let's put the figure of 90,000 jobs in perspective. It's nearly twice the number of cops, firefighters, security guards and prison guards in Colorado - combined. It's more than the combined total of every teacher in K-12 schools together with every lawyer and paralegal.
Ninety thousand is twice the waiters and waitresses in this state, twice the number of fast-food workers, and only 10,000 or so less than the total for all major health-care occupations (see the Bureau of Labor Statistics for the occupational employment totals).
Here's another reality check: After the legislature increased the renewable energy standard for utilities last year from 10 percent to 20 percent for 2020, the League of Conservation Voters - not known for soft-pedaling the impact of green energy - told its members that the measure would create a grand total of 4,100 jobs.
So what's up with the 90,000 claim?
For a clue, go to the American Solar Energy Society Web site and review a report called Renewable Energy and Energy Efficiency: Economic Drivers for the 21st Century. The first thing you'll realize is that Ritter defined the industry more narrowly than the study apparently will. It will measure jobs not only in renewable energy but in the "energy efficiency" industry, too - which casts a very wide net.
The report admits that the energy efficiency business is "much more nebulous and difficult to define" than renewables, but that doesn't stop it from trying. For openers, its definition includes "partial segments of large industries such as vehicles [those considered energy efficient], buildings, lighting, appliances, etc." And don't sneer at that "etc." because it covers a lot of ground, too, including "insulation sales" and the recycling industry.
Never mind that people have been blowing insulation into walls for decades: That activity has now been drafted into the New Energy Economy, where it can be displayed by politicians as a trophy of their economic leadership.
According to the solar energy society, "one in four jobs in 2030" could be in the renewable-energy and energy-efficiency industries. One in four! You could be an autoworker, plumber, architect, welder, bureaucrat, furnace salesperson - you name it - and apparently be counted.
"Do you have a green job?" the society asks. "You will."
Now, there is always a certain amount of stretching and reaching in a study whose purpose is to magnify the importance of a particular activity. If the authors become too greedy, though, the exercise begins to take on the features of a farce. Maybe there are 500 renewable-energy companies in Jefferson County, as the governor also said - three times the number of public schools - but it's going to be interesting to see just what that list includes.
Who knows, maybe you're in charge of one and didn't even know it."
Carroll is at something of a disadvantage, trying to critique a report that isn't out yet. But it's not hard to anticipate that the conclusions will be skewed to advance Ritter's agenda, given that it's a state-funded "study" conducted by what's obviously an advocacy group.
A guess the next question should be: Is this an appropriate use of taxpayer money?
Sunday, October 12, 2008
Throwing in City Hall Helps Seal the Deal
Communities across the country are selling their souls, and selling the taxpayers out, in order to win bidding wars with other communities over the retention or relocation of jobs and companies. The panhandlers in pinstripes shrewdly play one city (or one state) off against another, to secure the best "incentive" packages, usually involving huge tax abatements or cash on the barrel head.
But this is the first time, as far as I know, that City Hall has been auctioned off as part of the "deal." Reports the Daytona Beach News-Journal:
"And to sweeten the deal on their end, the city in September offered up City Hall as the company's new headquarters at $240,000 annually, with the option to buy it for $3 million within three years. Meneough said, although the company will be breaking ground soon on a 200,000-square-foot facility, the City Hall offer was instrumental in Palm Coast being selected. "Without it, it would have been a very difficult decision to make to stay here and move jobs here," Meneough said."
It's outrageous. It's pathetic. It's unbelievable. But the auctioning off of City Hall is also a fitting symbol of how mercenary, and how out of hand, the corporate whoring, and community pandering, has become.
But this is the first time, as far as I know, that City Hall has been auctioned off as part of the "deal." Reports the Daytona Beach News-Journal:
"And to sweeten the deal on their end, the city in September offered up City Hall as the company's new headquarters at $240,000 annually, with the option to buy it for $3 million within three years. Meneough said, although the company will be breaking ground soon on a 200,000-square-foot facility, the City Hall offer was instrumental in Palm Coast being selected. "Without it, it would have been a very difficult decision to make to stay here and move jobs here," Meneough said."
It's outrageous. It's pathetic. It's unbelievable. But the auctioning off of City Hall is also a fitting symbol of how mercenary, and how out of hand, the corporate whoring, and community pandering, has become.
Sunday, August 24, 2008
What Detroit can learn from Dublin
Detroit, Michigan and Dublin, Ireland: The two cities would seem to have little in common except an intimate acquaintance with hard times. But Dublin, although a basket case in the 1980s, is today enjoying an exciting economic renaissance, while Detroit continues on a downward trajectory.
A thoughtful piece by Ellen Creager in today's Detroit Free Press asks what the Motor City might learn from Dublin's stunning success.
Not everything that worked for Dublin applies in Detroit. The Irish city has a major advantage in that it skipped over the industrial/manufacturing phase, leaping from agriculture to high tech, so there was less rebuilding and environmental clean-up to do. Dublin is a capital city; Detroit is not. And Detroit, though it once had beautiful neighborhoods, lacks some of the inherent charm which makes Dublin a tourist draw. Detroit's infamously high crime rate, as well as 47-50 percent functional illiteracy rate (Dublin's is 15-20 percent), may be insurmountable hurdles to climb over.
But where Detroit -- or any other American city -- can follow in Dublin's footsteps is on tax policy. Here's a key passage:
"Key to (Dublin's) success was Ireland's decision to slash its corporate income tax rate to 12.5%," writes Creager. "By turning itself into a tax haven, Ireland stole all kinds of European headquarters of multinationals (including 500 American firms) from neighboring European Union states.
That created jobs, which created wealth, which sent Dublin on an upward spiral.
Detroit has seen some growth based on tax breaks to companies like Compuware; Quicken Loans is expected to follow.
But could Detroit compete on corporate taxes? Unlikely. The United States has a 35% top corporate federal income tax rate, plus Michigan's new business tax is 4.95%."
Just slashing corporate taxes probably won't be enough to duplicate Dublin's success in Detroit. But it might help jump-start the Motor City's sputtering engine. And Detroit, at this point, has little to lose by trying.
"The biggest lesson Dublin may teach Detroit is that when you're on the bottom looking up, you've got to be bold," writes Creager. "When cities reinvent themselves as Dublin has and Detroit is trying to do, pain is involved, and some grief, and finally a rebirth."
A thoughtful piece by Ellen Creager in today's Detroit Free Press asks what the Motor City might learn from Dublin's stunning success.
Not everything that worked for Dublin applies in Detroit. The Irish city has a major advantage in that it skipped over the industrial/manufacturing phase, leaping from agriculture to high tech, so there was less rebuilding and environmental clean-up to do. Dublin is a capital city; Detroit is not. And Detroit, though it once had beautiful neighborhoods, lacks some of the inherent charm which makes Dublin a tourist draw. Detroit's infamously high crime rate, as well as 47-50 percent functional illiteracy rate (Dublin's is 15-20 percent), may be insurmountable hurdles to climb over.
But where Detroit -- or any other American city -- can follow in Dublin's footsteps is on tax policy. Here's a key passage:
"Key to (Dublin's) success was Ireland's decision to slash its corporate income tax rate to 12.5%," writes Creager. "By turning itself into a tax haven, Ireland stole all kinds of European headquarters of multinationals (including 500 American firms) from neighboring European Union states.
That created jobs, which created wealth, which sent Dublin on an upward spiral.
Detroit has seen some growth based on tax breaks to companies like Compuware; Quicken Loans is expected to follow.
But could Detroit compete on corporate taxes? Unlikely. The United States has a 35% top corporate federal income tax rate, plus Michigan's new business tax is 4.95%."
Just slashing corporate taxes probably won't be enough to duplicate Dublin's success in Detroit. But it might help jump-start the Motor City's sputtering engine. And Detroit, at this point, has little to lose by trying.
"The biggest lesson Dublin may teach Detroit is that when you're on the bottom looking up, you've got to be bold," writes Creager. "When cities reinvent themselves as Dublin has and Detroit is trying to do, pain is involved, and some grief, and finally a rebirth."
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