All Cost, No Benefit

Every city of any size, and every state, has a government agency charged with “economic development.” Economic development is almost always a euphemism for luring new employers to the city or state.

A productive discussion about what a genuine effort to improve the local economy should and should not entail is considerably overdue. Such a re-examination remains unlikely, but here and there, investigations of current practices do remind us that not everything we call an “incentive” deserves the name.

Which brings us to Wisconsin, Scott Walker and Foxcomm. A report from the Brookings Institution recently described that embarrassing boondoggle:

In 2017, the state of Wisconsin agreed to provide $4 billion in state and local tax incentives to the electronics manufacturing giant Foxconn. In return, the Taiwan-based company promised to build a new manufacturing plant in the state for flat-screen television displays and the subsequent creation of 13,000 new jobs.

It didn’t happen. Those 13,000 jobs never materialized, and plans for the manufacturing plant have been consistently scaled back. Even if the project had gone through as planned, there is no way the Foxconn subsidy would have made money for the state, or provided earnings benefits for residents that exceed its costs. It now appears that few of Foxconn’s promises will be fulfilled, even though local governments have gone into debt over the project.

The Foxcomm “deal” was widely panned at the time, but as Brookings reports, criticisms of that effort were mostly based on the enormous size of the incentives being offered, not on the underlying concept. But since 1990, even the average size of these business incentives has tripled, threatening public services and the social safety net.

Even when the incentive being offered is comparatively modest, however, research doesn’t confirm the underlying assumptions of the approach. At least 75% of the time, the incentives don’t really affect the relocation decision one way or the other.

They’re all cost and no benefit. Furthermore, even when incentives do tip a location decision, they do not pay for themselves. They may create new jobs, but frequently they also bring in new workers from outside the city or state, which raises costs to public services that offset at least 90% of any increased revenue…On average, only 10-30% of new jobs go to state residents who are not already employed.

Are there incentives that would work? Brookings says there are, and offers the following checklist:

Do the incentives target the right businesses?

Will the business provide multiplier effects? When the business buys from local suppliers, it helps increase jobs at those companies. Workers employed at the business, too, will buy from local retailers, increasing those jobs.

Is the business “traded”—i.e., selling its goods and services outside of the state or community? Incentives to non-tradeable firms will just displace jobs at other local non-tradable firms.

Is the real job multiplier accurately calculated? Multipliers can be overstated if they ignore the increased local costs that accompany business growth.

Is the business locally owned? Locally owned firms spend more of their revenue locally, benefiting the hometown economy.

Do the incentives target the right areas?

Incentives should target economically distressed local areas, with more available labor that is not employed. That way, the share of new jobs that go to local residents can be two to three times as great, compared to already-booming areas.

Do the incentives target high-tech businesses in an area with an above-average high-tech base? High-tech businesses have additional multiplier effects because they support and spawn other local firms whose workers and ideas flow from one to another. But this only works when the area has a sufficiently large “cluster” of tech firms to build from.

Are they the right type of incentives?

Are they structured so cash incentives occur upfront? Upfront incentives are more cost-effective in affecting business location decisions, because they are more relevant to business decisionmakers who focus on the short term.

Do they include enticements/requirements to hire locally? For example, customized training programs can encourage firms to hire the local unemployed.
Do they include a healthy share of customized businesses services, or is it all cash giveaways? Business services such as job training, business advice to smaller businesses, and new transportation infrastructure can have job creation effects per dollar that are five to 10 times greater than tax or cash incentives.

Do the incentives avoid robbing Peter to pay Paul? If governments pay for incentives by decreasing public spending on education, training, or infrastructure, the negative economic development effects of those budget cuts may exceed any benefits from the incentives.

Finally, is there a decent model to accurately assess the impact of the incentive?

There are practical ways to evaluate incentives. We can compare assisted with unassisted firms, or assisted areas with unassisted areas. There are good estimates of how many location decisions will be swayed by a cash incentive package of a particular size, and how many jobs per dollar will be created by a high-quality customized job training program. State and local government researchers can combine these evaluation approaches with models of local labor markets and fiscal impact to see whether a specific incentive package’s benefits are likely to exceed its costs.

Finding the right answer depends on asking the right questions–not on constantly sweetening the pot.

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Bigotry And The Campus

My university–albeit not my campus–recently made the Washington Post, among other national publications, thanks to a longtime business-school professor’s racist, sexist and homophobic posts to social media.

According to colleagues on the Bloomington campus, Eric Rasmusen has voiced these opinions–which he characterizes as “conservative” and “Christian”–for several years.   What apparently triggered the current attention to them was his recent retweet of an article suggesting that women are destroying academia. The ensuing publicity has led to a lively argument over the University’s response, which has been to condemn his opinions in the strongest possible terms while respecting his First Amendment right to express them on his own site.

The current kerfuffle illustrates–among other things– the dishonesty of most conservative criticisms of higher education, especially the charge that conservative faculty members aren’t treated fairly.

More telling, however, is Professor Rasmusen’s clumsy effort to distance himself from the clear implications of his own social media history.

Rasmusen, who has taught at the school since 1992, told the Indiana Daily Student on Wednesday that he only shared a quote he “thought was interesting and worth keeping note of.” He told the student publication that the backlash was surprising, adding, “It seems strange to me because I didn’t say anything myself — I just quoted something.”

In a Thursday interview with Kelly Reinke, Rasmusen said he should be able to quote from an article without agreeing with it in its entirety; he deflected questions that asked him point-blank whether he agreed with the piece.

Since then, Rasmusen has continued to update a personal page “for links concerning the 2019 kerfuffle in which the Woke crowd discovered my Twitter tweets, retweets, and suchlike and got very excited, and my Dean and Provost immediately overreacted.”

If the Professor’s history of racist, sexist and homophobic posts reflects his considered philosophy, why does he seem so reluctant to own that philosophy? (I’ve noticed that a number of individuals who spout truly offensive racist rhetoric nevertheless object to being labeled racist. But that’s an observation for another day…)

The university’s response, in my view, was exactly right. It’s an approach that respects both the First Amendment and the right of students to have their classroom performance fairly and equally evaluated.

Indiana University Provost Lauren Robel did not mince words in a statement to the Kelley School community Wednesday, asserting that Rasmusen had used his social media accounts to push bigoted views for several years. Robel said Rasmusen had previously used slurs to describe women, who he has said do not belong in the workplace and academia. He has similar feelings about gay men, Robel said, because “he believes they are promiscuous and unable to avoid abusing students.”

Robel also said Rasmusen thinks black students are unqualified for attendance at elite institutions and are academically inferior to their white counterparts….

“Ordinarily, I would not dignify these bigoted statements with repetition, but we need to confront what we are actually dealing with in Professor Rasmusen’s posts,” Robel wrote. “His expressed views are stunningly ignorant, more consistent with someone who lived in the 18th century than the 21st.”

She indicated that school officials have been flooded with demands for Rasmusen to be fired in recent days, a request she said the university could not — and would not — adhere to because “the First Amendment of the United States Constitution forbids us to do so.” But, she said, Rasmusen would be in violation of the law and school policy if he acted upon his discriminatory views while grading or making tenure decisions. The school would investigate and address those allegations if they were raised, she added.

The university will ensure that students worried about being treated fairly in Rasmusin’s classes–an understandable concern, given the persistence with which he has voiced his views over the years– have alternative courses available to them, and administrators are requiring him to use a double-blind system for grading so he won’t know whose papers he is evaluating.

Are faculty members who espouse Rasmusin’s particular brand of conservatism rare on elite American campuses? Of course. His views are blatantly inconsistent with academic competence. They are inconsistent as well with the legitimate conservatism that does have a place in academic discourse.

Defending bigotry by calling it “conservatism” is an insult to genuine conservatives. Unfortunately, there’s a lot of that going around…

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Speaking Of Faux News…

Quartz recently published an in-depth description of a widespread scam that focused on the elderly–actually, on a very specific subset of elderly Americans.

The scam itself consisted of selling precious metals–especially coins–to people worried about impending government actions that would devalue their assets or even confiscate their savings. Obviously, the scam required an ability to find people sufficiently suspicious and fearful of government to harbor these fears.

A former salesperson for one of the companies implicated in the scams told Quartz that the ideal targets were people who believed the dollar could collapse tomorrow, people who had a deep-seated distrust of government, the elite, Wall Street, and the entire system.

How does a scammer locate people likely to be sufficiently gullible?

Facebook provided the means to show scare-mongering ads, like one that blared “Is Your Retirement Protected from the Deep State?” exclusively to those people. This ad, which ran in March 2019, contained a “sign up” form that included a link to Metals.com’s privacy policy.

Just like a diaper company can pick from Facebook’s targeting options to show its ads to parents, whoever purchased Metals.com’s ads could choose very specific groups of people.

Quartz found a large network of Facebook ads with various connections to Metals.com. According to the “Why am I seeing this” information given to people who saw the ads, those ads were designed to reach people over 59 years old whom Facebook had classified, based on their tracked web browsing history, as “very conservative” or “interested in” Fox News personality Sean Hannity or other conservative media figures….

When a Facebook user clicked on certain Metals.com-affiliated ads, many of which didn’t mention Metals.com, like one ad from “Fox News Insider Reports,” they would be taken to a website with a URL such as FoxInsiders.com.co. The web page urged them to “Call NOW” while a countdown timer created a false sense of urgency, over a line that read “Offer Only Valid For Next 15 Minutes.”

Fox has disclaimed any relationship to the companies involved, and is reportedly assessing its legal options.

In fairness, Fox wasn’t the only bogus imprimatur; other ads purported to be connected to the “US Retirement Bureau” or “Republican House Committee.” All of them, however, claimed rightwing political identities and played on the fears common to elderly conservatives. (One promised to “protect your savings from the coming account freeze.”)

And as the article points out, Facebook approved every one of those ads.

Even after Facebook implemented new political-ad rules that it said would “ensure that you can see who is paying for the ad,” some ads, running under the name of “Retired Republicans,” included a disclaimer saying that they were “Paid for by Webinar Technologies.” That is the name of an anonymously registered Wyoming corporation. Later ads from the “Retired Republicans” page linked to Metals.com’s privacy policy. Other ads said they were paid for by entities such as “Precious Retirement Strategies,” which Quartz was unable to confirm exists.

Facebook accepted at least $3 million, and likely much more, for ads affiliated with Metals.com‚ according to a Quartz analysis of statistics published by Facebook. The social network displayed the ads tens of millions of times over at least 21 months, despite Facebook’s claim of keeping a close eye on its powerful political advertising tools after they were used by Russian operatives in the 2016 election. The ads under the “Webinar Technologies” name were listed as the 18th-largest political advertiser on Facebook a few days after election day in the US in November 2018.

The article is lengthy, and contains a number of stories about the plights of the elderly people who were defrauded. As unfortunate as these examples are, they point to the larger harms being facilitated by social media’s ability to “targetcast.” 

They also confirm the accuracy of unflattering characterizations of the Fox audience–elderly, white, unsophisticated and frightened–and underscore the dangers of living in a bubble.

Any bubble.

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The Anti-Fact Party

Here in Indiana, we joke about the time the Indiana House of Representatives passed a measure purportedly changing the value of  pi. That was in 1897, and Republicans controlled the chamber.

Things haven’t changed all that much. This year, similar GOP idiocy has apparently manifested itself in Ohio. 

High school test question: How old is the Utica shale formation that Ohio is drilling for oil and natural gas?

Answer: 6,000 years, just like the Bible says.

According to critics, HB 164, the Ohio Student Religious Liberties Act of 2019—which every single Republican in the Ohio House of Representatives and two of its Democrats voted for—would bar teachers from dinging that answer, which is 444 million years off the mark, if the student claims “sincerely held religious beliefs” for making it. And this would apply to all science tests. For example, under this belief, astronomers couldn’t possibly be right about the Andromeda Galaxy being 2.5 million light-years distant from the Milky Way.

One of the critics is Gary Daniels, the chief lobbyist for the ACLU of Ohio. He told the Cleveland Plain Dealer that the bill would protect students’ religious rights, a good thing. But it also would keep teachers from taking off points for answers that conflict with science, stating that they “shall not penalize or reward a student based on the religious content of a student’s work,” he said. And that’s far from what education should be about.

The author of the bill disagrees with the ACLU’s analysis, contending that the measure simply protects “religious self-expression”–although he is apparently unable to point to any examples in which Ohio schools have suppressed or otherwise denigrated “religious self-expression.”

Given the facial absurdity of a bill that would protect a student in the above example–and the amount of misinformation circulating on the web– I consulted Snopes, which  merely lists the issue as “unproven.”

The Washington Post quoted Ohio’s legislative services analysis, and followed up with the ACLU’s interpretation of the bill’s language.

Per the legislative services, the bill would

Allow students to engage in religious expression in the completion of homework, artwork or other assignments;

Prohibit public schools from rewarding or penalizing a student based on the religious content of a student’s homework, artwork or other assignments. (emphasis mine)

Per the ACLU

Gary Daniels, chief lobbyist for the American Civil Liberties Union of Ohio, said the measure does in fact allow students to answer homework questions and other assignments incorrectly, based on religious doctrine rather than science — and not be marked wrong. Cleveland.com quoted him as saying: “… this legislation clearly states the instructor ‘shall not penalize or reward a student based on the religious content of a student’s work.’ ”

Amber Epling, spokeswoman for Ohio House Democrats, based her analysis on the language of the measure. She also contends that it would allow students to be scientifically incorrect if they incorporated religious belief into a test response.

The bill’s language–which is at the very least open to interpretation–gives rise to an obvious question: If the bill is not an effort to legislatively “overrule” science, and if there are no examples of religious expression having been penalized, what, exactly, was it intended to accomplish?

According to the sponsor, “protecting students’ rights to express their faith encourages hope in the face of violence in schools and rising rates of drug abuse and suicide.”

Shades of “thoughts and prayers.”

And more students would excel in math if legislators would just change pi to make it easier to remember….

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“Meanwhile”–Mike Pence Version

While we are transfixed by the latest “shiny object”–the latest betrayal of long-time allies, the emergence of emails documenting the White Nationalism of the White House, Trump’s approval of war crimes, the daily evidence that our President is quite insane, and of course the Impeachment hearings–the current administration stays busy behind the scenes destroying both democratic norms and constitutional barriers.

I have previously posted about a number of these assaults–generally, they are being led by the unqualified and ethically compromised individuals currently ensconced in cabinet and other administrative positions. Recent reporting, however, locates one such offensive in the White House itself: efforts by wannabe theocrat Mike Pence to further erode the First Amendment’s separation of church and state.

As ProPublica reports

Last November, a top Trump appointee at the U.S. Agency for International Development wrote a candid email to colleagues about pressure from the White House to reroute Middle East aid to religious minorities, particularly Christian groups.

“Sometimes this decision will be made for us by the White House (see… Iraq! And, increasingly, Syria),” said Hallam Ferguson, a senior official in USAID’s Middle East bureau, in an email seen by ProPublica. “We need to stay ahead of this curve everywhere lest our interventions be dictated to us.”

The email underscored what had become a stark reality under the Trump White House. Decisions about U.S. aid are often no longer being governed by career professionals applying a rigorous review of applicants and their capabilities. Over the last two years, political pressure, particularly from the office of Vice President Mike Pence, had seeped into aid deliberations and convinced key decision-makers that unless they fell in line, their jobs could be at stake.

Some five months before this email was sent, Ferguson’s former boss had been fired. The action followed a communication from Pence’s chief of staff, in which recipients were told that Pence was “displeased” with USAID’s work in Iraq, especially the agency’s decision to turn down Christian groups for aid.

The administration’s efforts to influence USAID funding worried professionals within the agency. Not only did it risk violating First Amendment prohibitions on favoring one religion over another, but there were practical concerns: if the U.S. was perceived as favoring Christians, that perception could–indeed, it probably would– worsen Iraq’s sectarian divides.

USAID regulations state that awards “must be free from political interference or even the appearance of such interference and must be made on the basis of merit, not on the basis of the religious affiliation of a recipient organization, or lack thereof.”

Despite the clear language of the regulations, USAID recently announced two grants to Iraqi organizations that had previously been rejected. According to the Pro Publica article, political appointees, rather than professionals charged with making these determinations, “significantly impacted” the awards.

Typically, such appointees have little to no involvement in USAID grants, to avoid perceptions of undue political influence on procurement.

One of the groups selected for the newest awards has no full-time paid staff, no experience with government grants and a financial tie that would typically raise questions in an intense competition for limited funds. The second organization received its first USAID direct grant after extensive public comments by its leader and allies highlighting what they described as a lack of U.S. assistance to Christians. The two groups — a charity that primarily serves Christian Iraqis and a Catholic university — were not originally listed as front-runners, according to a document seen by ProPublica.

The remainder of the lengthy article documents the measures taken by the administration–especially Pence’s office–to change the criteria by which funds would be awarded in order to benefit Christian organizations. It also reports on Pence’s “pushback” to warnings that favoritism to Christian organizations would run afoul of both the First Amendment and agency regulations.

Just more evidence that while we are transfixed by Trump’s bizarre behaviors and ungrammatical tweets, lobbyists are running federal agencies for the benefit of their former clients, faux Christians are undermining the Constitution and distorting foreign policy, the entire administration is undermining the rule of law…

And today’s GOP is fiercely defending all of it.

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