Last week, the Center for Economic Accountability named “Michigan’s $1.75 billion in planned subsidies for an electric vehicle battery plant operated by a joint venture between Ford Motor Company and Chinese firm CATL” the “Worst Economic Development Deal of the Year.” The organization lamented that 2023
continued the dangerous trend of state and local government subsidies across the country committing billions of dollars at a time to corporate projects. Even in that environment, Michigan’s subsidy … stood out for a unique combination of factors. These included a massive $700,000 per-job price tag for below-average jobs; the use of unrealistic “job multipliers” to artificially justify its massive price tag[;] and an uncertain future where success would depend on labor negotiations, consumer preferences, federal policy and technological advancements.
Not long after February’s Ford/CATL announcement, South Carolina approved a “$1.291 billion … incentive package” for offroad-EV startup Scout Motors, pledging to build “a railway bridge over Interstate 77 to the Blythewood industrial park site” and a “new I-77 interchange to serve the eventual factory.” The company also gets “additional road improvements, electrical work, water and sewer infrastructure,” and the state will stabilize “the soil on the site.” A few days earlier, Nevada doubled down on its “partnership” with Tesla, and gave its blessing to an “abatement package” that allowed “100 percent reductions in property taxes and the Modified Business Tax (a tax on wages paid to employees) for 10 years, plus a 20-year reduction in the Sales and Use Tax rate from 7.6 percent to 5.35 percent, which leaves intact the state portion and local school support portion of the tax.”
Nevada, currently suffering from the worst unemployment rate in the nation, went corporate-welfare crazy in 2023. Elon Musk’s “gigafactory” is up in Storey County, hundreds of miles from Sin City. So the Democratic-majority legislature, and GOP Governor Joe Lombardo, didn’t hesitate much when the Oakland Athletics expressed a desire to come to Las Vegas — if given a handout, of course. As Michael Schaus, a columnist for The Nevada Independent, noted, it wasn’t “the first time a wealthy sports mogul from Oakland … lobbied Nevada lawmakers to subsidize a new playground for his team in the Mojave Desert.” The result was the same. In June, state “leaders” crafted what the blog Field of Schemes called one of “the largest MLB stadium subsidies ever.”
The state’s taxpayers can take some solace in Carson City’s failure to pass a bill to “gradually expand” the revenue shoveled at Hollywood “from $10 million in annual … credits to $190 million a year over more than two decades.” Huh. Odd, how the “vast majority of those credits, $175 million, would be directed” toward “the Las Vegas Media Campus developed by Southern California-based Birtcher Development and the Summerlin Production Studios Project developed by the Howard Hughes Corp. in partnership with Sony Pictures.”
The script was the same in Texas. Stars — Matthew McConaughey, Dennis Quaid, Owen Wilson, Glen Powell, Billy Bob Thornton — turned out to back Republican Rep. Four Price’s bill to “supplement Texas’ existing grant program with a new, uncapped scheme targeted at big-budget projects of at least $15 million.” Happily, the legislation died.
Give Austin credit for going all-in on a different manifestation of crony capitalism. The CHIPS and Science Act, signed into law by the president in August 2022, appropriates “an unprecedented $52 billion to support the domestic microchip industry.” But why should the feds have all the fun? States are “sweetening the pot with their own tax credits and other enticements to encourage chip manufacturers to expand existing factories or build new manufacturing capacity.” In June, Governor Greg Abbott, a Republican — beginning to see a pattern? — swooned over creation of the the Texas Semiconductor Innovation Consortium and Texas Semiconductor Innovation Fund, which he promised would “ensure that Texans will be leading the way for semiconductors for decades to come.” Kanas has opened the microchip floodgates, too. Ditto for Arizona, Ohio, New York, and Oregon. Industrial policy for everyone!
On the issue of corporate welfare, economists and policy analysts across the ideological spectrum come very close to complete agreement. It’s ineffective. It’s plagued by serious transparency problems. And it invites corruption.
In a different dimension, where political priorities prevail, one finds elected officials. Party makes no difference. Neither does a state’s color — green, yellow, pink, or gray. The pols speak in unison: Entrepreneurs and investors deserve the money of Joe Sixpack and Jane Diet Coke, extracted through government force.
Anyone want to do something about that in 2024?
In NM, after single party Dem rule at the state level ,pretty much since 1931, the state is so unattractive for private business that bribery with tax revenues is necessary to get many businesses to even look at the state . That's not true for many of the other mentioned states. NV and TX, with no individual state income tax, are very attractive without huge giveaways. Local media could emphasize the folly of these giveaways, but usually stands silent.
All these entitlements have been alive and well since the 1950's, only now they cost a lot more. Phoenix had Motorola and Intel for a long long time before today's debacles of industry. It was the same for California, Nevada, Michigan and Texas. There's been a mindset in this Country, since WWII, that we can just buy our way into wealth and prosperity. That thinking is antiquated and needs to be re-thought! However, the Democrats Marxist Socialist Communist ideology is NOT the answer. Capitalism works and Socialism never works. So, we need a Capitalism way of manufacturing that doesn't eat itself and us along with it!