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Iowa's handout to Apple illustrates the folly of corporate welfare deals

latimes.com

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Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#221

Post by quadrangle »

eridius wrote: post #203
quadrangle wrote: post #191

Earlier quoted context omitted.

> This is "nothing more" than the free market at work. Exactly! And by their very nature, free-markets are susceptible to races-to-the-bottom. https://en.wikipedia.org/wiki/Race_to_the_bottom So, yes, here they are at work doing one of the examples of free-market behavior that work against the public interest. Here's another variant of my comment above: If all the workers refused to work in abusive conditions for low…

> Exactly! And by their very nature, free-markets are susceptible to races-to-the-bottom. I was actually thinking that this was an example of a Nash Equilibrium. It's basically like the prisoner's dilemma. If all the states cooperated and refused to offer tax breaks, that would be good for all states. But if a single state "defects" and offers tax breaks, that state reaps the rewards of its defection. Unfortunately t…

Hah! I wish I didn't even have to guess (i.e. I wish nobody were so blindly dogmatic). Your answers make it clear you are certainly not one of those blind free-market dogma folks.

I think your Nash Equilibrium point is spot on, but it's fair to describe a breakdown in that as turning into a race-to-the-bottom.

> why unions exist. But that won't work when we're talking about states.

Oh, but that could. There's no inherent reason why states can't coordinate. They could do so in a weak fashion (i.e. recognize the need to maintain the equilibrium and just all do the right thing) or a strong fashion (lobby the federal government to step in and bar this sort of behavior).

As to your last paragraph, you could definitely convince me of that. I have seen evidence, however, that some places realize that they can refuse to play this losing game. A state can reject the growth-ponzi-scheme ( see https://www.strongtowns.org/the-growth-ponzi-scheme/ ) for example and just let the other states play the race-to-the-bottom while they encourage positive economic activity through other means.

That's like a store refusing to slash their prices to compete and instead finding some other way to convince customers to stay loyal and not just focus on price (perhaps service is better, experience is better overall, etc). In the case of states, they can get great education, quality of life, protect the environment, and realize that they will prosper long-term and refuse to join the race-to-the-bottom. Enough states refusing to play race-to-the-bottom can bring back an equilibrium eventually.

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#222

Post by little_data »

alexanderstears wrote: post #210
fulafel wrote: post #59

Earlier quoted context omitted.

Companies are supposed to pay taxes so we can have schools, healthcare, basic income etc. When they bid countries or states against each other to get tax breaks and governments play the game, citizens lose. Yes, it happens in other cases too, and citizens should also protest against those other cases.

You're right to identify tax revenues as the source of funding for local services but there's a strong case to be made for taxing people and not corporations. Corporations don't pay taxes, they simply pass the burden on to customers/employees/shareholders. It would be simpler (and arguably it would allow the market to allocation resources more efficiently) if corporations paid 0 tax and people paid taxes. Consider th…

>IMO the bigger problem is corporate free loaders. All the local walmarts use way more police time than the targets, but Walmart doesn't pay additional fees for the intensive use of police.

I really have a problem with this statement. It's not like Walmart is trying to gobble up police services. Your statement reflects the Bloomberg article written about this topic, which IMO is a flawed view. The pains that Walmart faces are similar to many other retailers in non-affluent areas.

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#223

Post by alexanderstears »

little_data wrote: post #222
alexanderstears wrote: post #210

Earlier quoted context omitted.

You're right to identify tax revenues as the source of funding for local services but there's a strong case to be made for taxing people and not corporations. Corporations don't pay taxes, they simply pass the burden on to customers/employees/shareholders. It would be simpler (and arguably it would allow the market to allocation resources more efficiently) if corporations paid 0 tax and people paid taxes. Consider th…

>IMO the bigger problem is corporate free loaders. All the local walmarts use way more police time than the targets, but Walmart doesn't pay additional fees for the intensive use of police. I really have a problem with this statement. It's not like Walmart is trying to gobble up police services. Your statement reflects the Bloomberg article written about this topic, which IMO is a flawed view. The pains that Walmart…

If walmart had to pay for police services directly, they might continue with the status quo, or they might take extra steps - like hiring asset protection employees, limiting the hours of the store, making a policy to not pursue shoplifting under $5, etc.

I'm not saying the current allocation of police time is right or wrong, I'm just saying that I think it'd be different if Walmart had skin in the game and I think we'd be closer to the right amount of police time at Walmart if Walmart had skin in the game.

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#224

Post by lend000 »

specialist wrote: post #215
lend000 wrote: post #127

Earlier quoted context omitted.

> When they bid countries or states against each other I have nothing to say specific to this case, but there is a market for governments (very distorted since options are very practically limited for most people, although corporations have an advantage here), and we should encourage competition in this market, as well as political markets. Competition results in better products. Washington already won me over [parti…

If "progressive" WA adopted "conservative" ID's tax regime, resulting in roughly ~$2.5b/yr extra revenue, WA would have much better infrastructure. Local businesses like Boeing have been begging Olympia to invest, better maintain infrastructure (for as long as I remember). But those efforts are always rebuffed by the anti-tax jihadists. Per Logic of Collective Action, the reason tax regimes should be normalized (loca…

> WA would have much better infrastructure

Supply and demand does not care whether your state votes red or blue. You've put forth two common misconceptions here -- one stems from a lack of economics training (that increasing prices always increases revenue), the other is naive (that the more money the government receives, the better the results).

If WA raised taxes (analog -- prices), demand decreases and fewer people like me move there for the tax benefits. More immediately, fewer large businesses headquarter there. Residents spend most of their money in WA so this reduces sales tax receipts, and transitively, the entire WA money supply. In the immediate term, it's obviously going to raise their tax receipts significantly. But in the long term, the effects could be quite negative, eventually even reducing inflation-adjusted tax receipts, if they really mess things up.

> Per Logic of Collective Action, the reason tax regimes should be normalized (local, state, national, international) is to minimize cheating (defecting).

Exactly what I disagreed with in my original post, but I guess we can agree to disagree... I do not think it is cheating to go somewhere that more efficiently spends your tax dollars. I suspect you think you would rather live in a society where you do not have as many choices.

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#225

Post by taysic »

lumberjack wrote: post #150
lend000 wrote: post #127

Earlier quoted context omitted.

> When they bid countries or states against each other I have nothing to say specific to this case, but there is a market for governments (very distorted since options are very practically limited for most people, although corporations have an advantage here), and we should encourage competition in this market, as well as political markets. Competition results in better products. Washington already won me over [parti…

Competition between governments is harmful to citizens because in general, labour is never going to be as mobile as capital. And this is not just limited by regulations and laws (which it is). People just aren't going to move across borders because of politics, unless things get really bad. It just costs too much to move.

It could be helpful too. If a government is being wasteful with its money and it doesn't result in more valuable services, then another area that is doing just as good of a job with lower taxes competes for that citizen.

It's one of the few ways a government can be kept in check for excessive spending.

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#226

Post by esmi »

wavefunction wrote: post #100
gtCameron wrote: post #25

Earlier quoted context omitted.

What year would Wisconsin turn a profit off of Foxconn if it didn’t build a factory there at all?

Presumably this year, if they paid each person as outlined above because they'd be getting income tax back from the individuals. They could even pay those people $30,000 a year for ten years to work on civic projects and achieve even more 'profit' or return on investment.

I am confused. Who is "they" in these sentences: Foxconn, WI, or an employer other than Foxconn?

It can't be Foxconn because the parent statement requires Foxconn doesn't come to WI.

WI getting back in tax a portion of what they paid out in full can't be a net income gain because the employee gets to keep some.

If it's an employer other than Foxconn, which doesn't get any deal, then I agree that would be best for WI. But which employer is that?

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#227

Post by [deleted] »

paganel wrote: post #135
AnthonyMouse wrote: post #93

Earlier quoted context omitted.

There is nothing wrong with states competing with each other. If one state has poor schools then companies won't want to be there because they won't be able to find competent employees. If one state has no government healthcare subsidies then employees there will demand higher wages so they can pay for healthcare. The states that have better schools and more subsidies will have correspondingly higher taxes. The only…

> The states that have better schools and more subsidies will have correspondingly higher taxes. The reality contradicts you. The Netherlands and Ireland have some of the best schools in Europe and at the same time they're some of the best tax-heavens for big corporations. Too early in the morning for me to search out for any reasons for why this is the case, I've just presented what the facts currently are.

[deleted]

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#228

Post by esmi »

mikeash wrote: post #81

It's odd to see so many comments defending Apple on the basis of their $100 million pledge. I guess you all just skimmed the article and didn't really read it? They pledged up to $100 million. In other words, they're not spending $100 million.

The minimum initial payment from Apple is $20M.

However since we have no data on the cost to Iowa or Waukee we can't say whether or not this is cash positive to the state or county.

My guess is because the payment is variable and a function of the size of the facility Apple is basically paying for its hookup to streets, water, electricity, etc. with a park thrown in on the side.

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#229

Post by specialist »

lend000 wrote: post #220
cratermoon wrote: post #187

Earlier quoted context omitted.

> a market for governments This is the myth of the Free Market Fairy - https://bitworking.org/news/2008/01/The-Free-Market-Fairy And the ways that "everything is a market" distorts and destroys are covered in this long read: https://www.theguardian.com/news/2017/aug/18/neoliberalism-t...

I hope you don't truly subscribe to the ad hominem nonsense in "The Free Market Fairy." A discussion about free markets is sort of off topic anyway, so I imagine you just saw the keyword 'market' and made some assumptions. A mathematical market doesn't need to have your political sentiment attached to it. The reality is that there are markets for pretty much everything and we can better analyze many systems by evalua…

The correct pejorative is Freedom Markets™.
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