Foxconn as Case Study of Targeted Development Subsidy

Or, “Ready, fire, aim”. From Mitchell et al. “The Economics of a Targeted Economic Development Subsidy,” Mercatus Center:

In an effort to spur economic growth and to burnish their job-creation bona fides, policymakers at the federal, state, and local levels often dispense targeted economic development subsidies. These selective incentives include targeted tax relief, targeted regulatory relief, cash subsidies, and in-kind donations of land and other valuable goods and services. The weight of economic theory suggests that these subsidies do not work and may even depress economic activity. In this paper, we review the economic case for and against targeted economic development subsidies, using Wisconsin’s $1.2 billion to $3.6 billion subsidy to Foxconn to illustrate these points. We show that under realistic scenarios the subsidy may depress state economic activity by tens of billions of dollars over the next 15 years.

Former Governor Walker has noted that there were performance standards imposed, so that the state is in principle not on the hook for subsidies, should FoxConn fail to employ the agreed to number of workers (who do not necessarily have to be Wisconsin residents, by the way). However, other outlays have been made by other localities:

In addition to the state subsidies, localities agreed to a $764 million site development subsidy (which subsequently expanded to $911 million), funded via tax increment financing. The state has agreed to underwrite 40 percent of these loans if the local government is unable to pay them off (but we do not include this potential cost in the state subsidies listed in table 1). Beyond these financial incentives, the state also exempted the company from certain wetland regulations, permitting it to circumvent the standard environmental impact reports and to discharge material into nonfederal wetlands without a permit. It also authorized over $332 million in electric and gas utility infrastructure improvements to service the plant, the costs of which will be borne by other utility customers. Finally, the Village of Mount Pleasant declared 2,800 acres as “blighted,” despite the area’s comparatively low crime rate, and has spent $160 million to acquire property through eminent domain in order to transfer it to Foxconn.

Hence, even if one doesn’t take all the components of the Mercatus analysis at full value (taxation induced dead weight losses, dynamic inefficiencies, etc.), the fairly transparent costing of implicit subsidies and outright and tax expenditures make it clear that the Foxconn deal is an expensive one for the State of Wisconsin, even if Foxconn ends up, as currently seems proposed, a Generation 6 plant.

One can add to these costs the static and (more difficult to quantify) dynamic and X-inefficiency costs as laid out in the report, in order to obtain a total cost. The Mercatus study authors clearly think a net positive benefit is unlikely.

 

 

 

52 thoughts on “Foxconn as Case Study of Targeted Development Subsidy

        1. Moses Herzog

          I have travelled there believe it or not (I might have been even some place connected to the campus, but I can’t swear to it as it’s been years and I wasn’t really sure then). But I was in that district, that much I am sure. I don’t actually remember Princeton smelling that bad, but there are portions of Jersey that are some of the worst in all of America. In my travels (and I’m not trying to be funny or insulting here) there are roughly 5–6 that really stick out in my mind, and I have been to all 48 states and most even medium sized cities anywhere near an interstate. Parts of Jersey are in that top 5-6 for horrendously smelling places.

          I don’t think Kopits lives in Princeton, I don’t even think by any stretch of the imagination he has a right to use that label—I’m strongly guessing the name is used to mislead people on reputation/credentials. It’s roughly the same as if you gave yourself the name “Poughkeepsie pgl”. Or maybe “Stanford pgl” would be more apt comparison here. He’s shown here multiple times he can’t grasp or hasn’t learned basic concepts. There are many classifications of species to compare Kopits to, but the immediate one that comes to mind is he’s a poor man’s version of Stephen Moore. He’s selling to audiences what they already WANT to hear. Which, next to prostitution, is most likely the 2nd oldest profession of man-kind.

          Reply
          1. Barkley Rosser

            Oh dear. We have been through this before. Because of its obvious prestige, not to mention proximity to both NYC and Philly, Princeton has for a long time been a favoreds location for consulting companies, even though those working for them are not employees of Princeton U. Mathematica is one that is there now and has been for a long time and reasonably well respected as an econ consulting operation. Another was a firm that employed Gustav Akerlof, father of econ Nobelist George Akerlof, who grew up there.

            So, many of us have disagreements with SK, but poking at him because he runs a consulting op out of Princeton w/o being on the faculty there is getting old and tiresome. Criticize him for his ideas, not the location of his consulting op, please.

          2. Barkley Rosser

            BTW, Gus Akerlof, whom ,I knew, was a chemist and the consulting firm he worked for did chemistry, there being sonsulting firms located in or near Princeton, NJ that do not have people on the Princeton U. faculuty in many fields, not just econ. In George Akerlof’s family on both sides, it was the thing to do to go to Yale and major in chemistry. He has at times joked about being a “family failure” because although he went to Yale, he did not major in chemistry. Oh well.

  1. Willie

    New York City’s rejection of the Amazon shakedown attempt should be a guide to any local government thinking about subsidizing a major corporate entity. The corporate entity is looking out for itself, not the locale.

    Reply
    1. pgl

      It’s not like NYC has a lot of land being underused. We do have a need for more tax revenues to fix out subway system and to educate the kids.

      Reply
    2. pgl

      Willie – check out this paragraph from page 6:

      Some states and localities make their commitment to the “general approach” explicit. For example, in its bid for Amazon’s second headquarters (HQ2), New Hampshire made clear that it wasn’t offering Amazon any special treatment beyond its already-existing comparatively low tax burden. Similarly, the mayor of San Jose was quite vocal in announcing that his city would not offer Amazon any targeted subsidies for HQ2. These attitudes, however, are rare. In a recent survey of 110 mayors, 84 percent reported that they believe targeted incentives are good policy.

      Reply
    3. Moses Herzog

      Words of Wisdom Sir, Words of Wisdom……

      But with one proviso —-it is not the local government (officials themselves) being shaken down, as often times they are at the trough themselves in kickback schemes. Remember it was not really the local government that had turned it down—they were ready to take the deal. It was only after a major sh*tstorm of local protests from residents did they THEN decide they were no longer to to continue the hoax on local taxpayers. People have to make their voices HEARD BEFORE the robbers have entered the bank vault.

      Local NYC officials were ready to sign on for Amazon—don’t make them out to be “the hero”, they were ready to hand the robbers the key to the bank vault before the robbers had even asked–Just like Governor Walker did with FoxConn. Remember kids, you can’t ALWAYS trust the “caretaker” of the property. I would link the bathroom scene from “The Shining” with Delbert Grady here, but I had nearly forgotten it has some colorful language.

      Reply
  2. joseph

    There’s a simply solution to the problem of corporations shaking down states and forcing them to compete in a race to the bottom. The federal government should treat these subsidies and tax expenditures as taxable income to the corporations. These are income transfers from state governments to corporations. Treat them as direct income.

    This isn’t entirely new. For example, forgiveness of debt is treated as taxable income under current law. There is no reason that subsidies and tax expenditures transferred to companies shouldn’t be treated as taxable income. State politicians can then try to explain to their citizens why they are taxing them so that their taxes can be transferred to the federal government.

    Reply
  3. Bruce Hall

    The modern “war between the states” over jobs has been active since the Great Depression. Fifty states run some 1,829 incentive programs designed to create jobs and wealth, according to the Council for Community and Economic Research, and economists have written hundreds and hundreds of studies trying to measure their effectiveness.

    In 2004, some economists in Iowa did a meta-review of the economic development literature. That is, they looked at studies other people had made of the subject, how they conducted them, and what they found. The title of their review tells the tale: “The Failures of Economic Development Incentives.” The authors came to a significant conclusion: Any claim that government economic development programs improve economic growth or lead to positive fiscal benefits for the public treasury is probably false.

    Bureaucrats who run develop programs do not have profound skills at picking winners from losers in the marketplace to “invest” your confiscated dollars in a profit-maximizing way. To think otherwise, in the words of Friedrich Hayek, is the “fatal conceit” of economic planning. It is a folly stemming from conceit to think that a small group of planners can somehow grasp our economic lives, in all their nuances and details, and then reorganize them forcefully in a way that would be better off than if we had simply been left to our own devices.

    https://www.mackinac.org/why-government-fails-at-economic-development

    Is this the meeting point for Keynesians and Austrians?

    Reply
    1. pgl

      You finally provided a link worth reading. Alas, your only comment shows you had no idea what your own link said:

      ‘Is this the meeting point for Keynesians and Austrians?’

      Brucie boy – Keynes v. the Austrians is a debate over macroeconomics. Oh wait – you have no clue what any of these words even mean. Never mind!

      Reply
      1. Bruce Hall

        pgl, Keynes v. the Austrians is a debate over macroeconomics. Yes, but it goes beyond macroeconomics to a general philosophy of how government involvement in economic activity is viewed. Now, if you want to say that is redundant (macroeconomics = philosophy), then we are in agreement.

        Keynesians generally view that government economic activity is beneficial and stimulates the economy; Austrians generally view that government economic activity is inefficient and wasteful… at least that’s my interpretation. Obviously, both approaches can be taken to unfortunate extremes.

        The Role of Government
        From our discussion up till now, it is clear that the neoclassical notion of
        market failure, discussed in the first section of this paper, cannot be used to
        justify government intervention in order to correct inefficiencies as defined
        from an Austrian perspective. Even though a market can never attain perfect efficiency, the corrective forces which arise from the market’s own mechanism will make it as efficient as possible. In fact, any notion of
        market failure from the Austrian perspective would have to arise, not from
        the free market, but from government interventions that would distort
        market prices and allocate resources toward ends other than those being
        pursued by market participants.
        If you’d like to correct that, I’m willing to learn from you.

        Reply
          1. pgl

            Oh wow – you did manage to cite some dude from Auburn University. Great football problem although they are about to lose to ALABAMA! But as far as an economics department? Seriously?

          2. pgl

            Bruce Hall’s new guru is Roy Cordato:

            https://www.johnlocke.org/person/dr-roy-cordato/

            “In June 2019 Roy Cordato retired from his full time position as Senior Economist and Resident Scholar at the John Locke Foundation and currently holds the position of Senior Economist Emeritus at the Foundation. From January 2001 to March 2017, he served as JLF’s first Vice President for Research.”

            That’s right boys and girls – the John Locke Foundation! Something tells me Brucie boy never checked Cordato’s credentials. So typical of Brucie boy.

            BTW – I read the paper and it clearly assumes away any Keynesian problem of insufficient aggregate demand. Did Brucie boy get that either? I doubt it. Now maybe he did get this and he is actually foolish enough to buy into this totally discredited view of the economy.

        1. pgl

          You do not give any citation to that long quote. I guess you do not know enough to know you should. Of course then again you may be so incompetent you do not know how. But this?

          ‘Keynesians generally view that government economic activity is beneficial and stimulates the economy’.

          That is a very stupid statement even for you. Keynesians do believe that we may need some sort of aggregate demand boost to more quickly get back to full employment but there are so many tools of aggregate demand management than increasing government purchases. But once again I realize you are too damn dumb to get this either. So yea – keep amazing us with your utterly stupid comments. It is your forte!

          Reply
        2. 2slugbaits

          Bruce Hall The Austrian school includes lots of different economists, from Bohm-Bawerk to Schumpeter to Hayek, and they are all a little different. When most people today who claim to be Austrians usually have Hayek in mind. The argument between Hayek and Keynes (and Kaldor) was all about the role that real wages play in the lengthening and shortening of production cycles (what Kaldor called the “concertina effect”), which is the basis for Hayek’s theory of the business cycle. There is near universal agreement (save George Mason University) that Hayek’s theory of the business cycle is simply wrong. And my experience has been that most people who claim to be “Austrians” and admirers of Hayek have never read Hayek’s actual economics. What they really admire is his quasi-libertarian political philosophy writings. And very few of those folks recognize that late in life (after extended discussions with his logical positivist first cousin Ludwig Wittgenstein of the “Vienna Circle”) Hayek ended up agreeing with much of John Rawls’ writings. Hayek eventually conceded that Rawlsian liberalism was not the inevitable road to serfdom after all.

          n fact, any notion of market failure from the Austrian perspective would have to arise, not from the free market

          Sounds like it was written by someone who never actually read any actual Austrian economics. Hayek’s theory of the business cycle holds independently of there being any government to gum up the works. That’s what the “concertina effect’ and varying production cycles in response to changes in real wages is all about!!! Next we’ll be treated to some half-baked synthesis of Hayek and Ayn Rand.

          Reply
          1. Barkley Rosser

            Oh dear. I do not like disagreeing with the usually correct 2Slugbaits, and I do not think this is worth getting into a long dispute over.

            However, my reading of Hayek as well as other Austrians is that their business cycle theory, certainly Hayek’s, has more to do with interest rates varying around the “natural rate” leading to malinvestment leading to business cycles. While this may happen for various reasons without government, generally they have been most likely to blame central banks for these improper oscillations, which is why in the end Hayek supported the free banking movement, even though he was not a full libertarian.

          2. 2slugbaits

            Barkley Rosser It’s certainly true that the interest rate is central to the broader school of the Austrian theory of capital, but I’ve always thought that what distinguished Hayek from other Austrians (e.g., Bohm-Bawerk and Schumpeter) was the role of wages relative to commodity prices and how that relationship affected investment. In Profits, Interest, Investment Hayek argued against Keynes’ flexible accelerator. Hayek believed increasing consumption tended to reduce the rate of investment. According to Hayek, real wages fall during a boom because commodity prices rise faster than nominal wages. This causes businesses to substitute labor for capital. Using more labor and less capital shortens production methods (i.e., less “roundabout”). Consistent with other Austrians, the length of the production cycle falls with real wages and increases with the interest rate.

            But for purposes of my comment to Bruce Hall, the most important point is that contrary to what many self-identified Austrians claim, abolishing government does not abolish the business cycle. In fact, the business cycle is endogenous with Austrian economics. OTOH, Keynesians tend to see the business cycle as the result of some exogenous shock (e.g., “animal spirits”) applied to an economy that is always teetering on disequilibrium. Austrians like to blame the government for malinvestment, but a consistent Austrian would recognize that you don’t need government to generate malinvestment. Malinvestment is endogenous to the Austrian system. Where Austrians and Keynesians differ is in what to do about the business cycle. Austrians believe a little dose of liquidation and purging will cure the economy and any interference by the government will only make matters worse.

            And even more to the point, my experience has been that self-identified Austrians don’t really have the stomach to follow all of that mumbo-jumbo about “roundabour” and “Ricardo effect” or Kaldor’s mocking term “concertina effect.” What really attracts many conservatives to Hayek is the same thing that attracts teenage boys to Ayn Rand.

          3. Barkley Rosser

            2slug.

            Will keep this short, maybe three points.

            Yes, Hayek did allow for the effects you mention, but I think he still viewed the interest rate stuff as more important.

            You seem to make it look like the Austrians are more into endogenous business cycles than Keynesians. I think it is the other way around. Again, lots of Austrians really do focus on the naughty central banks, in this way agreeing with Milton Friedman and old-school Chicago monetarists, despite their other disagreements. But Keynes himself and much more directly his important follower, Hyman Minsky, argued that animal spirits were more often than not endogenous to recent patterns in markets and the business cycle, with Minsky laying out a whole theory/model of this.

            Regarding Hayek, poorly informed libertarians and conservatives who have not read much Hayek really do not understand how complicated he was. He was no fan of Ayn Rand, and she was not a fan of his. Probably the most blatant example of this was back when Obama was trying to get the ACA passed, and various opponents, partly triggered by idiot shows on Fox News were waving copied of Hayek’s Road to Serfdom, even on the floors of Congress, in opposition to the ACA. The ironic joke is that in RtS itself Hayek himself came out for full-blown universal national health insurance, making him much more of a socialist than that nasty Obama, with his ACA that was derived from a proposal that originated in the free-market Heritage Foundation. But, well…

    2. 2slugbaits

      Bruce Hall As pgl pointed out, the Keynesian/Austrian debate is about macroeconomics. The Foxconn thing is a very different animal. Very few actual economists would support crony capitalism as a smart path to economic development. Also, the reference to Hayek is misplaced. The “fatal conceit” had to do with Hayek’s epistemological views.

      Bureaucrats who run develop programs do not have profound skills at picking winners from losers in the marketplace

      “Bureaucrats” don’t usually get involved in “economic development” programs. I think you’re confusing “bureaucrats” and private sector lobbyists. Again, very different animals. Bureaucrats simply carry out laws and policy choices. The bureaucrats down at the DMV don’t make the rules, they simply process drivers who want a license. In cases like the Foxconn deal the real culprit is the unholy alliance between company lobbyists and clueless “economic development” entities that bamboozle clueless politicians like Scott Walker…who is only a high school graduate and was in way over his head. As to picking winners and losers, you should keep in mind that the private sector does not have profound skills at picking winners and losers either. Most companies fail. The problem with deals like Foxconn is that those kinds of projects are not allowed to fail in a way that penalizes private investors.

      Reply
      1. pgl

        Did you see Brucie’s link to that paper by Roy Cordato? The paper itself assumes away any Keynesian aggregate demand insufficiency. Besides that Dr. Cordato is best known for being part of the John Locke Foundation. Brucie does have a talent for putting forth the views of some really nut cases!

        Reply
    3. Barkley Rosser

      Bruce,

      You are on to a valid pont here but blew it as the commentary below indicates. This matter of the feds subsidizing local governments to compete with each other wastrefully i nproviding all sorts of goodies to businesses location in them is indeed an isssue on which many pro-free market economicsts, including non-Austrians at the University of Chicago, and many other economists much more open to various government interventions in the economy happen to agree on. Your mistake was pinning this as being something about Austrians and Keynesians.

      As it is, there are areas where some Keynesians, reallly mostly Post Keynesians, and some Austrians, especially Hayekians, agree on besides this matter. An obvious one is the matter of fundamental uncertainty, which has been a matter of discussion in another thread regarding the meaning of “black swans” or “Black Swans.” As it is, the controversial Nassim Ncholas Taleb has expressed respect for both Hayek and Keynes (as well as Frank Knight) for their understanding of the importance of fundamental uncertainty that cannot be understood by reference to any probability distribution, including ones that model events that supposedly occur only once every 100 years. These are not true black swans or Black Swans as they do reflect probability distributions.

      So you got yourself off both by misidentifying this as being the only place where “Austrians” and “Keynesians” agree while not being aware of areas where at least some of them do agree.

      Reply
  4. macroduck

    1) Marginal analysis suggests that, as locales bid for businesses, competition between locales will drive the return from government subsidy to near zero, with complete information. Firms get all the benefits, the public gets none.

    2) Information is incomplete, leaving plenty of room for a “winners curse”. Beyond no benefit to the public, there is a good chance the public will suffer harm as a result of the curse.

    3) Money is involved, which assures that lies will be told.

    Standard theory argues that subsidization causes distortion and will generally be a bad idea, That’s without ever considering the bidding problem or less bald-faced lies. So I count three arguments against subsidization.

    Reply
  5. Moses Herzog

    It would appear from some recent charts from our good man Mr. Torsten Slok, that he neither thinks monetary policy is helping the general economy that much nor are the orange leathery creature’s tax cuts helping. Gee wiz, who would have thought it??

    Reply
  6. Julian Silk

    Dear Folks,

    Just two points about this. The Mercatus people are very conservative and would be against almost all government intervention. This may include the Amazon headquarters in Northern Virginia as well. But before all these things get dismissed,

    1) Was it ever stated anywhere how much Foxconn sales would have to increase to pay back the incentives?

    2) Foxconn hires certain types of labor. Was there significant unemployment, or reason to expect it, before the tax credits, etc., were provided?

    Julian

    Reply
      1. Julian Silk

        Dear Folks,

        Menzie is right, and I thank him for the references to the studies. I think the CROWE study is, shall we say, over-optimistic, especially with regard to attracting FDI. The multipliers of 2.7 that are in both studies seem very high as well. The CROWE numbers on Illinois-Wisconsin flow of workers are reasonable.

        It is very unfortunate but true that people get political reputations. In Walter Moore’s biography of Schrödinger, we see this happening with Rudolf Tomaschek, and Georg Joos from Heidelberg, who conducted experiments verifying the absence of “aether”, in their update of the Michelson-Morley experiment. This directly supported Einstein. Eugene Meyer, who was a colleague of Schrödinger’s, had objected to both of them on political grounds. Meyer had excellent reason to do this, since Tomaschek and Joos worked under Lenard, who was a virulent Nazi and anti-Semite. But the point remains that had Meyer prevailed, the experiments might not have been done.

        The polarization in this country hasn’t reached that level, yet. But it discriminates against honest findings from the other side, and I think it discriminated against Menzie’s study. If I had been asked to try to estimate the numbers, I would have tried to run an IMPLAN study to get the direct, indirect and induced effects. (It is unclear where these numbers for either study came from; both or neither may have used IMPLAN to estimate the effects.) If there were some sort of neutral arbiter, then it would be harder to say, “The other side is just making this up to hurt us politically”.

        Julian

        Reply
      2. pgl

        “Noah Williams is an American economist, currently the Juli Plant Grainger Professor of Economics at University of Wisconsin-Madison. He is the director of the Center for Research On the Wisconsin Economy.”

        Wait – does Menzie know this guy? If so, might he go ask Mr. Williams why he wrote a paper that seems to be so similar to what Gerald Friedman wrote back in 2016 on the Sanders fiscal plan. All multipliers all the time. I did now know Wisconsin was in the midst of the Great Depression.

        Reply
  7. Julian Silk

    P.S. There is a point in looking at the real details about the Foxconn incentives. It is my impression that people who are writing here are not well-versed in the specifics in Virginia. (Barkley Rosser may be an exception to this.) But one of the things that is at least rare in Virginia is JLARC (the Joint Legislative Audit and Review Commission). This is a professional watchdog, and they have seemed quite competent to me for over 20 years, especially when I worked in Richmond myself. Their study of the value of the data centers to the state is at

    http://jlarc.virginia.gov/pdfs/reports/Rpt518.pdf

    Of course, this is not Amazon directly, but having Amazon in the state may have some connection with the data centers. See also

    https://www.richmond.com/news/virginia/high-stakes-for-jlarc-as-it-takes-on-robust-work/article_c153a226-c2c5-50d8-84e8-30261ef22345.html

    which makes the connection, with the redesign of the state development agency, more direct. So there is a professional review in Virginia the way there may not be in Wisconsin, and to the extent the submission to Foxconn in Wisconsin was just badly done, and can be fixed for the future with minimal politics involved, that would seem to be in the best interests of the taxpayers in Wisconsin. Wisconsin will have economic development incentives under any governor and parties in control of the legislature. It may be that the Foxconn deal was inherently corrupt, or just intentionally misleading, but the Mercatus study may not be a useful guide in how to make things better.

    Julian

    Reply
    1. Moses Herzog

      Will this be better/worse for Virginia than the Foxconn deal was for Wisconsin?? Some of these numbers look hard to match as far as Virginia getting back what they have given up in tax revenues. Without looking too deeply at it, one way I assume that Virginia’s deal will be better is they will hire more American based workers. My impression was FoxConn wasn’t even going to do that for Wisconsin as it looked like the skill-set needed was more suited to Chinese workers.
      https://www.bloomberg.com/news/articles/2019-03-16/amazon-wins-final-incentive-deal-for-hq2-in-northern-virginia

      I think this is VERY worthy for Menzie to keep track of, if the benefits Virginia gets back are worth what they have given up. At the very least, it might make a good paper or class project for 3-4 graduate students to hammer out, perhaps the 2025 class, or 5 years after the facility has been completed, where enough time has lapsed to make a solid judgement on that. I’ve seen enough of these, I’d be “betting the under” on that one as far as payoffs are concerned.

      Reply
      1. Julian Silk

        Moses,

        This will be unusual, but I agree. It may well be under, and if Menzie and the students will keep track of it, that’s a good idea.

        Some of the intended receipt is bragging rights – “We have Amazon and you don’t!” This sort of thing attracts governors, and isn’t that great for the taxpayers.

        Julian

        Reply
  8. Moses Herzog

    Folks, you know that Uncle Moses is deh best at finding FREE stuff online. Chad Bown has Edited a new book you can find on VoxEU titled “Economics and Policy in the Age of Trump”. You go to VoxEU, make sure to log in, then do a key word search for Chad Bown’s name. Then look for the Free eBook. It should be roughly the third link down from the top of the list. Don’t ever say Uncle Moses never tried to be nice to you.

    The greatest thing about Chad Bown’s eBook??? It has a paper co-authored by Gita Gopinath. Oh damn, I drooled some saliva on my shirt. How did that happen??

    Reply
  9. Julian Silk

    P.S. Correction on the last post. Tomaschek was a student of Lenard’s at Heidelberg, but did work on his own elsewhere. He was a supporter of the loathsome “deutsche Physik”, but at least did honest experiments. See https://en.wikipedia.org/wiki/Rudolf_Tomaschek. Georg Joos was neither a student nor collaborator with Lenard, and was (rightly) a critic of “deutsche Physik”. He did cooperate with the Nazis to some extent, but again, given where he was, it would have taken a very brave man not to do so, and it is much too much to expect everyone to be so brave. See https://en.wikipedia.org/wiki/Georg_Joos.

    J.

    Reply
    1. Barkley Rosser

      Julian,

      Well, at least these Nazi-linked physicists did an esperiment that sided with the Jew Einstein.

      On Amazon in NoVa, the biggest complaints have been from locals worried about rising housing prices, traffic congestion, and related gentrification, especially in Alexandria, with these resembling some of the complaints raised in New York.

      There have not been many arguing the subsidies will not pay for themselves, although they may not. But I think there are clear reasons to think thie one is not as bad as FoxConn in Wisconsin or even the New York one. Some of that has indeed to do with externalities associated with these other data centers, as you mentioned, Julian, which indeed was one of the attractions for Bezos and Amazon in the first place. It also seems fewer subsidies have been given, partly because NoVa had a stronger case without them in the first place. We shall see whether it pays for itself or not.

      Reply
    2. Moses Herzog

      Speaking as someone with a significant portion of German blood, but one whose family migrated to America long before World War 2, I think Germans often use this as too much of a rationalization for morally bankrupt decisions they made. I think there was a significant portion of Germans who thought “People are suffering, but I am not one of the ones suffering, so life goes on, so be it”. No one knows for certain what they would do until placed in that context, but I feel this has been too much referenced as an excuse for the general German population. I also think that all ethnic Germans should (at the very least) feel a mild sense of guilt for the severe crimes committed against Jews, whether they have past family connections to Germans of the war period, are German nationals, OR NOT. It is my personal/subjective belief (again as someone with a good portion of German blood) that there is some dark thing inherent in German nature which contributed to what happened, and was not just “environmental” or exterior factors.

      Reply
  10. Julian Silk

    Moses,

    We are back to normal. I lost a lot of relatives to the Germans, too, and my uncle brought back stuff from fighting them in Germany. My thing, which relates back to the original Foxconn argument, is “How do you get over it?” Ideally, there would be some independent way to certify your results, so I could write an article criticizing Trump or Walker, or an article supporting Trump or Walker, as an opinion piece, and then do, say, empirical work, which could be impartially checked, and have nothing to do with the opinion piece. But it doesn’t seem possible for empirical work in economics to be like that – the choice of variables is suspected, the functional form is suspected, even the method of estimation gets suspected. If there were some general procedure to politically immunize your work, a lot of people would follow it.

    It would seem that encompassing, as an econometric tool, might work in this way. But how many people get converted?

    Two examples of encompassing, connected to Neil Ericsson, with whom I am somewhat acquainted, are examples. They are at:

    https://ideas.repec.org/a/tpr/restat/v75y1993i1p19-31.html – on the trade balance
    and
    https://www.federalreserve.gov/econresdata/ifdp/2017/files/ifdp1189.pdf – on government forecasts on the Federal Debt

    They are perfectly reasonable papers. But who has been converted by them? For the Germans, what procedure can they perform to remove this dark thing that may be inherent in their nature? Reparations in the 1950s apparently were not enough. What should they do?

    Julian

    Reply
    1. Moses Herzog

      @Juilan Silk
      Maybe other great thinkers such as Barkley Junior can decipher your comment, for me it’s all over the place, near schizoid. Or maybe “frenzied” is a better way to describe it. I’ve enjoyed some of your past comments. My main beef with your comment in this thread is in the quotation “He did cooperate with the Nazi’s to some extent” and that if a broad number of Germans were doing this (i.e. “going along with it”), it somehow makes it partly acceptable.

      Menzie?? What did I do wrong THIS time?? 3 of my comments in the Jeffrey Frankel thread did not post. Now my life will go on if those 3 comments never post, I’d just like to know what my transgression was THIS time??? If you wanna say they were asinine, I can even live with that, I’d just like to know your reason.

      Reply
  11. sammy

    $600 million, or over half, of the listed subsidies are tax credits or exemptions that the state wouldn’t have received without the new plant. So they cost the state zero.

    Reply
      1. sammy

        Menzie,

        With all the competing states for the Foxcomm plant, the probability of landing the plant with no incentives would be about zero

        Reply
    1. pgl

      This comment reminds me of those Macy’s 25% off sales. Price tag at the store down the mall $250. Price tag at Macy’s before the discount $400. I guess Sammy is happy with paying only $300 and he does not have to stand in the long line at the other store!

      Reply
      1. Moses Herzog

        This was a pet peeve of my father’s for years. He used to say “discount from what??” which was abbreviated of “discount from what price??”. This has gone on for decades clear to this very day with no signs of abating. It used to be Macy’s, Sears, JC Penney, local furniture stores, local home appliances stores, and every clothing store under the sun that used this stunt. Now you tend to see it more with electronics and streaming services. Here is the thing radio and TV marketers are counting on the American consumer NEVER figuring out, and largely haven’t up to this point If they don’t give you the flat out price of the item in the advertisement—whatever that price is (this INCLUDES foods in TV ads BTW), then it’s not that damn good—period—OR THEY WOULD TELL YOU THAT PRICE IN THE ADVERT. “30% off from WHAT??” is a question requiring way too much brainpower for the average American consumer.

        It’s not rocket science people, anymore than a presidential candidate telling you he can shoot someone with a shotgun out on Boulevard and still get Southern Evangelical’s vote is rocket science.

        Reply

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