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Economic Development: Last Week Tonight with John Oliver (HBO)


Jobs. Literally, the only reason
that anyone gets up before 11am. Politicians care about jobs
more than anything else, as you can tell from how often
they mention them. These are the things I focus on.
Jobs, jobs, jobs– Jobs, jobs, jobs. Jobs, jobs, and jobs.
Period. -Jobs… jobs… jobs.
-(AUDIENCE LAUGHING) It’s about jobs, jobs, jobs.
Good-paying jobs. It’s about jobs. Jobs, jobs, jobs, and more jobs.
American Jobs. Politicians seem to think
that jobs are like Beetlejuice. If you just say the word
a magic number of times, eventually they’ll just pop up
out of nowhere. Now, more specifically tonight,
I’d like to talk about one of the ways that politicians
try to create jobs. Economic development incentives. And I know that
that doesn’t sound interesting. Wait, wait, what are you doing? You’re putting me
picture-in-picture? Is thatEntourage: The Movie?Fine, you know what,
switch over the audio, listen to the first line.
You’ll be back. I may have to jerk it
before we even get there. -(AUDIENCE LAUGHING)
-Oh! Oh, how about that? All of a sudden, a show about
economic development doesn’t seem like
the worst thing you could be watching, does it? -(AUDIENCE LAUGHING)
-So… (CLEARS THROAT) -As I was saying…
-(AUDIENCE CHEERS) Economic development incentives
are essentially when state and local governments
offer perks to companies to entice them to build
or expand in their area. Here in New York there is a program called
StartUp New York which launched with some pretty
astounding tax breaks. AD ANNOUNCER:Start-Up New York
creates zero tax zones
for new businesses
for ten years.
Zero property tax,
zero corporate tax,
zero business tax,
and zero income tax.
Wow. Zero property, corporate,
business, and income tax. (SLIDE WHISTLE ASCENDING) And I believe that that sound
you just heard was Donald Trump
getting an erection. (AUDIENCE LAUGHING) Wait for it. Don’t wor–
Wait for it… -(SLIDE WHISTLE DESCENDING)
-It’s gone again. -(AUDIENCE APPLAUDING)
-See ya next year, little buddy. And look,
it’s not just New York. All 50 states
offer some kind of incentives, like tax-breaks
to attract companies, and the argument is,
that they attract employers, which attract jobs,
which lead to spending, which creates more jobs
and so on, and so on, and so on, and many places have
bought into this, hard, trying to outbid one another
for businesses. Indiana even once took out
attack ads on other states, like this billboard, which read,
“Illinnoyed by higher taxes? Come to Indiana,
a state that works.” And that’s pretty aggressive,
although, it’s actually much tamer than their
original billboard, “Just Arkan-saw your tax bill? Ida-hope you like
our tax breaks. Because if you Colora-don’t, we’ll Conneti-cut
your fucking balls off.” (AUDIENCE LAUGHING) And if a company is big enough, it can even start
a bidding war itself. That is actually happening
right now, with Amazon. They are planning to build
a second headquarters somewhere in North America and they are making
governments bid for it. They even released eight pages
of instructions for candidates telling them to “think big
and be creative,” which led many cities
to do stupid shit like this… NEWS REPORTER 1:Overnight,
the Big Apple
looking more like an orange.New York City mayor,
Bill de Blasio
lighting up the city in, quote,
“Amazon orange.”
The city of Birmingham is using
giant Amazon boxesto try to get
Amazon’s attention.
NEWS REPORTER 1:Stonecrest,
Georgia offering to create
a new town of Amazon, Georgia.They would create a new town
and name it “Amazon.” You know, to compete,
I’m not surprised that Omaha, Nebraska didn’t
offer to let Jeff Bezos kill any three people he likes. ‘Cause you know he would.
Look at him, he wants it so bad. It’s the only thing
he can’t have and he wants it. And numerous mayors
made direct appeals to Amazon with videos ending in versions
of the same bad joke. Hey Alexa, where should Amazon
locate HQ2? ALEXA:Hmm. In Frisco, Texas.Alexa, where is
the most interesting company in the world gonna locate? ALEXA:Obviously,
Washington, DC.
So, Alexa,
where is the best place for Amazon to locate
its second world headquarters? ALEXA:Danbury, Connecticut.I told ya so. You know, my one and only worry
with all of those ads, and I mean this sincerely, is,
are they almost too hilarious? But those stunts
are just window-dressing. What Amazon cares much,
much more about, as they mentioned
in their instructions 21 times, are incentives. And while few places
are revealing what they offered, we do know that New Jersey
reportedly offered seven billion dollars
in tax breaks, which is an insane amount
that other places may now have to compete with,
and think about what that means. That could mean billions
of tax dollars that would not be collected
for things like roads, or schools, or hospitals,
and Amazon already has more money than it knows
what to do with. How else could you explain
the existence ofGoliath?A show that, and this is true,
literally nobody has ever seen. Nobody. No human.
No animal. Nobody. -Nobod– No one.
-(AUDIENCE APPLAUDING) Does it even exist? If you make a show
and no one watches it, does it exist? Discuss. And…
And that is the thing here. We give companies a lot of money
through these incentives. By one estimate, in 2015
they cost state and local governments
45 billion dollars. And that money can go
to some questionable projects. For instance, a few years ago, Kentucky took a big swing
on this… A full-size replica
of Noah’s ark is drawing thousands of visitors
to Williamstown, Kentucky. REPORTER 2:
This is the Ark Encounter.
A chapter from Genesis
told on a $100 million budget.
Four floors of Noah,
his family,
and beasts great and small.The project received $18 million
in Kentucky tax incentives.
Eighteen million dollars of tax breaks
for a gigantic ark museum. And I’m not saying that is
inherently a bad idea, I do kind of want to see
this thing, especially as its website
genuinely has a section devoted to the question,
“What about all the manure?” The answer, apparently, is, “Slatted floors
or multiple-level cages,” which is really
not a good answer, ’cause you do not want to be
the animal on the lowest level of that ship. And while the ark
clearly created some jobs, there were some caveats
to those positions… REPORTER 3:Critics complain
of discrimination in hiring.
Only Christians,
no gays or lesbians,
and single people have to sign
a chastity pledge.
-(AUDIENCE GASPS)
-Oh, come on! Aside from the homophobia, chastity is a pretty weird rule
to put in place for a museum that’s pretty much a gigantic
replica of a floating fuck-zoo. They… they weren’t brought in
two by two so that everyone
would have a swim-buddy, they were on that boat
to fuck. (AUDIENCE APPLAUDS, CHEERS) To fuck! But the justification for taking a gamble
on a gigantic ark, was that it would be
a boom to the whole area, and to hear one
local official tell it, the economic impact
has been underwhelming. The ark’s success has not had
the ripple effect many hoped it would. REPORTER 4:Downtown
Williamstown,
which was expecting
increased car and foot traffic,
has almost as many
empty store-fronts
as occupied store-fronts.REPORTER 5: What’s it meant
for downtown Williamstown? Nothing. I don’t wanna sound negative
in this interview, but… there’s nothing here. Yeah,
and that kind of makes sense because once you’ve spent
three hours walking around a wooden boat with
sexually frustrated tour guides and haunted by the mental image
of a miserable zebra neck deep in shit, ’cause apparently decks
were assigned alphabetically, you’re probably gonna
skip lunch in town. And look, a well-designed,
closely monitored program with clear goals
might make sense to an area, but too often the terms
are extremely lax. Some don’t require
that jobs be created at all, and some require
almost laughably few. Remember StartUp New York?
Zero taxes for a decade?… -(SLIDE WHISTLE ASCENDING)
-Oh shit, I’m sorry. I’m sorry. Don’t think about it,
I’m sure it will pass. That program
is hiring requirements– That program’s hiring
requirements were that you create just
one new job a year, and the state
recently considered scaling that back to one
new job in the first five years. And sometimes these incentives
are given out even when
they may not be necessary. Take a look
at Fargo, North Dakota. -(SLIDE WHISTLE DESCENDING)
-You know what, he’s not wrong. He’s not wrong and I knew
that would do the job. Fargo gave a tax break to FedEx for moving a facility
to their city, but why? Did they really need to? ‘Cause just listen to what
happened when one city council member
asked that very question of a FedEx representative. Mr. Wilson, if you don’t get
this exemption, will you still move to Fargo? -MR. WILSON: Yes, sir, we will.
-Okay. Yet, ten minutes later, the council voted
to give FedEx that exemption. Why? Also, if someone wants to
willingly move to Fargo, you don’t offer them
tax incentives, you simply offer them
a full psychological work-up that starts with the question,
“Who did you murder? We’ll still let you live here,
but we do need to know.” (AUDIENCE LAUGHING) And then…
Then there are programs narrowly set up to encourage
a particular industry to grow. Which can sound great,
but may not lead to good, permanent jobs.
Take film and TV incentives. At some point
in the last couple of decades, nearly every state decided
that they wanted to be the next Hollywood, and now,
31 states have incentive programs
for film or TV. The problem with that is,
if you are one of them, you have 30 other states
competing with you… hard. And because film productions
are portable, if you try and scale back
your incentives, they’ll just go
wherever a better deal is. Just listen
to this movie producer who has taken advantage
of multiple states’ incentives. I would never make a movie
where I didn’t get an incentive, and I don’t ever intend to. But at the end of the day,
if there’s an incentive… it’s good for me. -And look…
-(AUDIENCE LAUGHING) He’s not wrong,
I mean yes, he looks like every woman’s
worst ex-boyfriend, but he’s– he’s not wrong. It is not his job to worry
about whether his incentives are good for the states. It is his job to, I’m assuming,
refer to sushi as “sush,” because he definitely does that. But it should be someone,
someone’s job, to worry about the effect
of these programs. And on some occasions
when states have done that, the news they got was not great. For instance,
Louisiana found that for every dollar
it spent on its film program, it generated just 22 cents
of tax revenue. Which sounds bad,
but which is still better than Maryland,
which made just 10 cents for every dollar spent,
which is still better than Connecticut’s program,
which returned only seven cents on the dollar. That’s like putting a dollar
into a vending machine, and getting a single,
yellow Starburst in return. At some point,
what you’re getting out is not worth what you’re
putting in. And defenders
of economic incentives will say, that’s just a fraction
of the broader economic benefit that they bring.
The problem is, there’s not much evidence
for that. And I know that accounting
for the total economic impact of anything is tricky,
but we are gambling billions of dollars
on little more than faith. And even basic information
can be really hard to come by. One study found that
three quarters of major state
development programs don’t even disclose actual jobs
created or workers trained. So, we’re basically throwing
money down a hole and hoping it bring us
prosperity, which is the exact
business model of a fucking wishing well. (AUDIENCE LAUGHS) And to see this at perhaps
it’s most pointless, just look at Kansas
and Missouri. They’ve offered competing
tax breaks to businesses for years. Which has made things
particularly interesting in one metro area. So,
I’m in Kansas City, Missouri. That’s it behind me. Uh,
there is Kansas City, Kansas. Two states, one metro area,
but those states offer subsidies for job creation. Create a job,
you get a tax break. So, what do businesses do? A Missouri business will move
some employees over to Kansas City, Kansas
and claim a tax break, move ’em back,
claim another tax break. It’s true. For instance,
Kansas City, Missouri lost corporate offices
for all these companies to Kansas City, Kansas
which, in turn, lost offices
for all these companies to Kansas City, Missouri.
And that isn’t creating jobs any more than moving your couch
from the bedroom to the living room
is creating fucking furniture. And this war has come
at a real cost. A local foundation has studied two state-level
incentives programs and estimates that since 2009,
around 6,600 jobs have moved from Missouri
to Kansas. While around 5, 500 jobs have moved
from Kansas to Missouri. Meaning there’s been a net-gain
of around 1,100 jobs on the Kansas side of the line
and a combined cost to the two states of
$331 million in lost tax revenue, and
think about that for a second. You could create a program
where the first 1,100 people to move from– to Kansas City
from Missouri would each get a Ferrari
which they could then drive around a giant pile
of $30 million that the state had set
on fire and you’d actually be
fiscally responsible, because you would have
saved the area $20 million. Look, it is pretty clear
that economic development needs to be done
in a much smarter way. And I don’t fully blame
the companies for this. Because if governments
are going to offer ridiculous incentives,
they are going to take them. So, governments need to
hold themselves, and companies,
more accountable. And if companies aren’t
producing what they promised, we need a system to claw
our money back. But to find that out,
we’re going to need much more oversight
over these programs and what we’re getting
in return. Although, I will tell you one thing that I know for sure
we got in return, theEntouragemovie. That got a $5.8 million
tax credit from California and where else were they
going to filmEntourage?Idaho? So,
California, please know that you indirectly had a hand
in producing a movie, which, may I remind you, had this,
for it’s very first line… I may have to jerk it
before we even get there. You know what,
I’ve got to say this, “Congratulations,
Kentucky Ark Museum, because somehow, you’ve become
the second worst tax-payer subsidized
fuck-boat in this story.”

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