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This is a great article around why "corporate welfare" rarely works out. Also, semes like a textbook example of "eminent domain" abuse? We call this "expropri

• justchilly 6y ago
  > This is a great article around why "corporate welfare" rarely works out. Any data to back this up? It's generally accepted that subsidies are effective in many cases (see corona virus stimulus packages). This Foxconn deal was poorly thought out and horribly mismanaged, but it doesn't sound like Foxconn lined their pockets with taxpayer money. The subsidies encouraged them to take a chance, and it didn't work out - spectacularly.
• tootie 6y ago
  Corporate subsidies work very well in certain conditions. The biggest is in investing in industries have big long-term potential but huge upfront costs. Power generation is a good example. Subsidies also tend to work best with a portfolio like a VC fund. The other option is for a very mature industries with inelastic demand where subsidies go directly to pushing down prices. Like with food and fuel.
  • sudosysgen 6y ago
    In general, for such industries where corporate subsidies are really really worth it, a well run SoE will do the job with less risk. For examples in power generation, EDF and HydroQuebec are cases where the government, instead of directly or indirectly subsidizing power generation, decided to just run it themselves, and they both have very clean (80% carbon free for EDF, 99.9% for HydroQuebec), and both make a solid profit while selling the electricty at very low costs (for HydroQuebec, the lowest unsubsidized cost in the world, full stop).
    • zdragnar 6y ago
      Hydro is clean in the sense that clean coal is clean. You need to measure and factor in the methane generated by the decaying biome behind the dam. We also have a lot of electrical cooperatives and other non-mega-corp electrical providers in the US. All in all, it isn't a great analogy.
      • gruez 6y ago
        >You need to measure and factor in the methane generated by the decaying biome behind the dam. how much are we talking about? does it work out to about the same as other fossil fuels, or order(s) of magnitude less? Also, is it possible to mitigate this by burning the vegetation prior to flooding the area?
        • User23 6y ago
          Oxidizing the biocarbon to mitigate CO2 release? I think I see a bit of a flaw in that strategy.
          • gruez 6y ago
            I don't see why not? We flare natural gas at oil wells for this exact reason.
            • ineedasername 6y ago
              Natural gas burns pretty clean by comparison, and if we're taking methane, it's far better to burn it and produce those relatively low C02 amounts than let the methane into the atmosphere as it holds roughly 80 times more heat than C02. C02 produced by biomass varies with moisture content, but is generally on the level of coal per unit of energy. Moister wood produces slightly more, dry seasoned wood slightly less than coal.
        • zdragnar 6y ago
          https://www.theguardian.com/global-development/2016/nov/14/hydroelectric-dams-emit-billion-tonnes-greenhouse-gas-methane-study-climate-change https://www.theguardian.com/global-development/2016/nov/14/h... About 1.3% of all human caused gas emissions, made worse because it is primarily methane. As for burning first, that only works for new dams, and you need to de extensive excavation to get at the roots as well- depending on the plant, upwards of half of its mass is below the surface. Biomass decay isn't the only problem; the article also cites downstream algae blooms, which I suspect would be exacerbated by the occasional dredging necessary to keep dams from being blocked by silt. A direct comparison to coal is tricky, because a lot depends on the type of coal burned and thr type of plant it burns in. Certainly coal isn't a clean source of energy, but it is clear that hydro isn't either.
  • maxerickson 6y ago
    Isn't Foxconn all short to medium term potential with sort of middle of the road upfront costs? Their upfront costs are probably nominally higher than average, but state of the art manufacturing moves fast, the up front costs are either paid back quickly or a waste. The same forces limit the long term potential; if they don't keep up, the investment quickly withers.
    • tootie 6y ago
      Yes. This investment made no sense. The state would have gotten a better deal by just hiring people directly.
      • imtringued 6y ago
        That's what I'm thinking too. The only way you can salvage this is by canceling the contract with Foxconn and buying the empty buildings at rock bottom prices and grant funding to local startups who are allowed to use the buildings for a low price. At a minimum this would replace the fake jobs with real ones.
        • tootie 6y ago
          Good luck with that. Startups aren't chasing real estate. Gov Cuomo sunk a load of money trying to build a startup hub in western new york and it didn't work at all.
    • ineedasername 6y ago
      Well, plenty of manufacturing doesn't require state of the art. Start with that level today, and you can still use it a decade from now for products that don't require bleeding edge. Take chip fab for example: 45nm chips appeared around 2008, and cutting edge today is 5nm. Yet something like an arduino may come in around 200nm, the Pi 4 is still 28nm. So there's a fairly long lifespan for manufacturing facilities. Some will retool for the latest tech sure, but plenty will simply pivot to a different market niche commensurate with their capabilities.
• pg_bot 6y ago
  You can blame the worst supreme court decision in the 21st century for that. (Kelo v City of New London) https://en.wikipedia.org/wiki/Kelo_v._City_of_New_London https://en.wikipedia.org/wiki/Kelo_v._City_of_New_London
  • gruez 6y ago
    worst? what about citizens united? how often is eminent domain abused for economic development, compared to how much favorable legislation was passed for corporations?
    • pg_bot 6y ago
      I knew someone would bring up Citizens United v FEC when I said worst. I know this will be an unpopular opinion on this forum, but I believe that case was decided correctly. I agree wholeheartedly with Justice Kennedy's opinion that "If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech" Read the opinions and dissents of that case and you may change your mind. https://supreme.justia.com/cases/federal/us/558/310/#tab-opinion-1963051 https://supreme.justia.com/cases/federal/us/558/310/#tab-opi...
      • Accujack 6y ago
        Yes. People blame the court for doing the correct (if not right, because courts don't really do "right") thing. The problem is that there's no constitutional amendment making an exception to the first amendment to limit or forbid contributions to campaigns. It should never have been an ordinary law in the first place.
        • ummonk 6y ago
          To be clear, the law does limit contributions to campaigns. What they don't limit is third party organizations spending money on their own ads. Which is as it should be.
        • 6y ago
• Accujack 6y ago
  It's not just eminent domain abuse, either... part of the Foxconn deal was set to bypass the Great Lakes Water Resources Compact and use water from Lake Michigan for LCD manufacturing. The City of Racine basically argued that they could take the water for "public use" because they were allowed to do so (cities source drinking water from the lakes) and give up to 7 million gallons a day to Foxconn via a pipe. Wisconsin environmental oversight signed off on this, but the plant hasn't happened so it hasn't been tested in court. Hopefully the Compact will be strengthened to prevent potential abuses like this in the future.
• ineedasername 6y ago
  Yes, these sorts of "tax incentives" are a negative sum game. As long as they are done, companies will hop around to the best deals, depleting the tax base as they force more and more competition from struggling jurisdictions, forcing local citizens to foot the bill for more and more of the infrastructure and services that make those businesses possible.
• cratermoon 6y ago
  NY Times covered it well 8 years ago https://www.nytimes.com/2012/12/02/us/how-local-taxpayers-bankroll-corporations.html https://www.nytimes.com/2012/12/02/us/how-local-taxpayers-ba...
• MisterBastahrd 6y ago
  I think I read somewhere that Louisiana loses about 20% of its local municipal revenue per year due to corporate welfare and tax breaks.
  • rjmunro 6y ago
    That's an unfair way to say it. You could equally say "Louisiana spends about 20% of its local municipal revenue supporting local businesses." I have no idea if that is a big number or how it compares to other states. I also have no idea if it's a good investment - perhaps it results in lots of jobs and ultimately more than 20% increase in tax take (you should also factor in if it's just pulling jobs and therefore taxes from elsewhere, rather than creating new value). But the money is no more "lost" than it would be if they spent it on schools or roads or whatever else.
    • throwaway0a5e 6y ago
      Furthermore, the end number is just going to be a reflection of how in-vs-out sourced the state .gov is anyway. Does it really matter if the state is patching its own roads or running its own homeless shelters or cutting checks (aka "corporate welfare") for 3rd parties to do it? At the end of the day those things are state funded whether or not the people doing the work have state letterhead on their pay stubs.
    • MisterBastahrd 6y ago
      It's an accurate way to say it. The companies that are getting the breaks are large multinationals who drop polluting chemical plants into towns and raise local cancer rates while getting sweetheart deals that true local corporations never get.