Snyder reveals Hyundai expansion in Michigan

[downtown_racine]

I don't know or particularly care about the question posed in the thread title, but stuff like this, as routine as it is these days, is freaking insane public policy:



We're directly shelling out 50 grand per job created, and that's what Snyder calls "a sound job creation strategy?"

When polled that is what the general public wants government and pols to do "create" jobs. I dont understand the logic that its governments job to "create" jobs but billions in corporate welfare are handed out to companies by pols and gubmint to lure employers. Alabama gave $253 million for 2500 jobs.

[JBMcB]

Politicians base these subsidies on the "velocity of the dollar" theory - that every dollar paid out to employees and put back into the local economy generates some multiplier of economic activity. Conventional wisdom says it's 1:10 - for every $1 spent in the local economy $10 of economic activity gets created. That's how they justify these huge subsidies for relatively small numbers of jobs created - the idea is that the $10 million in wages will blow up to $100 million in overall regional profits.

Problem is, most economists think the actual number is between $0 and $8, depending on what people spend their money on [[buying bread from a local bakery is closer to $8, buying a video game from Amazon is closer to zero). For reference, Obama's stimulus "success" calculations were based on $18 per dollar spent - which is optimistic to say the least.

[antongast]

Politicians base these subsidies on the "velocity of the dollar" theory - that every dollar paid out to employees and put back into the local economy generates some multiplier of economic activity. Conventional wisdom says it's 1:10 - for every $1 spent in the local economy $10 of economic activity gets created. That's how they justify these huge subsidies for relatively small numbers of jobs created - the idea is that the $10 million in wages will blow up to $100 million in overall regional profits.

Problem is, most economists think the actual number is between $0 and $8, depending on what people spend their money on [[buying bread from a local bakery is closer to $8, buying a video game from Amazon is closer to zero). For reference, Obama's stimulus "success" calculations were based on $18 per dollar spent - which is optimistic to say the least.

The other problem is that we keep laying off public-sector employees, who generally are creating broader social benefits by doing the work they do, in order to pay for more tax breaks to create private-sector jobs to help Hyundai make a bigger profit.

[ordinary]

The other problem is that we keep laying off public-sector employees, who generally are creating broader social benefits by doing the work they do, in order to pay for more tax breaks to create private-sector jobs to help Hyundai make a bigger profit.

I think it would be difficult to define "broader social benefits".

[antongast]

I think it would be difficult to define "broader social benefits".

Obviously it depends on the job. But if, say, that $2.5 mil gets cut from revenue sharing to cities that could have been used to hire more local cops or keep a library open or something, IMO that's a terrible trade. The government should be in the business of collecting revenue and providing services, not making large corporations more profitable. Job creation and the resulting economic multipliers aren't a compelling argument here because regular public service provision and corporate welfare both create jobs.

[ordinary]

The government should be in the business of collecting revenue and providing services, not making large corporations more profitable.

Job creation and the resulting economic multipliers aren't a compelling argument here because regular public service provision and corporate welfare both create jobs.

I see what you're saying.

It's just a gut reaction with me but the phrase "job creation" just makes me uneasy.

[Wesley Mouch]

The other problem is that we keep laying off public-sector employees, who generally are creating broader social benefits by doing the work they do, in order to pay for more tax breaks to create private-sector jobs to help Hyundai make a bigger profit.

It took me a few moment here to realize that you were being sarcastic [[I hope).

[antongast]

It took me a few moment here to realize that you were being sarcastic [[I hope).

Oh, fuck you.