Good feature article, also blogged about at
AntiRust.
A heaping helping of handouts from the P-G by Bill T.... Politicians are willing to do just about anything to create or preserve jobs.
Right. They will steal from neighbors. They will undercut. They will lie.
It is no wonder that they use slush funds so well. They are great at giving bonus pay to staffers in Harrisburg -- and hiding it.
"Once you get in the subsidy game, everybody else gets in line," said Edward Lotterman, a Minnesota economist. "And some of the people in line would be building that project anyway."
Some would call this OPM -- or Other Peoples Money. OPM is easy to spend.
My favorite reason for not doing give-a-ways is its toxic nature. The subsidy puts poison into the well of the free market place. A gift, bonus, grant or enhancement to one is sure to halt the development from those who would do so otherwise, without the aid.
Furthermore, the people vote with their feet. They will invest elsewhere, in a market that is NOT so crooked, so slanted, so full of favorites.
I've seen this in coaching plenty of times. When a coach plays favorites, the team is going to crumble. People won't buy into the system when some are being rewarded and others are not. When bribes are needed to jump start anything -- then nothing will happen without a bribe. Game over.
A business person that makes an investment into an area wants to protect that equity. High risk investments are not worthy. Capital should not be leveraged in areas where others don't do the same and where capital isn't even valued.
Questions from within the article:
Are these or any businesses worth such enormous public investments? No.
If not, is it OK to sometimes make bad investments on behalf of the taxpayers if those same taxpayers also derive tangential benefit from the overpriced product?No.
Is it even possible these days to get something built without offering a big carrot first?No in Pittsburgh, these days. However, it could be not only possible but certain that a windfall of development would return to the city and the region as soon as we made a drastic change of course.
Once we say, 'enough is enough' and mark a new day -- and tell the world in no uncertain terms that all TIFs and tax-breaks for the favorites have ended, then we'll see a new dawn of prosperity.
When we respect the marketplace and prove it -- then the marketplace will respect us, again.
This is more than a politician, union, business leader (ha, ha) and campaign donor issue. The voters need to be a part of this chain of command. They are the citizens, the ones with the most money, and the ones that are hardest to mobilize -- but with the best clout.
The voters are going to need to speak with their votes -- and not just once. The voters are going to need to awaken -- like never before. Or else, the special interest groups will dominate into the future.
Condos are an option now in Downtown because Downtown is so poor, depressed and poisoned. Building condos in a downtown business area isn't a sign of prosperity.
Just as the arrival of flowers at a funeral home should not signal anything but death, so too goes condos for our downtown.
Downtown wasn't meant for subsidized condos, yet we're getting condos because downtown is dead. Downtown should have a density of economic activity, commerce, business. Wealth should be created and calculated in Downtown spaces. Widgets should have places to rest on balance sheets, in downtown offices -- not empty nesters.
It is fitting that 'empty nesters' are the ones flocking to occupy Downtown spaces now.
And if it's hard to prove public subsidies are ever a really good deal, then why do politicians keep forking over millions? The proof of the value of subsidies is hard to get a handle upon because we've had controllers like Tom Flaherty and Dan Onorato. They are players in the rat race where spending government money is a career enhancement.
Think again!
The economic theory of opportunity cost means money spent on one thing means opportunities foregone on other things. That is a lesson that is lost on many. I'd rather give money and provide services to veterans who have had limbs blown off in the war than build two tunnels under the Allegheny River for a modest expansion of light rail. But then again, I'd rather not send our loved ones into war, especially after the evil dictator of Iraq has been removed, stood trial and executed.
Sports venues are the biggest drain of all, most economists agree. Come on. The cost of war exceeds the cost of sports venues.
Here is another goofy comment in the article:
And unlike skyscrapers that may be underwritten with public subsidies, public arenas and stadiums almost never go on the tax rolls, meaning the city or county won't recover the costs over time. I've called upon the Steelers, Pirates and even the Penguins to own their own venues. Even the Steelers practice field should be owned by the Steelers. And tax should be collected there.
I've also called for a net reduction in the amount of land that is owned and controlled by nonprofits, including the city, county and state. I'd build a plan where the region would shrink the overall property holdings held in non-tax deeds. That long-term evolution would allow for institutional growth upwards -- as in taller buildings.
However, the skyscraper buildings that, for example, sit upon three acres of land, should pay the same tax as the surface parking lot that also sits on three acres of land in an adjacent lot. If we got back to the point where we just tax the land, not the building's value above the dirt, then we'd be rewarding the developers who bring investment into the region.
Presently, we reward those who let property values drop. We give tax breaks to those who rip down affordable housing. We punish those that fix up their properties.
Skyscrapers should not be underwritten with public subsidies because we should only worry about the footprint of the land. Then everyone gets a tax break for fixing up their holdings. Market pressures would insure that those with blight and surface parking lots either sell or upgrade to get more value to their capital and the community's gain as well.
The value of being a 'big league city' is little next to the hurt of being a place of bigots, racists, special interests, complex corruption and machine politics. On the other hand, if Pittsburgh, as a region, was known the world over for being fair, square, direct, open, healthy, caring and honest -- then the world would notice. There are plenty of other traits that should go on either side of this formula: smart, inventive, hard-working, enterprising, just, trustworthy, creative, etc., etc.
When we pin our hopes of showing the passion of Pittsburgh on a few guys with pro-sports contracts, we fail.
The public good that the Penguins own needs to be matched with the public good that the citizens, fans and world. I would hope that the governmental leaders would dance with the Penguins owners, but in much different ways than what is unfolding here. Rendell, Onorato, Ravenstahl and even S&EA members Fontana and Koch are clueless. With a bigger vision, I feel that the Penguin Village concept could flourish in Pittsburgh. The new arena could come, with private money with new, long-term income streams to the team based upon the value that they bring to a new development -- where land is cheap and available.
I do not agree that the Pittsburgh's population is not too small for its residents to make up a new arena -- from private sources. Government is too frail to carry the weight of that type of investment, I dare insist. But, the private investors could make the deal occur to everyone's satisfaction. With the Penguins Village, people would receive enough "tangible" value from the team. And, they'd like a part of that action. The public buy in for a new public arena, new housing, new village and new lifestyle opportunities would be amazing.
Public transit is almost always a losing venture -- given the way it is a monopoly, managed, priced and held accountable. However, public transit could do more in a bottom line justification if there were new system-wide checks and trust. PAT does offer an incalculable societal value to providing subsidized transportation for the people who need it.
Then sewers are mentioned. The past Dem leaders in this town sold off the most necessary public assets for a quick cash fix. The sewer lines should be public. Meanwhile, the hockey venue should be private.
"You don't have places to park your construction vehicles," ... Humm. But we've given up many roads for construction vehicles. Jeepers.
I'm flat out against more incentives for Downtown. I do not favor the Downtown historic-zone tax credits. They want to steal from the kids. I say 'no.'
The status quo politicians love it when incentives are so, so tricky. My trick is to make them simple -- by not doing any of them. No tricks. They are like tricky-dicky Nixon. The other way is without smoke and mirrors -- without a trick -- without being a whore.
All subsidies end up being good deals for the special interests. These are good deals for some.
"No matter how much forecasting you do, there's no way to know the end benefit unless you take the leap." Unless, of course, you stand firm and don't leap at all.
Take the South Side Works. My biggest objection to that project was the UPMC owned football facility. Those 40 acres proved to deliver a net gain of 2 jobs. That sucks. That can't be overlooked.
The bar bill is something that I'm not going to defend as it isn't going to come into being.
Rick Belloli, the executive director of the South Side Local Development Company, can't even get the neighborhood business district with ADA accessibility and handicapped ramps. The SSLDC is worthless and that is just the way I like it.
The project may not have created a net job gain for the state or even the region. PEROID. You said it. That's something to emulate?
"It isn't a subsidy," Mr. Belloli argued. "It's balancing the cost [of development] so that it's competitive" with cheaper-to-develop land in, say, Butler County. What about Pittsburgh Mills. Cheap land. Expensive to get customers there -- and to sustain itself.
I'm a critic and I understand that subsidies aren't distributed in an economic vacuum. Duhh. The spokesman for the Department of Community and Economic Development can save his breath. They don't want to compete. They want to grow their power. They want to be deal makers instead of guardians of freedom and justice.
Westinghouse Electric's nuclear expansion comes in-state so we can build NUKES for CHINA and our kids get less funding for our schools. China finances our bonds. China gets its needed electricity. China gets next generation technology. Meanwhile, American kids and schools get less. The Westinghouse was not a competition between North Carolina and Pennsylvania. In another generation, we'll see who has the upper hand, in a vast majority of categories.
"It's what in game theory is called 'the prisoner's dilemma'," said Mr. Lotterman, the economist. "If you think the other guy is going to do it, and if you're a Pittsburgh and you are desperate for some jobs and some development, you have to do it, too."
Good name, prisoner's dilemma. Count me among those that choose to be free.
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