What does $777.3 million buy you?

According to the Business Journal, American Water is getting a $164 million tax break to move to Camden.

This is on top of this short list of other companies who have been bribed into moving into Camden:

Here are a few other companies that have moved to Camden as part of a 2013 state law that increased incentives for employers who moved to Camden:
• Volunteers of America Delaware Valley(VOADV) was approved for $6.3 millionto consolidate administrative offices into one facility in Camden rather than a location in Bensalem, Pa.
• Subaru of America netted $118 million in tax breaks to move its U.S. headquarters from Cherry Hill to Camden.
• Cooper Health System received $40 million to move about 350 administrative jobs now located in Cherry Hill and Mount Laurel back to its main campus in Camden.
• The Philadelphia 76ers obtained $82 million in tax breaks to build a practice facility and corporate headquarters.
• Holtec International received $260 million in tax breaks to build a manufacturing facility.
• Lockheed Martin was provided with $107 million in assistance to relocate employees from Moorestown to Camden.

All told, this is about $777.3 million, more than three-quarters of a billion dollars to get companies to locate in Camden.

While Camden is a challenged market in all sorts of ways, and it is likely significant public subsidy is needed to jump start it, this isn't how to do it. This is just sheer economic poaching -- shuffling jobs around without actually creating new jobs. What impact to the region's economy is there if VOADV is in Bensalem instead of Camden? The Sixers in Philadelphia instead of Camden? Lockheed Martin in Morrestown instead of Camden? The article says:

If American Water leaves its Voorhees, N.J. headquarters for Pennsylvania, then New Jersey will lose about 600 jobs on top of hundreds of potential new jobs that would go into constructing American Water's new campus.

If American Water was to move their corporate HQ to Pennsylvania, would they move it to Moon Township? Of course not: that would involve uprooting ensconced executives. It would stay in the Philadelphia area (winding up, most likely, in Bensalem).

The economic impact of this strategy is nil. There is no net change in regional economic productivity. There are no new jobs, no new work. All this does is marginally change commuting patterns. And while it's nice that the new Camden jobs would be close to PATCO, is this marginal access improvement really worth $777.3 million in public money? Instead of subsidizing existing jobs, wouldn't that $777.3 million be better spent elsewhere?

If the goal really were to make more jobs instead of simply bribing companies to go where you want them to, wouldn't a far more effective program be a small business incubator in Camden?

Whelp, We're Boned

From this article: http://america.aljazeera.com/opinions/2014/2/corporate-welfaresubsidiesboeingalcoa.html

The size and range of the subsidies the tool has uncovered helps explain the burdens taxpayers must bear because so many major corporations rely on welfare for much or all of their profits rather than earning them.

Holy fuuuuuuuuuuck...

If we, the taxpayers, are subsidizing their profits, doesn't that imply that we live in a right-wing socialism?

ETA: Thank God we've got a gubernatorial candidate who gets it, and gets that the only way to win this game (thank you Jon Geeting for calling it the "Ripoff Game") is not to play and play the Economic Gardening* game instead:

Tom Wolf’s Fresh Start plan has a different idea that’s not based on blowing a bunch of money on propping up zombie firms. He wants to invest in Ben Franklin Tech Partners and other regional incubators that have a proven track record of creating new Pennsylvania businesses, and commercializing the good ideas coming out of our many universities into working business models.

This is a slower process than the Ripoff Game, but it actually creates new value, and it’s actually sustainable in the long run. This would be the benefit of having a self-funder Governor. Unlike Tom Corbett, he wouldn’t try to bet the horse on stupid get-rich-quick schemes conveniently timed to the election calendar.

(Keystone Politics)
_____________________
*Would you believe there is no Wikipedia page for economic gardening? Now that's ridiculous...

Bureaucracy and Subsidy

Last fall, Steven Smith noted that European mass transit is subsidized the same amount as its American counterpart. Yet Europe has extensive mass transit offerings just about everywhere, to the point where it is difficult to find anyplace that has mediocre access relative to density or none at all, whereas in the U.S. the picture is the obverse. What gives?

Most complaints fall against ill-structured subsidization packages: roads in the U.S. have substantially higher subsidies relative to their European counterparts; driving standards here are rather more lax; exclusionary land use promotes driver culture at the expense of transit culture; etc. Part of this is of course true. Road standards are excessive and promote speeding which in turn promotes lax enforcement; land use is not planned in a way to support transit nodes; and road subsidies are hidden while transit subsidies are often paraded front and center. DOTs want to do nothing but build roads, and politicians insist on micromanaging transit while at the same time ignoring the multitude of excessive standards (and entailed ballooned costs) in the road planning arena. It's as if they have a monocle on one eye and a log in the other.

But that isn't the key problem. Smith, in his article, points out that the Bay Area receives an equivalent amount of transit funding for an equivalent population as Switzerland--but Switzerland has incontestably excellent transit while the Bay Area's, while good by U.S. standards, is, ahem, lacking. As Elizabeth Alexis notes, in Smith's quote, "The problem is more of how we spend money, not the amount of money."

How is this money spent? In the Bay Area, it is allocated to a number of transit agencies, each with its own agenda:

BART
Caltrain
Muni
Amtrak California (Capitol Corridor)
ACE
VTA
AC Transit
Golden Gate Transit
etc.

Even when you take out the bus operators, that still leaves

BART
Caltrain
Muni
Amtrak California
ACE, and the
VTA.

By contrast, the vast majority of passenger rail in Switzerland is handled by the

SBB:

this includes all national-level passenger rail, the R-Bahn networks, and the S-Bahns. Some Swiss cities also have metros (Lausanne is the smallest) which are owned and handled by independent organizations. The Swiss

SBB

handles thus all the functions of

BART
Caltrain
Amtrak California, and
ACE.

And therein lies the problem. The Bay Area suffers from a bad case of bureaucratic redundancy, which means that multiple overlapping bureaucracies are handling things where only a single bureaucracy is really needed. So the basic problem is that, where in Switzerland,

1 bureaucrat

is needed to perform any necessary office job, in the Bay Area,

4 bureaucrats

are.

And you wonder where all the money goes!

That's not the worst of it, though. American transit agencies are incredibly territorial, and jealously guard their turf to the point of undermining the common need for improved transit access. How else can you defend Millbrae, which seems to have been spitefully designed to inhibit Bay Area high-speed travel via the Caltrain ROW as expensively as possible? Or spending money to reduce interlocking redundancy, which in its turn undercuts on-time performance?

Elizabeth Alexis is dead right. And in the U.S., we spend money on bloated redundant bureaucracy, on entrenching petty squabbles in concrete, and at the end of the day we find we have no money to actually run transit, let alone well.

Organization before electronics before concrete, the Germans say. But here we take concrete uber alles, and even use concrete to entrench organizational inefficiencies.