Tag: cronyism

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Up-to-Date in Kansas City?

META, Data Center, Kansas

Eight-hundred million bucks. 

That’s the investment that “Meta” — the umbrella outfit that owns Facebook, Instagram and WhatsApp — has agreed to invest in a patch of land in Kansas City’s Northland. The plan is to build a data center at an 882-acred development site. 

“Political leaders who gathered at Union Station heralded the news as a major development for Kansas City and the state.” This private investment “would far surpass the scale of recent projects in the region . . . said Missouri Gov. Mike Parson,” The Kansas City Star relates.

But there’s more.

“Meta spokeswoman Melanie Roe said the company could invest as much as $40 billion at the site in land acquisition, construction, and development of a larger data center.” This is to be a “long term partnership.”

Make that a Big Business/Big Government partnership. The biggest ever, perhaps.

The Kansas City Council had unanimously approved a development plan for the site last April, with data centers there enabled to access to more than $8 billion in local tax incentives. “Incentive watchdog group Good Jobs First says such an incentive award would be the largest ever in American history,” The Kansas City Star explains.

Take it as a word of caution. This is not laissez faire capitalism. This is not “the free market.” It is favoritism. It unites big business and big government.

And even as an investment in future taxes — which is the ostensible justification for the subsidies — the data complex is slated to employ about a hundred workers.

Politicians don’t make the best investors. But they do make easy marks for big corporations.

This is Common Sense. I’m Paul Jacob.

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national politics & policies too much government

The Audacity of the Swamp

swamp, corruption, Washington DC, politics

A crony anti-infrastructure plan.

That, writes Veronique de Rugy at Reason, is “the best description of the Biden administration’s proposed $2.3 trillion infrastructure plan.”

Democrats are the masters of favoring a select few at the expense of the electorate and calling it the Public Good. Their woke moralism, egalitarianism, and other pieties effectively mask their party’s accomplished crony scheming.

Right now, though, the heady audacity of spending trillions of dollars we do not (yet) possess is all the mask the Democrats appear to need. 

Does anyone talk about the Swamp anymore?

Never drained, it is back with a vengeance:

  • “A large share of the plan . . . is a massive handout to private companies. The proposal includes $300 billion to promote advanced manufacturing, $174 billion for electric vehicles, $100 billion for broadband, $100 billion for electric utility industry, and more.”
  • “Biden’s plan also includes hundreds of billions that have nothing even remotely to do with infrastructure.”
  • “To the extent that Democrats are trying to pay for this spending with taxes, they’re doing it in a way that belies their claim that this plan will result in a boost in quality infrastructure.”

The tax increase in the plan is to eliminate established tax “preferences” for fossil fuel companies. This would be politically popular with Democratic Party supporters, feeding their enviro-lust to lash out at what are commonly perceived as destroyers of the planet. But tax something more, get less. And a huge part of our infrastructure relies upon — indeed, consists in — the fossil fuel industry. So there will be less infrastructure investment in that realm.

But that doesn’t hurt the cronies. It hurts other folks.

This is Common Sense. I’m Paul Jacob.

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Accountability free trade & free markets insider corruption moral hazard national politics & policies porkbarrel politics responsibility too much government

Cry Me an Amazon

cronyism, Amazon, taxpayers, black hole

My idea of a “free market” is not our politicians’. Their idea is to give away free stuff to their new and old business buddies . . . at everyone else’s expense.

That sort of “crony capitalism” has been writ large per Amazon’s search for a location for a second headquarters (HQ2). The world’s biggest retailer — valued higher on the market than all other major retailers combined — announced it would spend $5 billion and bestow 50,000 new jobs on HQ2’s locale. Subsequently, 238 cities, states and provinces in the U.S., Canada, and Mexico offered to take from their current citizenry to give unfairly to Amazon.

Chicago’s proposal would allow Amazon to keep the income taxes their employees pay. Seriously. This “personal income-tax diversion” would add up to over a billion dollars for the company.

New Jersey state government offered a cool $7 billion in subsidies should Amazon choose to locate in Newark.

Seattle Times columnist Danny Westneat described this sorry spectacle of subsidy as not so much a corporate “takeover” as a government “surrender.”

The most egregious example, though, has to be Fresno, California, where the city “promises to funnel 85 percent of all taxes and fees generated by Amazon into a special fund. . . . overseen by a board, half made up of Amazon officers . . . supposed to spend the money on housing, roads and parks in and around Amazon.”

“Rather than the money disappearing into a civic black hole,” explained Larry Westurland, Fresno’s economic development director, “Amazon would have a say on where it would go.”

Selling out the taxpayers? Moolah in the millions. Referring to a normal city budget as a “black hole”? Priceless.

This is Common Sense. I’m Paul Jacob.

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Accountability government transparency insider corruption local leaders moral hazard porkbarrel politics responsibility too much government

More-Equal-Ness

George Orwell, Kaya Henderson, Washington D.C., equal, Animal Farm, favors, corruption, crony, cronyism, politicians,

“All animals are equal,” wrote George Orwell, “but some animals are more equal than others.”

That was the regime’s final slogan in Orwell’s allegorical novella, Animal Farm . . . and it currently serves as the operating principle for local government.

Well, at least in Washington, D.C., our country’s pig trough.

Washington Post reported that the District of Columbia’s Board of Ethics and Government Accountability spelled out the details of its official reprimand of Kaya Henderson, the former chancellor of D.C. Public Schools.

Henderson, the article explained, “violated the city’s Code of Conduct by granting permission for some people — including a White House official, an employee of the mayor’s office, a district principal and a former classmate — to choose the school they wanted their children to attend even though other D.C. families had to go through a competitive lottery system.”

Using one’s position of trust to hijack a public benefit and gift it to one’s cronies at the expense of everyone else is clearly corrupt. Henderson deserves more serious repercussions than a belated reprimand, especially since she has already moved on professionally. She now works as “a distinguished scholar in residence at Georgetown University,” researching “racial justice.”

Ms. Henderson offered weighty reasons for her cronyism. Regarding her special treatment for City Administrator Rashad Young, she offered that D.C. officials “do not necessarily get paid as much as we should.”

Young’s annual salary? $295,000 a year.

Did you also notice she said “we”? As chancellor, Henderson was paid a mere $284,000 a year.

Being “more equal” is nice. It’s especially nice to be friendly with those “more equal” folks, who can bestow a little more-equal-ness on you.

This is Common Sense. I’m Paul Jacob.

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Accountability crime and punishment government transparency insider corruption local leaders moral hazard porkbarrel politics

Interfering With a Sweet Racket?

Seattle, City Light, corruption, security, police, scandal, cronyism

One way for governments and enterprises to save money is to contract out some or all of their services. Towns, cities, counties, states — even the federal government — engage in such practices all the time.

It is really just outsourcing, as business lingo dubs it.* But, like any system for shifting responsibility away from direct management, it can be corrupted.

As Seattle citizens now learn, courtesy of Seattle Times reporters Mike Carter and Steve Miletich.

It appears that Seattle City Light, the public utility providing electricity to the city, has been contracting exclusively with Seattle’s Finest Security & Traffic Control. For a half a decade. Despite there being direct competition from another firm.

The utility paid “more than $7.8 million over the past five years to provide off-duty police officers for traffic control or security work,” the Times tells us.

The whole story came to light (no pun intended) when a new outfit offering similar services, but based on “gig economy” principles, sought to enter the market. Seattle’s Finest challenged the firm’s licensing, and, allegedly, directed abuse at the firm’s chief executive officer.

A Seattle detective off-handedly described the dominance of Seattle’s Finest “in organized-crime terms — using the word ‘mafia’ — and said nobody would be allowed to interfere with it.”

The FBI has now been called in.

Usually, local government may seem rather humdrum. But a lot of money can go through powerful, privileged hands. Things can get exciting. Terms like “murky” and “intimidation” abound.

Is this a surprise?

Remember: power corrupts; local power corrupts locally.

Right there where we live.

This is Common Sense. I’m Paul Jacob.

 

* An economist, R. H. Coase, got a Nobel Prize in no small part for explaining why this sort of contract can work better than establishing a complete firm-employee wage system.

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Accountability insider corruption moral hazard national politics & policies porkbarrel politics too much government

Cronyism Pays

CATO, FEE, crony, cronyism, Washington, corruption, elites, lobbyist, politicians, privilege, power

Daniel Mitchell, a senior fellow in fiscal policy at the Cato Institute, is a nice guy. But he’s sort of depressing, too.

Weeks ago, writing for the Foundation for Economic Education (FEE), Mitchell offered that “The Washington, DC Gilded Class Is Thriving.” He even provided a “depressing chart” graphing “median inflation-adjusted household income for the entire nation and for the District of Columbia.”

There is a graphic divide: while “the nation’s capital used to be somewhat similar to the rest of the nation . . . over the past 10 years, DC residents have become an economic elite, with a representative household ‘earning’ almost $14,000 more than the national average.”

Dan Mitchell highlights that “the entire region is prospering at the expense of the rest of the nation.” Among the nation’s counties, the top four wealthiest are in suburban Washington, D.C. The nation’s capital region boasts nine of the country’s top 20 richest counties.

Now Mitchell’s back with another FEE column exclaiming more bad news: “The ROI for Cronyism is Huge.” (ROI is “return on investment.”)

Mitchell cites a study entitled, “All the President’s Friends: Political Access and Firm Value,” conducted by University of Illinois professors Jeffrey R. Brown and Jiekun Huang. “Using novel data on White House visitors from 2009 through 2015,” they explain, “we find that corporate executives’ meetings with key policymakers are associated with positive abnormal stock returns. . . .”

The authors find a lot evidence showing that “political access is of significant value to corporations.”

None of this should surprise. Cronyism pays, and it sticks close to power, even geographically.

This is Common Sense. I’m Paul Jacob.

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