Political Ramblings

[thaiturkey]

Yesterday the Chancellor made his autumn budget statement. He promised us we were in for another five years of austerity. He said that during the next three years all forms of social security/ unemployment benefit and tax credits would only rise by 1%, per year, regardless of the rate of inflation. Public sector pay has only risen by 2-3% for years now. All this would be ok if electricity prices weren't rising by 12% and food and fuel prices weren't also rising rapidly. The good news? More money for healthcare and education and more money to fund road/transport networks. Economies are so interdependent, not much point in manufacturing more products if there is no one to sell them too.

That's not too bad, all things considered. Perhaps the additional spending on health care, education and roads is a sign that the UK is returning to Keynsian economics at last and using capital projects to kick the economy into gear.

Public utilities such as electricity should not have been privatised. They are now for-profit businesses and were found lacking a few years ago regarding investment in equipment and services.

I guess that the UK can expect to see a boost in tax revenues now that Starbucks have agreed not to dodge corporation tax!

 

[KristyHall]

I caught this on NPR yesterday and thought it was interesting. The term corporate welfare was a new one to me, but I think it is an accurate term for the massive amounts of loop holes and incentives given to the top 1-2 percent.



http://www.npr.org/2012/12/05/166489199/a-thin-line-economic-growth-or-corporate-welfare







A Thin Line: Economic Development Or Corporate Welfare?

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Fresh Air from WHYY​

[38 min 55 sec]​

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Ricardo Azoury/iStockphoto.com​

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In her series for The New York Times, reporter Louise Story says that the manufacturing sector — automakers, in particular — benefit the most from incentive packages.​

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December 5, 2012
In her new series for The New York Timescalled "The United States of Subsidies," investigative reporter Louise Story examines how states, counties and cities are giving up more than $80 billion each year in tax breaks and other financial incentives to lure companies or persuade them to stay put.
The states and localities want jobs and economic growth; the companies want free land, free buildings, property tax abatement, "anything you can think of that would be financially beneficial," Story tells Fresh Air's Terry Gross.
The companies, she says, know they can get what they want, which is why they ask, and officials are so afraid to risk losing a current or prospective local employer that they readily comply.
"The beneficiaries come from virtually every corner of the corporate world," she writes in the series. However, the rewards from the incentives are difficult to calculate, Story writes, because job growth as related to incentive packages is rarely tracked.
And yet, Story tells Gross, "I don't think you'll find a company out there that has not received financial incentives from local government."
As Dale Craymer, president of the Texas Taxpayers and Research Association, says to Story, the question is: "When does economic development end and corporate welfare begin?"

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The New York Times​

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Louise Story is an investigative journalist for The New York Times, specializing in business reporting. In 2009 she was a finalist for the Pulitzer Prize in Public Service for her reporting on the financial crisis of 2008.​

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Interview Highlights

On the bidding war for businesses in Kansas City
"Kansas City, it's right on the border of Kansas and Missouri, and what's been happening is that Kansas will offer to companies who are in Missouri to come over and they'll give them tax credits. [Kansas has] a very big ... tax credit called the PEAK Program, and Missouri will match it. ... I interviewed both governors, Gov. [Sam] Brownback from Kansas and Gov. [Jay] Nixon, and I actually asked them why they did this. There are local business leaders in Kansas City who have called on those two governors to agree to a truce, to agree to not give incentives to companies who are just moving across the border, and I asked both Gov. Brownback and Gov. Nixon, 'If the other one would agree, would you agree to stop this?' And neither would."
On the impact of incentives on Texas schools and public services
"Texas schools have had their budgets dramatically cut in the last couple years. They lost $5.4 billion in the last legislative cycle. By the time they lost that money, Texas was already spending the 11th least amount per student in the country. So, they're already at the bottom of the heap on what they spend per student and they cut it further. ....
"It's a little difficult to talk about exact causality, because ... the general fund of a state is like a big bowl of the water. ... You pour a little out on one side, well, which part of the glass, or which part of the bowl, did it come from? It's a little hard to say, but certainly this amount of cash out the door in Texas, and forgone tax revenues but through different incentives they have and tax breaks, is money they don't have at a time they have been cutting the school budgets."
On the beginning of incentives in the film industry
"Canada started recruiting some moviemakers away from New York and L.A., and Louisiana took a look at that and said, 'Oh, wow, Hollywood will go for money?' And Louisiana created a very lucrative program offering a 20 percent rebate on what movie companies spend there, and movies started going to Louisiana. And when other states saw that they said, 'Oh, wow, we should offer that too.' ... And so then what happened was New York and L.A. — where it used to be clear that people would want to shoot movies — they had to create their own programs to convince moviemakers not to move."

Web Resources

As Companies Seek Tax Deals, Governments Pay High Price
Lines Blur As Texas Gives Industries A Bonanza
Michigan Town Woos Hollywood, But Ends Up With A Bit Part​

On what happened to the places that had agreed to the financial incentives after GM went bankrupt
"A lot of other places, like Moraine, Ohio, and Janesville, Wis., were not as lucky and, in 2009, as part of the bankruptcy, the company left a bunch of properties behind in what became a legacy GM, an old GM, and ... the company actually is a new company and it doesn't have the obligations to those old properties, and those properties are being sold now very slowly. There were local officials in states and cities tied to about 50 of those properties that had given incentives and they were dismayed when they saw [this and thought], 'We gave you this money to help with jobs and now you're leaving.' "

 

[hemet dennis]

Can someone show a study that says if you spend more on schools you'll put out smarter kids ?

 

[thaiturkey]

Can someone show a study that says if you spend more on schools you'll put out smarter kids ?

I expect you know that the answer is it depends on how you spend the money.

If you are referring to the recent budget in Westminster, I think the extra spending is to do with creating jobs (perhaps teachers, construction and maintenance) and moving money around the economy, thereby stimulating spending. Keynesian economics.

 

[nova022]

Can someone show a study that says if you spend more on schools you'll put out smarter kids ?

If they simply pay the same teachers more, are the teachers suddenly going to do a better job?

 

[Capvin]

If they simply pay the same teachers more, are the teachers suddenly going to do a better job?

I guess the concept that says if you raise teacher's pay you will attract better teachers is too difficult for some to grasp. As for studies regarding putting out smater kids all you need to do is compare our system to other country's who are far ahead of us in all scholastic respects. For me, all I need to do is look to my own backyard. I chose to spend the money and sent my kids to well regarded private schools. It resulted in Air Force Academy, Stanford, and Columbia where each one graduated and each is very successful. To be really honest I am thrilled to see people with your short sided opinions regarding education because it assured me that my grandchildren will be way ahead of the pack.

 

[hemet dennis]

I guess the concept that says if you raise teacher's pay you will attract better teachers is too difficult for some to grasp. As for studies regarding putting out smater kids all you need to do is compare our system to other country's who are far ahead of us in all scholastic respects. For me, all I need to do is look to my own backyard. I chose to spend the money and sent my kids to well regarded private schools. It resulted in Air Force Academy, Stanford, and Columbia where each one graduated and each is very successful. To be really honest I am thrilled to see people with your short sided opinions regarding education because it assured me that my grandchildren will be way ahead of the pack.

So are the countries "who are far ahead of us in all scholastic respects" spending more or less then we are ?

 

[thaiturkey]

Le's not imagine what the UK budget speech contained in order to justify the expression of some preconceived notion or prejudice.

Here's what the Chancellor said about spending on education:

We will continue to seek efficiency savings in the NHS and in our schools, but that money will be recycled to protect spending in these priority areas.

I other words, savings on expenditure on education will be spent in other ways on education. He did not say whether teachers' pay would be increased but why should they not have pay rises?

Here's what he said about expenditure on transport, a favourite Keynesian tactic during a recession:

We’re committing an extra billion pounds to roads, including four major new schemes to:

• upgrade key sections of the A1, bringing the route from London to Newcastle up to motorway standard.
• link the A5 with the M1.
• dual the A30 in Cornwall.
• and upgrade the M25, which will support the biggest port developments in Europe, and I pay tribute to my HF for Thurrock for campaigning to achieve this.

We’ve already set out plans this autumn for a huge investment in rail, and my RHF the Transport Secretary will set out in the new year plans to take High Speed 2 to the North West and West Yorkshire.

He announced other items of public works expenditure too.

Here's the full speech for anyone interested in the facts:

http://www.hm-treasury.gov.uk/as2012_statement.htm

 

[chickened]

So are the countries "who are far ahead of us in all scholastic respects" spending more or less then we are ?

Teachers have been getting raises over the long term and the education system has gotten worse... I guess it is self explanatory.

 

[hemet dennis]

Teachers have been getting raises over the long term and the education system has gotten worse... I guess it is self explanatory.

So are the ones that send their children to private schools admitting that the public school system is broken ?