Relevant and even prescient commentary on news, politics and the economy.

Why subsidize data centers?

A number of authors (Good Jobs First, David Cay Johnston, me, and me, among others) have pointed out that data centers (aka server farms) in the United States create very few jobs, yet receive state and local government subsidies that routinely exceed $1 million per job. I’m sure you already know that numbers like those make me ill: the typical automobile assembly plant will receive $150,000 or so per job, and require all sorts of component facilities to feed it — though, sadly, economic development officials often given incentives to the supplier plants as well.

So why $1 million or more per job? Data centers pay reasonably well, and the biggest are connected to famous tech names like Apple, Google, and Facebook, but it seems to me that it’s hard to get around the facts that there just aren’t that many jobs, and they don’t require an army of supplier facilities bringing indirect jobs.

But surely the competition for jobs is so steep that governments have no choice but to subsidize them? Actually, no. Aside from the fact that $1 million per job probably gives away more than the value of the investment to the government, my investigations have turned up multiple examples of companies building data centers without incentives.

One I’ve mentioned here before: American Express in 2010 built a $400 million data center in Greensboro, North Carolina, without any incentives at all. The leading explanation has been that Amex had already decided it was going to close a 1900-job call center in Greensboro (announced in 2011), a move it knew would trigger clawbacks of any incentives on the 50-150 job data center — so it didn’t bother seeking subsidies. Did I mention that North Carolina has cheap electricity?

More recently, I have found four Google data centers that opened or expanded without incentives in the last few years. New and expanded facilities in the Netherlands, Ireland, Finland, and Belgium all take advantage of cooler temperatures to reduce their electricity use. While Google did not respond to my email asking whether it received subsidies for those facilities, and IDA Ireland similarly was unresponsive, the Netherlands Foreign Investment Agency did respond with a confirmation that it had provided no “state aid” (EU-speak for subsidies) to the brand-new $773 million, 150-job data center opening in Groningen province in 2017. In addition, a search of the EU’s Competition Directorate case database did not reveal any Google state aid cases for data centers. Thus, it appears that none of these cases received incentives.

So why did Google demand over $140 million (present value) in subsidies from North Carolina back in 2007? I think we’re looking at the “usual suspect” once again, rent-seeking. Of course, North Carolina couldn’t foresee the Amex no-incentive deal that didn’t happen until 2010, but now that we can see how Google and American Express do business when they have to, it’s time economic development officials around the country learned to “just say no” on data centers.

Cross-posted from Middle Class Political Economist.

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In Response to Kathleen Parker’s Praise of Jeb Bush’s Ugly Christian-Crusade Sleight of Hand

I just updated a post of mine from Monday titled “Jeb Bush Accuses Sheldon Adelson of Lacking Moral Fiber.  Or of Being a Closet Christian. (Not sure which, but it’s one or the other.)”, in refutation of Kathleen Parker’s assist to Bush in his bizarre, sleight-of-hand Christian Crusade.

Bush’s speech was a deeply ugly religious assault, a claim to religious and moral superiority and to the gracious bestowing of its truths even upon nonbelievers.  By an utterly stupid politician. It needs to be recognized for exactly that.

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Iraq was JEB’s War: Started by the Dim Son Instead

There has been some furor over the “Would you have launched the Iraq War?” question posed to Jeb Bush mostly revolving around the question of whether he understood the qualifying “knowing what we know now” as opposed to “knowing what we knew then”. But this is to miss the point. Because Jeb was on record for launching a war on Iraq right from 1997. That is screw what we did or didn’t know in September 2001 or March 2003, Bush was ready to lead the Neo-Cons to war years before that. To see that this is true you need to examine two coupled documents from the Project for a New American Century and their signatories: the PNAC Statement of Principles (1997) and their Letter to Clinton on Iraq (1998)

Now some might make the case that the Statement was just aspirational and the Letter operational but I say that in this case that is a distinction without a difference. In 1997 Jeb Bush and Dick Cheney signed their name to a manifesto, one that committed this country to a campaign of perma-war to establish a ‘New American Century’. If only the country would put the power to do so in their hands. Which the country (with an assist from the Supreme Court) did in 2000. Which in turn made the war on Iraq a matter of when and not if. If that is you take the Neo-Cons at their word. As publically signed in a full page ad in the New York Times. The Statement opens as follows:

American foreign and defense policy is adrift. Conservatives have criticized the incoherent policies of the Clinton Administration. They have also resisted isolationist impulses from within their own ranks. But conservatives have not confidently advanced a strategic vision of America’s role in the world. They have not set forth guiding principles for American foreign policy. They have allowed differences over tactics to obscure potential agreement on strategic objectives. And they have not fought for a defense budget that would maintain American security and advance American interests in the new century.

We aim to change this. We aim to make the case and rally support for American global leadership.

As the 20th century draws to a close, the United States stands as the world’s preeminent power. Having led the West to victory in the Cold War, America faces an opportunity and a challenge: Does the United States have the vision to build upon the achievements of past decades? Does the United States have the resolve to shape a new century favorable to American principles and interests?

Elliott Abrams
Gary Bauer
William J. Bennett
Jeb Bush
Dick Cheney
Eliot A. Cohen
Midge Decter
Paula Dobriansky
Steve Forbes
Aaron Friedberg
Francis Fukuyama
Frank Gaffney
Fred C. Ikle Donald Kagan
Zalmay Khalilzad
I. Lewis Libby
Norman Podhoretz
Dan Quayle
Peter W. Rodman
Stephen P. Rosen
Henry S. Rowen
Donald Rumsfeld
Vin Weber
George Weigel
Paul Wolfowitz

This is the Bush Foreign Policy. The JEB Bush Foreign Policy. And in this policy the Iraq was was a Feature, indeed the Opening Feature, and not some Bug.

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Is labor reaching its limit in supplying its labor?

implied S&D based on labor share

The graph implies that as labor share falls, labor is less inclined to supply its labor… and the natural rate of unemployment rises. (link to Fred graph)

Since 1947, the unemployment rate falls to a level consistent with implied supply & demand limits set by labor share. The US now seems to be reaching the implied supply limit with a low labor share index around 98.

  • Will the plot line end up respecting the implied supply limit of labor?
  • Will the unemployment rate continue to fall only as long as labor share does not trend downward?

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Less Support for the Death Penalty

I have written on elements of the death penalty previously

“And what about the cost of housing them? Execution could be cheaper if we were to subvert the rights of prisoners during trial and on appeal to state and federal courts. A 2003 legislative audit in Kansas revealed total costs for the death penalty at 70% more than non-death sentence cases with a median cost of $1.26 million as opposed to $.74 million. Since 1995 when the death sentence was reinstated in NY, the cost for each of 5 people condemned, not executed yet, was ~$23 million per person for a total of $165 million. The Comptroller for the state of Tennessee audit revealed that death sentences cases increased costs by 48%. These are costs associated with the trial up till and including sentencing and not taking into account appeals. “New Jersey taxpayers over the last 23 years have paid more than a quarter billion dollars on a capital punishment system that has executed no one.” 197 capital cases, 60 convictions, 50 overturned, and no executions carried out since 1983. Average cost = ~$25 million/conviction.

And if they are innocent? From 1973 through 2003, 125 prisoners have been released from death row due to wrongful convictions. In 2003 alone, 10 prisoners were released. In 2000, Illinois Governor Ryan commuted the sentences for 167 inmates on death roll to natural life in prison. His reasoning was he could not be sure of whether the convictions were legitimate after releasing the 13th inmate from death roll due to wrongful conviction. 13 of 180 or ~7% error rate in Illinois. ~3800 inmates were on death row in 2000 and up till that point, 125 were released and exonerated for a percentage of ~3.2%. While not exact (it is probably higher), the 3.2% stands in defiance of Louisiana State Prosecutor Marquis and Supreme Court Justice Scalia’s claim of less than 1% being innocent and sentenced to death.”

and more completely on incarceration.

“What does a growing prison and correctional population cost for taxpayers? To support the growing state prison population, costs range from ~$13,000 in Louisiana to ~$45,000 in Rhode Island annually (2005). The average is ~$23,000 annually, “US Imprisons 1 in every 100 Adults” NYT. The cost of imprisonment compares nicely to a state or private college education (another story). As a whole the US imprisons a higher percentage of its population than any other nation in the world from which the cost burden of housing prisoners has become an issue for states with a decreasing/stagnant economy and decreasing tax revenues. Paradoxically while costing more, jails and prisons for many communities are a stable and growing business employing people, services, and a fast growing part of the rural economies.

Incarceration Nation as one part of, Schmidt, Warner, and Gupta’s “The High Budgetary Cost of Incarceration” (Real-World Economics Review, Issue no. 53) suggest much of the increased numbers of those under control of the correctional system result from harsher sentencing guidelines which in turn also have a lesser impact on crime. The mandated guidelines (drugs, three strikes, recidivism issues, etc.) result in higher imprisonment rates and consequently long sentences, higher costs to house prisoners as more prisoners are kept interned for longer periods, and have a diminished impact on crime.”

By far and given our justice system, it is less costly to imprison a person for life than to execute them. Raising an argument of changing the justice system to accommodate quicker executions at a lower cost goes against the grain of what this country is supposed to represent (please leave this argument at the door). There is a sound monetary argument to imprison a person for natural life rather than put them to death for murder and also to reconcile the law giving shorter sentencing for those guilty of nonviolent crime.

A recent PEW study is showing a change in the attitudes of people towards execution.

While the study still shows the majority of the population believes in executing prisoners convicted of murder, the people in favor of it are at the one of the lowest levels in 40 years. 56% of the populations are in favor of the death penalty and 38% oppose the death penalty.

Smaller Majority Supports the Death Penalty

A closer examination of who makes up the majority and minority leads to a breakout by partisanship and politics. 40% of Democrats still support the death penalty a decline of 31% since 1995. Declared independents supporting the death penalty declined from 79% in 1995 to 57% in 2015. 77% of Republicans support the death penalty, which is down from 87% in 1995. The Pew study has found doubts amongst many within its survey in how the death penalty is applied and whether it does deter crime.

Wider Partisan Gap

A majority or 63% of participants in the study believed the death penalty is justified in cases of murder, 31% said there is no moral justification, and 7% believed it depends.

Death Penalty Viewed as Morally Justified

1 in 4 of those surveyed did not believe there were adequate safeguards in place to prevent an innocent prisoner from being put to death. This is borne out by the many who have had their sentences commuted or were released after further investigation. While the argument has been made the death penalty deters serious crime, 35% believed it did and 61% believed it did not.

41% of those in the study believed whites and minorities share the same likelihood of being sentenced to death while 52% believed minorities were more likely to be given the death penalty. As I have argued before and it is well borne out in studies, minorities who lack resource to pay for adequate defense and the failure of the Public Defender system to provide adequate defense leaves the minority population at greater risk to the death penalty.

Most See Some Risk in Executing an Innocent Person

There is a growing minority base who oppose the death penalty; however, those favoring it have remained relatively stalwart. If you are in favor of the death penalty, you are likely to be a white male Republican, 51 years or older, with at least a high school education, and religious. Since 2011, there has been a softening of attitude towards the death penalty by Democrats, women, minority, nonwhite practitioners of religious beliefs and those with no affiliation to a religion.

Growing Gender and Partison Gaps in Views

77% of Blacks say minorities are more likely to face the death penalty than are whites. Democrats polled at 70% in on the same question while 48% of Republicans claimed minorities are more likely to face the death penalty. Much of this can be seen playing back from the white population out of Baltimore, Ferguson, and other communities faced with minority protests from black citizens over random killing of unarmed minorities. Many of the minorities lack the financial well being to bring on a strong defense in court rooms and they have to rely on overworked, understaffed, under-financed, and often times inexperienced state public defenders. 85% of all cases in the court system today are plea bargained.

Lg Majority of Black Say Minorities

While there are sharp moral divides between those who oppose and those who favor the death penalty, there is an agreement between the two groups there are dangers of an innocent being put to death.

Death Penalty Supporters and Opponents View

Federal Judge Jed S. Rakoff sums it up in one sentence (full comment below) on those who go to court as defendants; “Basically, we treat them like dirt.” The trip and expense of going to court is anything but as glamorous as shown on TV on shows such as “LA Law.” If you do not accept a plea bargain and you make the prosecution work; in the end and if you lose, you will be faced with harsher sentencing than if you accepted the plea bargain. The vast majority of people do not have the finances to fight back and are left to accept a public defender as their council. I do not wish to demean public defenders; but in many states, they are overworked, underpaid, often times inexperienced, etc. Your chance of winning slowly ebbs with each negative. 85% if not more cases are plea bargained and many of those who accept a plea bargain are a minority.

“In many respects, the people of the United States can be proud of the progress we have made over the past half-century in promoting racial equality. More haltingly, we have also made some progress in our treatment of the poor and disadvantaged. But the big, glaring exception to both these improvements is how we treat those guilty of crimes. Basically, we treat them like dirt. And while this treatment is mandated by the legislature, it is we judges who mete it out. Unless we judges make more effort to speak out against this inhumanity, how can we call ourselves instruments of justice?” Judge Jed S. Rakoff, “Mass Incarceration: The Silence of the Judges,” The New York Review of Books.

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Jeb Bush Accuses Sheldon Adelson of Lacking Moral Fiber. Or of Being a Closet Christian. (Not sure which, but it’s one or the other.) — [UPDATED]

Jeb Bush’s graduation address last Saturday at Liberty University is absolutely breathtaking, and I’m betting that it will backfire significantly.  Whatever the religious views of the likes of the Koch brothers, those folks surely will recognize that a candidate who throws down the Christian-moral-superiority gauntlet and accuses non-Christians of lacking a moral compass, or of borrowing one from Christians, is unlikely to appeal to a majority of voters in a presidential election.  And that anyone so brazenly craven as to invite religious strife in this country in an attempt to garner his party’s nomination for president will trigger revulsion in a substantial percentage of the public.

So beyond the pale are his comments that they disqualify him as a potential commander in chief. This guy’s dangerously lacking in the judgment and temperament required for the job.

Anyway, Marco Rubio must be smiling about it all.  Bush just lost the Jewish Republican vote, in Florida and elsewhere.

What a vile candidate.


UPDATE: Reader Jack and I exchanged the following comments in the comments thread to this post today:

  Jack

May 13, 2015 12:25 pm

“No place where the message reaches, no heart that it touches, is ever the same again. And across our own civilization, what a radically different story history would tell without it. Consider a whole alternative universe of power without restraint, conflict without reconciliation, oppression without deliverance, corruption without reformation, tragedy without renewal, achievement without grace, and it’s all just a glimpse of human experience without the Christian influence.”

I’m curious to ask where exactly is it that this “whole alternative universe” is located? Has Jeb not noticed that the past two thousand years or so have seen a persistent and constant series of the worst examples of man’s inhumanity to man in spite of the existence of organized religion, both Christian and otherwise? And does the name Torquemada ring a bell from the past? What part of human history demonstrates that organized religion of any form serves to preserve life, liberty and the pursuit of happiness?

  Beverly Mann

May 13, 2015 1:38 pm

What part of human history demonstrates that organized religion of any form serves to preserve life, liberty and the pursuit of happiness? Modern political history, Jack! Notably, the part about obsessively trying to keep many millions of Americans who have or had no access to medical care from having, or now that they final do have it, keeping it. And the part about barring people (including kids) on public aid from paying for admission to a swimming pool or movie theater, and people on food stamps from using the program to buy seafood or steak.

Then, of course, there’s that matter of police officers arresting people for being black, and maybe giving some of them “rough rides” in the backs of police vans while shackled and leg-ironed. And arresting kids, shackling and leg-ironing them, and sentencing them to prison for school fights or petty shoplifting. And of course there’s also that little matter of funding your town’s and county’s government with obscene fines and court fees for minor traffic violations.

And then there are those state and local government contacts with private prison companies in which the government agrees to keep each of the prisons full or mostly full and to pay the company as though operating the prisons at full capacity even if, heaven forbid (pun intended), a prison here or there is not quite at full capacity. (THIS is something that I didn’t know about until I read a jaw-dropping article about it a few days ago.)

So, obviously, Jack, you’re just unaware of modern American history and the role that Christian values play in it.

In the speech, Bush attempts a remarkably obvious sleight of hand, conflating Christianity’s precepts of compassion—e.g., “The last shall be first, and the first last”; “‘unalloyed compassion, such genuine love, such thorough altruism,’ as Dr. Martin Luther King Jr. described Christianity.”—with actions that are unrelated to compassion and are claimed as the free exercise of religion.  Such as—and Bush does make clear that he has these specifically in mind—the claimed right of people who own secular businesses to discriminate at will by invoking some supposed dictate in the bible, or invoking religious dogma as an excuse by a secular corporation’s shareholders to exempt itself from a mandate of law.

I have not read or listened to the speech, and took those quotes in that preceding paragraph from a column by Kathleen Parker in today’s Washington Post, which is titled “Jeb Bush’s eloquent defense of Christianity.”  Presumably, then, Parker knows of instances in which Christianity is being attacked by liberals as too compassionate—as just going toofar with that “the last shall be first, and the first last” thing. In which event I respectfully ask that she specify what, exactly, she has in mind.

Bush doesn’t defend Christianity, much less does he do so eloquently. He erects an elaborate strawman.  He accuses non-Christians and non-religious Christians of attacking Christian tenets of compassion, in the service of advancing both his own political ambitions and an obscenely uncompassionate political ideology; an aggressive lack of compassion is its very hallmark.  There is indeed an attack an attack underway by a segment of America against unalloyed compassion, and altruism, and in fact any semblance of human decency.  But it’s not non-Christians and non-practicing Christians, nor liberals, who are at its vanguard.  And, seriously, there probably aren’t very many people who will be fooled about that.

Bush is currently in the speedy process of exposing himself for the ridiculous idiot that he is, and the so-called establishment Republican kingmakers (billionaire donors, of course) soon will be on the hunt once again for a new hope.  The Kochs will prop up some new puppet and hope that New Hampshire cooperates.  Maybe it will.  And maybe the candidate will avoid insulting the character of many Americans and the intelligence of most Americans.

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