Letter from Pennsylvania: Call of the Amazon

Posted: Oct 19, 2017 12:39 PM
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There’s a curious line at the end of an Associated Press story regarding Pennsylvania’s ongoing budget impasse:

“Now, an analysis by Moody’s Analytics of metro areas that are good fits for Amazon’s huge second headquarters questioned whether Pennsylvania’s budget troubles will make it unwilling or unable to offer the generous financial incentives that Amazon will want.”

Really? As if handing a very (very) wealthy company a very (very) large bolus of corporate wealthfare should be some kind of “priority” in a budget-less commonwealth in which the governor and many legislators seeks to borrow and tax our way to prosperity, while others can’t seem to grasp the concept of belt-tightening, preferring instead to make ends meet with non-recurring revenues.

Business climate, indeed, is critical to attracting new investment to the Keystone State. But “business climate” should be defined by the relative paucity of government interference in the form of taxes and regulations, not by how many taxpayer dollars can be given away.

Speaking of Gov. Tom Wolf’s plan to borrow in excess of $1.6 billion (and counting, one can only suppose) to “right” Pennsylvania’s badly listing budget ship, this, also from the AP:

“Public finance analysts generally regard borrowing to pay operating costs as bad fiscal practice and a last resort, and the practice of plugging deficits with one-time cash infusions over the last five years has played a prominent role in Pennsylvania’s credit rating plunging to the bottom rungs of state ratings.”

Sadly, Pennsylvania’s leaders appear to have no problem saddling future generations with ever more debt.

But, hey, Amazon will solve all this, right?

Business students at Penn’s Wharton business school, part of a team calling itself “Team Wharton Prime,” propose Amazon be given free land for its much ballyhooed “HQ2,” its second headquarters outside of Seattle. Oh, and also between $12.5 billion and $15 billion in tax credits to locate in Philadelphia.

It once was written that ignorance is a voluntary misfortune. How intellectually and economically tragic it is that so many so supposedly learned people so regularly tout alms for the moneyed interests that can, and have a moral responsibility to, pay their own way.

Pennsylvania, by the way, has an unflattering history of tracking/proving that tax incentives live up to their rah-rah-sis-boom-bah billing. And, in some cases, the very veracity of the commonwealth’s claims of “public benefits” has come into question.

As Pennlive.com’s Wallace McKelvey reminded in an Oct. 9 dispatch, “A 2010 report by the Legislative Budget and Finance Committee found little oversight to ensure that the jobs tax credit recipients promise actually materialize.”

Poor record-keeping was cited. But also cited were confidentiality requirements that shield hiring and tax payment information from public scrutiny, McKelvey wrote.

Now there’s a sound public policy: Offering tax breaks for possibly illusory benefits that are either difficult to verify or can’t be verified.

Sweet deal, eh?

Perhaps on this Amazon is banking?

Speaking of unflattering, that’s the portrait Carnegie Mellon University humanities professor Tim Haggerty paints of the process being used to put together Pittsburgh’s proposal, due Oct. 19, to secure Amazon’s HQ2.

In fact, in an Oct. 8 commentary in the Post-Gazette, he likened the secretive and limited-time process to “railroading … a great way for a corporation to see how much control it can exert over a local government.”

Concluded the former urban planner, “(I)f you’re frustrated by the lack of input into the process now, just wait until we’re essentially a one-company town. New and innovative really doesn’t mean fair or livable.”


Citing a litany of redevelopment “fashion cycles,” Haggerty says “popular (economic) renewal strategies have fallen in and out of favor over time as intrinsic costs and benefits reveal themselves.”

That would be, generally, costs that are too high and hardly an effective allocation of scarce resources – taxpayer dollars – and benefits that always, always, fall short of the pols’ promises of fantastical “multiplier effects” that will deliver the renaissance of all renaissances.