Monday, December 31, 2012

Your Water But Not Your Name

Milwaukee is a great place to extract water from. But, sorry, the Milwaukee Water Council doesn't want anyone to know that water has anything to do with Milwaukee.

As John Schmid reported, "The work of the Water Council has become global in its nature and the organization wants to jettison anything that smacks of provincialism," Executive Director Dean Amhaus said. Hence, they've dropped Milwaukee from the formerly titled Milwaukee Water Council.

Yes, all the companies that are members of the Water Council, those businesses which have benefited from Milwaukee's water, those same ones whom want see the "water hub" idea take-off, they just don't want to mention or give any indication that they are actually in Milwaukee.

Let's not forget this idea of a Milwaukee "water hub" and it's transformational economic powers are dubious. Nonetheless, being a Milwaukee initiative involving Milwaukee water, the fact that it's located in Milwaukee should be one of the focal points. Especially if the initiative is being sold as a catalyst for economic development in the Milwaukee area.

As a 2009 University of Wisconsin-Milwaukee Center for Economic Development report explained:
In 2009, UWM also launched the second key initiative in its entrepreneurial aspiration to become the driver of economic development in Milwaukee: a School of Freshwater Sciences. During the preceding two years, Milwaukee’s civic leadership had coalesced behind a regional economic development strategy, led by 69 business executives who organized something called the “Milwaukee 7 Water Council,” to “brand itself as the global capital of freshwater research”...
Curiously, no one in Milwaukee has done the comparative research on the water sector in other metropolitan areas that would be necessary to confirm whether a uniquely large “cluster” of water companies is located in the region...
Of the 40 global water companies listed by a Goldman Sachs report as generating the highest revenues none have their U.S. headquarters in Milwaukee...
What about the locations of all U.S. plants and offices –not simply headquarters-- for global “top 40” water companies? Over 50 metro areas are home to at least one U.S. plant or office of the global water “top 40.” What’s more, as in the case of headquarters noted above, the vast majority of these facilities are located in the suburbs, exurbs, and small towns of metropolitan areas, generally not in the central cities. Thus, as suggested earlier, this suggests that the economics of clustering and agglomeration may not be at a premium in the fragmented water technology industry, and that no one place is likely to emerge as a“Silicon Valley” of water...
The Milwaukee region supposedly is already home to a vibrant and growing water sector, comprising somewhere between 76 and 120 “water-related” companies (including local branches of five of the world’s 11 largest water companies). According to water boosters, these numbers are larger “than in any other city in the United States”; they confirm that Milwaukee is “already a leader in water technology”; and they confer on the region significant “first-mover” advantages in the race to become the “Silicon Valley” of water...
But, whether we look at headquarters locations, offices and plants, patents, or certain occupations, the Milwaukee region is hardly a “unique” presence in the industry, or even a “first-mover” in attempting to promote water technology as a local economic development strategy... 
Several regions, in the U.S. and abroad, do seem to have a leg up in growing and attracting water technology companies, but the industry doesn’t appear to exhibit a clustering that remotely resembles a “Silicon Valley.” And to the extent that there is a nascent Silicon Valley of water out there, Minneapolis, Toronto, Israel, or Singapore all seem like better bets at this point than does Milwaukee. 
So, we've gone through all this trouble and money to brand Milwaukee a "water hub," but now the powers that be would like everyone to just focus on the water and forget about Milwaukee. That's not right. 

Sunday, December 30, 2012

A Majority Rule Institution

"To give a minority a negative upon the majority (which is always the case where more than a majority is requisite to a decision), is, in its tendency, to subject the sense of the greater number to that of the lesser...A sixtieth part of the Union, which is about the proportion of Delaware and Rhode Island, has several times been able to oppose an entire bar to its operations. This is one of those refinements which, in practice, has an effect the reverse of what is expected from it in theory. The necessity of unanimity in public bodies, or of something approaching towards it, has been founded upon a supposition that it would contribute to security. But its real operation is to embarrass the administration, to destroy the energy of the government, and to substitute the pleasure, caprice, or artifices of an insignificant, turbulent, or corrupt junto, to the regular deliberations and decisions of a respectable majority. In those emergencies of a nation, in which the goodness or badness, the weakness or strength of its government, is of the greatest importance, there is commonly a necessity for action. The public business must, in some way or other, go forward. If a pertinacious minority can control the opinion of a majority, respecting the best mode of conducting it, the majority, in order that something may be done, must conform to the views of the minority; and thus the sense of the smaller number will overrule that of the greater, and give a tone to the national proceedings. Hence, tedious delays; continual negotiation and intrigue; contemptible compromises of the public good." ~ Alexander Hamilton, The Federalist No. 22

Saturday, December 29, 2012

Tax Collections At Historically Low Levels

The federal government is only collecting 17% of GDP as tax revenue, a historically low level.

Friday, December 28, 2012

A Fractured Process

The Journal Sentinel reports, "A new study funded by the petroleum industry says Wisconsin firms employ 20,000 people supporting the unconventional oil and gas business - meaning sand mines, largely. The sand from western Wisconsin is used by drilling companies in North Dakota and other states to unlock underground natural gas and oil supplies in a controversial practice called hydraulic fracturing, or fracking."

Go figure. The industry that gains from fracking has released a study showing how wonderful it is.

Walmart employs people. Sport stadiums employ people. Yet, these are low-wage jobs, usually lacking health care and retirement plans. The mantra of "It creates jobs!" is short-sighted and overblown. Regarding fracking, if those jobs destroy land, water, and leave behind a barren wasteland, it's not really a long-term jobs plan. It's a short-term money grab for the parent company pillaging and plundering the land. Not to mention the negative public health consequences for residents. So yeah, again, not really a good nor sustainable jobs plan. And, definitely not a good plan for a state that prides itself on the natural environment and the beauty and purity of the land.

“Every year, large areas are continually becoming unfertile in spite of efforts to grow vegetation on the degraded mined land.” wrote Mrinal Ghose in the Journal of Scientific and Industrial Research.

As Ellen Cantarow reports, "Boom times for hydraulic fracturing began in 2008 when new horizontal-drilling methods transformed an industry formerly dependent on strictly vertical boring. Frac-sand mining took off in tandem with this development. “It’s huge,” said a U.S. Geological Survey mineral commodity specialist in 2009. “I’ve never seen anything like it, the growth. It makes my head spin.” That year, from all U.S. sources, frac-sand producers used or sold over 6.5 million metric tons of sand — about what the Great Pyramid of Giza weighs. Last month, Wisconsin’s Department of Natural Resources Senior Manager and Special Projects Coordinator Tom Woletz said corporations were hauling at least 15 million metric tons a year from the state’s hills. By July 2011, between 22 and 36 frac-sand facilities in Wisconsin were either operating or approved. Seven months later, said Woletz, there were over 60 mines and 45 processing (refinement) plants in operation. “By the time your article appears, these figures will be obsolete,” claims Pat Popple, who in 2008 founded the first group to oppose frac-sand mining, Concerned Chippewa Citizens (now part of The Save the Hills Alliance)."

There are better ways to grow an economy. Much better ways than destroying the land around you. Let's move toward a sustainable, equitable, and safe future for Wisconsin and it's residents. Let's tell the hydraulic fracturers to frack off.

For Further Reading:
Clintonville Booms Caused By Fracking?
The Evolving Truth About Fracking For Natural Gas
How Rural American Got Fracked
In The Name Of Fracking

The Legalized Bribery That Is Sport Subsidization

A great article on the "system-gaming moocher class, an entitled, irresponsible, parasitic piglet subset, lazily suckling from the public teat, pulled up by shiny new bootstraps purchased with government giveaways, forever hiding in plain sight," otherwise known as sport subsidies.

As Patrick Hruby writes, "According to Harvard professor Judith Grant Long and economist Andrew Zimbalist, the average public contribution to the total capital and operating cost per sports stadium from 2000 to 2006 was between $249 and $280 million. A fantastic interactive map at Deadspin estimates that the total cost to the public of the 78 pro stadiums built or renovated between 1991 and 2004 was nearly $16 billion."

How does all this (continue to) happen? Especially considering our supposedly pinched budgets and ever-burgeoning fiscal constraints, why do we continue to subsidize sport millionaires? Hruby explains, "Team owners ask for public handouts and threaten to move elsewhere unless they get them, pitting cities against in each other in corporate welfare bidding wars -- wars rooted in the various publicly granted antitrust exemptions that effectively allow sports leagues to control and maintain a limited supply of teams to be leveraged against widespread demand."

Sound familiar? These are the same tactics (build us a stadium or we're leaving town) which were applied to Miller Park for the Brewers and which are being used to strong-arm the public into supporting a new Bradley Center for the Bucks. 

Go read the entire article - Cut Welfare To Sports - to find out more about the land giveaways, infrastructure freebies, tax breaks, and other government handouts the public provides to sport millionaires.

Wisconsin Government Spending

Saturday, December 22, 2012

Wisconsin's Spending Problem: Corporate Welfare

According to data collected by the New York Times for their series, United States of Subsidies, Wisconsin spends $1.53 billion per year on incentive programs. (Almost 5% of the $66 billion biennium budget.)

Remember Scott Walker's claims of a $3.6 billion shortfall for the two-year budget cycle during his campaigning? Simply ending corporate welfare "incentives" over a two-year period would wipe out almost all of this supposed shortfall.

Weekend Reading

As Companies Seek Tax Deals, Governments Pay High Price
The Big Lie About The Entitlement State
Cash-Rich Companies Being Subsidized By Tax-Poor Governments
How State Aid To Cities Has Plummeted
$100 Million In Business Tax Credits, But At What Cost?
Public-Private Partnerships Extract Private Profit From Public Projects
Revenge Of The Reality Based Community
The 6 Craziest State Gun Laws
The 12 Biggest Companies Paying Workers The Least
12 Facts About Guns/Mass Shootings In The U.S.
When Government Does Things Better Than Private Enterprise
Who Broke America's Jobs Machine?
Why Isn't Obama Demanding Corporate Welfare Cuts?

Saturday, December 8, 2012

Wisconsin Corporate Blackmail

From Bruce Murphy, "Wisconsin, it turns out, is also a paradise for companies seeking handouts, as a ground-breaking story in the New York Times documents. The story’s online tracker allows you to check any state, which shows Wisconsin spends $1.53 billion in taxes per year on incentives for business. That equals 10 percent of the state’s annual budget and costs $268 per per person. Wisconsin, land of the supposedly bad business climate, ranks ahead of 33 other states and the District of Columbia in per-capita payments to business."

Go read Murphy's entire Land of Corporate Blackmail article.

Thursday, December 6, 2012

It's A Scandal! It's A Outrage!

Following up on some earlier thoughts about Milwaukee's (well, really the MMAC's) fascination with Oklahoma City (OKC) and their new basketball stadium, partially funded by a 1 percent sales tax.

An additional 1% on the sales tax to pay for infrastructure and other civic investments is a worthy idea, used by OKC to finance some of their new projects. (Taxpayers have already voted in favor of such a tax to support our parks.) But, is a basketball arena the first priority of such spending? Considering transportation, water, sewer, education, health care, and a host of other more immediate needs, is a sport venue the crucial link to fostering explosive growth?

What we have here is a self-interested cabal throwing everything they can think of at taxpayers hoping something finally persuades them into thinking that subsidizing a sport arena is a great investment (again).

Sports are fun, stadiums are economic catalysts, Herb Kohl is a good guy, we need the Bucks to be a "big league" city, etc. Now they're surveying the country, identifying the most recently completed basketball stadiums, and if that city or region is experiencing growth, abracadabra - the stadium is a defining element of that growth, and yet another reason why Milwaukee should get on this bandwagon.

OKC is growing ... and they just built a basketball stadium ... ergo, Milwaukee needs to get with the program if they want to experience growth. Nevermind our lack of an advanced rail system (when compared with other cities), shrinking bus routes, continual cuts to our parks, crumbling bridges and roads, declining schools, to name a few. For the majority of residents (businesses and individuals), these needs far outweigh a sport stadium.

For Further Reading: 
Are Basketball Arenas Catalysts Of Economic Development?
As Stadiums Vanish, Their Debt Lives On
Basket Case 
Buck The System 
Buck You 

City Lays Off Workers While Giving Millions To Pro Hockey Team
Economic Engine Or Albatross? 

Economic Of Sports Facilities & Their Communities
5 Cities Financing Pro Stadium Boondoggles
Growth Effects Of Sports Franchises, Stadia, And Arenas
Is There Anything A Stadium Can't Solve? 

NBA Arenas Lousy For Local Economies
Overblown Bradley Center Impacts 

Professional Sports As Catalysts For Metropolitan Economic Development
Selig Defends Taxpayer Subsidies For Stadiums
Should Cities Pay For Sports Facilities
Stadiums Don't Bolster Local Economies
Stadium Swindle
Will Herb Kohl Blackmail Milwaukee?

Best State Pension System: Wisconsin

21 States' Pension Systems Not Fiscally Sound

Pundits, talking-heads, politicos, and other supposed experts warning about an impending Wisconsin pension crisis are merely using false information and scare tactics in an attempt to eviscerate the pension system. Plain and simple. This is another one of those "entitlements" (anything having to do with a fair society, the social contract, or shared prosperity - all of which, Republicans hate) the anti-government zealots complain about with the hope that some of the smears stick.

This situation is very similar to the debt ceiling theater (here, here, and here). Money has already been earmarked for a certain purpose - budgetary items/programs or employee compensation. Creating some phantom ceiling doesn't mean the liability goes away. Because varies entities may have taken pension money and spent it on other purposes, this does not absolve their responsibility to pay previously contracted pension obligations.

As David Cay Johnston explains, "The fact is that all of the money going into these plans belongs to the workers because it is part of the compensation of the state workers. The fact is that the state workers negotiate their total compensation, which they then divvy up between cash wages, paid vacations, health insurance and, yes, pensions. Since the Wisconsin government workers collectively bargained for their compensation, all of the compensation they have bargained for is part of their pay and thus only the workers contribute to the pension plan. This is an indisputable fact."

Some of these pundits and politicos don't want you to have a stable retirement. Well, that's implicating them too much. They really just want that money - in the form of tax cuts, subsidies, and giveaways - for themselves. As far as your retirement is concerned, they really don't care.

Pensions (public & private) are in trouble because slippery mayors, duplicitous governors, gluttonous politicians, and greedy business owners have diverted funds (compensation) away from pension accounts and into other uses - plugging budget holes, subsidizing business parks and sporting arenas, constructing more and more roadways, and even for new vacation homes.

You're going to see more articles and more pundits bloviating about this "we must transform the pension system to save it" talking-point in the near future, feel free to laugh at them, but make sure you're not swept up into their misguided rhetoric.

For Further Reading:
Deferred Wages
More Bad Pension Reporting
Pension Petulance
Politicking With Pensions
Recoiling Retirement
Retirement Revisionists
Scott Walker Is Coming For Your Pension

Monday, December 3, 2012

The Economic Trail Of Tears

The Business Journal of Milwaukee recently ran a handful of articles regarding a revival in Milwaukee, an new arena being a part of that, and Oklahoma City (OKC) possibly being a roadmap for the whole process.

Oklahoma City has recently developed a river walk, completed a large hotel development, and built a stadium to attract an NBA team (the OKC Thunder). I guess we're supposed to imagine Milwaukee doesn't already have these, or that duplicating similar venues will lead to greater growth?

Or, maybe we can turn back the clock and reverse our history. Milwaukee is an older city (1846) than Oklahoma City (1889). Newer cities, like developing countries, are experiencing higher rates of growth than older cities. Add in the warmer climate and the heavy influence of Big Energy (mostly oil & natural gas) and you pretty much have to whole story behind OKC's growth. It's not because of some magical development plan based on the public funneling more money to private projects.

Oklahoma City actually has a larger share of its workforce employed by the government - 15.1% versus  13.2% in Milwaukee.  Should Milwaukee expand government? I'd love to see the MMAC recommend that.

20.8% of Oklahoma City residents have no health insurance coverage, in Milwaukee, it's 15.6%. For that 5 or so percent of the population in OKC with no health care coverage, would they claim a better quality of life?

The rental vacancy rate on OKC 8.1%, in Milwaukee 3.5%. Median home value in OKC $131,100, in Milwaukee $133,800. Median rent in OKC $720, in Milwaukee $753. It appears the value (and occupancy) of the built infrastructure is holding it's own compared with OKC.

The article relies on quotes from Greg Marcus, CEO of Marcus Corporation, for the inside story on Oklahoma City. He developed a hotel there, so he knows. Marcus claims Kohl's Corporation may have moved to downtown Milwaukee if the quality of life had been better. Couldn't this excuse (quality of life), to some degree, plausibly be used every time one location is chosen over another? And, by doing what? What does he recommend that Milwaukee, imitating OKC, do to improve the quality of life?

Marcus elaborated, "If you don't invest in your product, you don't get customers. You need to have a product that is so compelling and invest in infrastructure."

Yet, these same omnipotent business leaders also don't want to have to pay the taxes that pay for improvements in infrastructure.

None of this means there isn't anything to learn from OKC. But sound economic development isn't just latching on to the latest rising star and reciting their most recent achievements as a best practices guide.