Misplaced Priorities, Crony Capitalism, & The A.I. Bubble

The U.S. ranks high in GDP per person but lower in social well-being and equality. The U.S. scores low on metrics like maternal health, political rights, discrimination, and income mobility compared to other developed nations. In fact, the U.S. often falls outside the top 20 in overall social progress despite strong economic indicators. Wealth doesn't always translate to broad social benefits. 

Government policy and spending choices provide insight into how the U.S. has gone astray from the post-WWII shared prosperity model of common sense, broadly shared benefits, and best bang-for-the-buck decisions. 

Wisconsin, under Governor Scott Walker, rejected Obama administration funding (around $823 million) for a proposed high-speed rail line between Madison and Milwaukee in 2010. Walker, a Republican, made stopping the rail project a cornerstone of his campaign, and after winning, he canceled the plan, leading to the federal funds being reallocated to other states.

Instead, Wisconsin has focused on road building. See this post regarding induced demand and why widening and building more highways is generally a bad idea. It's bad for the environment and it doesn't alleviate traffic congestion. Nonetheless, Wisconsin is doing more of it at a significant cost.  This $1.7 billion (currently) project is expected to last through 2033.  

Wisconsin is also throwing a lot of money onto the AI bandwagon. Wisconsin is experiencing a boom in data center development, driven by AI, with projects from Microsoft (Mount Pleasant) and Vantage Data Centers (Port Washington). Since significant public monies and resources are involved, many are raising concerns about energy use and environmental impact, along with negotiating for benefits like infrastructure and green energy. 

Clean Wisconsin reported, "Two approved data centers in Wisconsin will use more power than all the homes in our state combined. More than the generation capacity of the Point Beach nuclear plant, the single-largest source of power in Wisconsin."

Further, these companies are drawn to Wisconsin for the water. Data centers need a lot of water. As PBS detailed, "Wisconsin has become a destination for new data centers because of the extreme heat they generate, benefitting from cooler climates and lots of water to regulate their temperatures. That’s why companies are eyeing the state — for its climate and water."

Good Jobs First has substantiated that while Wisconsin's data center boom creates construction jobs and investment, the massive sales tax breaks (like those for Microsoft) cost taxpayers tens of millions in lost revenue, with few jobs created relative to the subsidies, prompting calls for better state oversight, transparency, and "guardrails" for fair pay and worker protection, as current deals often lack accountability and permanent job guarantees.

On top all of the money being given away to data centers, Tom Kertscher and Paul Kiefer note, "Obsolete power plants continue to cost ratepayers. Now, the push to generate unprecedented amounts of electricity for data centers risks creating another $1 billion in ‘stranded assets.' ... Wisconsin ratepayers will owe over $1 billion on retired coal power plants by the end of 2026 — a total that may climb in the coming years."

On top of all these issues related to AI data centers, they are also short-lived assets. Meaning they depreciate at an exponentially fast pace - the technology and equipment are obsolete within years. Further, the AI market is a bubble. Don't take my word, environmentalists, or other naysayers, big investors who've called other bubbles are saying so. Not only are they saying so, they are putting their money where their mouth is; they are betting against AI. Based on the initial investment to build these centers, and how quickly they need to be replaced or upgraded, the profits needed to achieve such are nearly impossible. 

The choice to continue building highways rather than more efficient ways of moving people and goods degrades our environment and our economy. Shoveling money into unproven and inefficient ephemeral and illusory catalysts (power plants, data centers ... not to mention stadiums and convention centers) is a drag on future growth. There is a massive opportunity cost imbedded in these choices. By wasting money on these boondoggles, the money can't go toward more meaningful and productive uses.

In the end, this all continues to hurt the country, the states, and the citizens. As usual, the only benefactors are those being given these handouts and corporate welfare.  

For Futher Reading:

The Hidden History of Prosperity

America’s Forgotten Generation (of Prosperity)

Why Did the Rich Pull Away from the Rest?

Restoring Shared Prosperity

The AI Industry Is About to Collapse

The AI Bubble and the U.S. Economy: How Long Do “Hallucinations” Last?

Talking With Paul Kedrosky

Michael Burry’s AI Warning Can’t Be Ignored

The Data Center Shakedown

The latest corporate welfare boondoggle is coming to a city near you.

Shutting Down Data Center Subsidies

Cloudy with a Loss of Spending Control: How Data Centers Are Endangering State Budgets

What to ask when a data center wants to come to town

Runaway Data Center Tax Breaks Endanger State Budgets

New Data on Data Center Subsidies, Same Old Problems

Data Centers: Questions to Ask Now

In race to attract data centers, states forfeit hundreds of millions of dollars in tax revenue to tech companies

Questionable Economic Impact Claims

Wisconsin Department of Tourism claims $321 million economic impact from Republican National Convention. 

As Center Square clarified:

Economists who have studied the impact of national party conventions says a report from the marketing firm Tourism Economics does not accurately reflect the actual impact of the 2024 Republican National Convention in Milwaukee.

Economist Victor Matheson of College of the Holy Cross has studied and written on national conventions and large events, He called the release, which claims the event had a $321.5 million impact, a “promotional booklet/press release, not a serious economic impact study.”

Center Square, in other economic impact reporting, further noted:

Economists say the numbers produced by the marketing group do not follow economic study principals and are not reputable. The numbers are used by politicians and state tourism departments to justify spending.

“Viewing what ‘economic impact’ consultants do to be economics is like considering horoscopes to be astronomy,” economist J.C. Bradbury of Georgia’s Kennesaw State University recently wrote. “Newspapers are smart enough to put horoscopes next to the comics and Dear Abby, while economic impact ‘studies’ get banner headlines on the front page.”

Bradbury noted economic impact analysis is not something real economists do and there is a reason that work is not presented at conferences or published in journals.  

Economic impact is often claimed surrounding publicly funded sports stadium projects or sporting events.

The annual tourism reports are paid for by state tourism departments and national tourism agencies.

Urban Milwaukee reported:

But when the Common Council discussed the RNC in September, it wasn’t as favorable.

“It didn’t trickle into the neighborhoods,” said Ald. Marina Dimitrijevic of the economic impact.

In an email to Dimitrijevic, LuLu Cafe & Bar owner Cameryne Roberts said the RNC didn’t result in a business boom. “For what it’s worth, the RNC was a complete bust for us and most of the other Bay View business owners I spoke with, not to mention those in other parts of town.” 

Alderwoman Milele A. Coggs asked for the final report to include a geographic breakdown and diversity data. “I just want us, as a council, in case we’re asked again to sign on to anything like this, to be aware of its impact. And where things might not have been how we wanted it to be, or we might not have achieved the goals we were going to achieve, that we recognize that and that we work differently in the future to better achieve those goals,” said Coggs. The final report does not include the breakdown requested.

Reports during the convention highlighted how many businesses outside of the hard security perimeter were seeing lackluster business. Across the month of July, sales tax revenue in Milwaukee was actually down year over year. But the state, which collects the revenue, does not collect data by week.

Per usual, many of these economic-impact no-brainers (conventions, stadiums, Olympics, etc.) which are touted to be win-wins for cities and states are anything but.  

Just A Few Reasons Trump Is The Worst

Really Frickin' Petty (RFP)

New Land blasts city development office shortly before downtown site award

It’s a shame when things don’t go your way. But for those who are supposed to be the bastions of free market competitiveness, there seems to be a lot of dependency on the public sector. And when contracts aren’t awarded, some of these private entities lash out, point fingers, and cry the blues. 

This criticism is laughable considering development companies are the ones who continually beat the market drum all the while insisting cities and states fork over millions to help fund their projects. And then if they don’t get their way, and a pile of cash, something is wrong with the process. 

The Business Journal article notes:

New Land's criticisms of the city's development department extend beyond the Marcus Center parking structure project: Gokhman says the department has "chronic problems" and "deep dysfunction" that are "stifling development"

This coming from a company that has been awarded similar projects in the past. The company was also involved in foreclosure proceedings in the not-so-distant past. What's that old saying about glass houses? Funny how private developers believe they should be able to dictate what a city’s development department does.  

Regarding another often-used development handout, the article details, “Tax incremental financing is a tool local governments can use to pay for new developments that are expected to grow the tax base by using future property taxes those developments generate to help repay the city's investment in those projects.” What they leave out is that this financing was intended to serve blighted areas, not locations where development is already thriving. 

The Journal article quotes another developer:

"When you do put out an RFP, you have to be ready, willing and able to make the commitment to help make it successful," said Bob Monnat of Milwaukee development firm Mandel Group Inc. "None of these larger RFP sites have anywhere of a chance of creating the kind of outcome that everyone would like to see unless there's some major participation on the part of the city to help get it over the hump."

Talk about entitlement. Developers seem to believe the City should alleviate all risk from the project, while the private developers get to walk away with all the profits. What a partnership!

Aren’t some of these concepts what the free market is supposed to be all about? Isn’t this part of the conservative mythology we’ve heard over the last many decades about the private sector, job creators, the wise surveyors of the market? So why do they even need the inefficient, mismanaged, inconsistent, misleading, and dysfunctional public sector?

A big problem for New Land’s Gokhman seems to be that the City Development Department took longer than expected. I’m sure that developers never take longer than expected. They’re always on time and everything they propose is seen through to completion. [Sigh. Eye roll.]

Seems odd to have such an issue with not being awarded this site, but then to also state:

New Land supports Johnson’s vision of growing Milwaukee and believes the city's current zoning code and DCD's urban planning team are "one of the best in the country," Gokhman said. 

But then Mr. Gokhman continued:

He cites the downtown Fourth and Wisconsin site near the Baird Center and the former Army Reserve site in the city's Bay View neighborhood — which both remain undeveloped after years of discussion — as key examples of failure.

"No one at DCD loses their job if development doesn’t occur," Gokhman said. "There’s no accountability." 

So, unless every city site is maximally developed, by the city, someone has failed? Seems there is a lot of contradictory ideas and sour grapes going on here. Let’s not forget - failure happens. Everything doesn’t work out as planned in life. [As an example, see the above discussion of Mr. Gokhman’s company's foreclosure activities.] 

City development is booming. Newer offices, hotels, apartments, retail, etc. have steadily been built over the last few decades. Milwaukee has seen downtown development unlike anything since WWII. But the City should throw more money at private developers because a few sites have yet to be developed? Or should the City allow itself to be bullied by developers attempting to rake them over the coals in the media? I don't think either of these would be policy or process improvements. 

These developers' public whining is just a big bushel of bitter, sour grapes.

A Vote For Trump Is A Vote For Project 2025

Project 2025: A wish list for a Trump presidency, explained

Project 2025: The myths and the facts

1) Concentrating power in the presidency: Trump’s allies believe that his first term failed because he couldn’t get enough “loyal” appointees in place and because the “deep state” bureaucracy sabotaged him. So a main recurring theme of Project 2025 is how to bend the executive branch to a conservative president’s will.

2) Longtime conservative priorities: The vast majority of Project 2025’s policy plan is focused on longstanding conservative priorities — with some tweaking and elisions for the Trump era. Though some are indeed quite extreme, they’re not all that new or specifically tied to Trump.

There are far too many to list here, but just as a flavor:

Education: Eliminate the Department of Education, give every parent a voucher-like option they could use to send their child to private school, zero out federal funding to low-income schools over the next decade, greatly cut “wasteful” school meal programs, and end Biden’s student loan forgiveness programs

Energy and environment: Deprioritize fighting climate change, repeal Biden’s clean energy subsidies, further unleash oil and natural gas production, roll back various environmental regulations

Health care: Majorly cut and overhaul Medicaid, roll back the recent law banning surprise medical billing

Immigration: Deny loan access to students at “schools that provide in-state tuition to illegal aliens,” ban non-citizens from living in federally assisted housing (even if they live with a citizen), reinstate and expand the horseback-mounted Border Patrol

On a few issues — trade, antitrust, the Export-Import Bank — the plan states that the conservative movement is divided, and lays out the thinking of two different sides on each issue. On the question of Social Security and Medicare, which Heritage has long supported overhauling but Trump does not, the document is basically silent.

3) A hardline religious-right agenda: There are also parts of Project 2025 that, while not exactly surprising for conservatives, are quite extreme in ways that are politically problematic for Trump. The plan calls for:

Revoking FDA approval of the abortion pill mifepristone, which is used in about half of US abortions (“Abortion pills pose the single greatest threat to unborn children in a post-Roe world,” the document states)

Using an old law known as the Comstock Act to prosecute people who send abortion pills through the mail

Ending the mandate for insurance to cover the “week-after” contraceptive pill Ella (which the document argues is a “potential abortifacient”)

Crack down on “abortion tourism” in liberal states by requiring states to report where women seeking abortions live and cutting federal funds if they refuse

Ending subsidies for stem cell or fetal cell research

In a fiery introduction by Heritage Foundation president Kevin Roberts, Project 2025 also calls for banning porn:

Pornography should be outlawed. The people who produce and distribute it should be imprisoned. Educators and public librarians who purvey it should be classed as registered sex offenders. And telecommunications and technology firms that facilitate its spread should be shuttered.

Roberts also adds that pornography is “manifested today in the omnipresent propagation of transgender ideology and sexualization of children,” suggesting that he may define “pornography” much more broadly than is typical — that he may view any attempt to explain or teach about trans people as worthy of outlawing and imprisonment.

This is reflective of a broader push from religious and cultural conservatives. (The demand for porn prohibition does not show up in the document again after Roberts’s introduction, making it unclear how it would be implemented.)

What Trump doesn't want you to know about Project 2025

Project 2025

Another American Revolution Needed

The United States has 13 of the world's top 20 billionaires. 

Let's stop pretending welfare, social programs, minimum wage, retirement plans, etc. are the true American budgetary issues. Living wages, health care, and pension plans are NOT the problem.

It's the fact that we've allowed a privileged few to avoid paying their fair share whilst amassing grotesque fortunes. 

It's time to start taxing these kings and queens and return the United States to a shared prosperity instead of the current plutocracy.

[source]

How To Solve (Mostly) All Our Problems

 TAX THE RICH!!!

And, by "rich", I mean millionaires. Which, for the U.S., is about 9% of the entire population. This isn't a call for increased taxation on low-income, working families, or the middle-class. It's a call to tax those that have clawed, cheated, and stolen the wealth and productivity gains of the past few decades. No, not all millionaires have clawed, cheated, and stolen. But those who have clawed, cheated and stolen, and who have bought politicians to get legislation and tax laws in their favor, need to be taxed more.

Income has been steadily redistributed upward since the 1980s. Millionaires are reaping more and more of the gains of workers. This is not sustainable. It's time to reverse this. Tax the rich! 

Little Economic Impact From Stadium Projects

Report Finds Little Economic Impact From Stadium Projects

For Further Reading:

The Legalized Bribery That Is Sport Subsidization

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

The Math and Taxes of Stadium Boondoggles

Big League Confusion

Brewing Up An Inflated Impact

Big League Broke

Bonds & Bondage: Indentured To The Sports Entertainment Cabal

Screenshots of Wisdom

 

Weekend Reading

The Quest to Tell Science from Pseudoscience

Listen, Progressive People!

Not a Housing Bubble

America’s Corporate Welfare Queens

Who Helps Pay Amazon’s Low-Wage Workers? You Do

Pastor’s wife planned husband’s killing with man they had sex with, Oklahoma cops say

Evers vetoes bill to give Legislature control of federal COVID relief funds

With ambitious new infrastructure plan, Biden isn't fooling around

GOP Legislators Want Pandemic Aid for Tax Rebate

Texas and Yet Another Failure of Privatization

Beto O'Rourke: Why Texas Oil & Gas Can't Keep Texans Warm

Greg Abbott Lies About Green Energy To Deflect On Freeze Fail - UPDATE: AOC Responds

The Texas grid got crushed because its operators didn’t see the need to prepare for cold weather

Why Does Texas Have Its Own Power Grid?

The failure of privatization in the energy sector and why today’s consumers are reclaiming power

A Cost Comparison ofPublic and Private Water Utility Operation

Privatization of Water and Wastewater Services

Has privatization failed Texas utility customers?

Natural gas, not wind turbines, main driver of Texas power shortage

Texas Mayor Tells Residents To Fend For Themselves

Feds Warned Texas To Weatherize Power Grid The Last Time This Happened

Fox News aired bizarre and wildly misleading claims about Texas' blackouts that pin blame on renewables and climate policies

Why on earth would right-wing people with connections to the fossil fuel industry lie about ‘frozen wind turbines’ in Texas?

For Conservatives, Government Is The Problem and The Solution

Inspired by all the recent flurries we’ve had in Wisconsin, John Torinus is back shoveling the yellow snow of economic policy. He begins with two head-scratchers.

“Congress should think twice before getting too generous with weekly unemployment compensation. That’s because manufacturers are already having a hard time finding enough workers to man their factories.”

First, what is “too generous” for weekly unemployment compensation? Recent compensation has been bolstered by the fact that we’re living through a global pandemic. It’s part of a stimulus package to keep workers and businesses afloat. It’s not meant to exist into perpetuity.

Second, it’s been pretty clearly and universally established that manufacturers are having a hard time finding workers because the work is grueling and worth more per hour than the amount they are willing to pay.

Tornius alerts, “The labor shortage is real.”

Again, this is wrong. Pay that is not commensurate with the work that is being asked to be done is real. We have a compensation problem, not a skills shortage or a labor shortage.

Torinus then pretends that stimulus money distributed during the ongoing pandemic has left many just sitting at home collecting checks, and many others just planning to do this forever. This is classic Republican bullshit. They’ve been claiming this garbage forever. Poor and working class are lazy and will stay home if given then chance. Yet, conservatives will bend over backwards to cut taxes and provide incentives to the rich. Remember, The Haves are the job creators and something will eventually trickle down to the poor and working class.

He then talks of the plethora of living wage jobs available for any willing worker. “Employers have also raised starting wages in this area to $14 to $16 per hour.” $15 per hour results in a yearly income of just over $30,000.

Torinus continues with even more drivel, “Yes, it is a noble goal to want a minimum level of income for every adult in the United States. But the better way to get there is through good-paying jobs in the private sector. Government jobs, which always seem to keep growing in number, may be necessary, but they do not propel the economy.”

Last I checked, the private sector has been around a while. We’ve deregulated, cut taxes and genuflected to their omnipotence for decades. Yet, the economy has been a roller-coaster of recessions alongside declining wages and benefits for most workers. And, despite Torinus saying so, the number of government employees has been declining, not increasing. As Fiona Hill, of the Brookings Institution, found, “Contrary to popular belief in the bloated growth of the U.S. public sector, the size of the federal government proportionate to the total U.S. population has significantly decreased over the last 50 years.”

Torinus’ article seems, in the end, to be an elaborate smoke and mirrors, which concludes, somehow, that the government is preventing the private sector from employing more people and also responsible for helping the private sector to employ more people.

He concludes, “We don’t need excessive unemployment compensation if there are lots of open jobs with good pay and benefits. Congress and the president have to get the incentives right. We can’t afford disincentives for working.”

Again, what is “excessive unemployment compensation”? What and where are these “open jobs with good pay and benefits”? Funny, too, that, with Republicans, “We can’t afford disincentives for working.” Yet, the subsidies, tax cuts and giveaways to corporations and billionaires can’t be considered anything but a disincentive and/or welfare. Somehow, in the twisted Republican logic, giving incentives to The Haves is sound economic policy, but giving incentives to those who really need it, is bad for business.

Trickling Down or Just Getting Pissed On

Socialism for the rich and capitalism for the poor. Milwaukee's new Economic Development Commissioner wants to double-down on corporate welfare.

Milwaukee officials consider higher incentives to bring businesses downtown

According to the new Commish, "The city is exploring more aggressive policies to incentivize job creation and investments in the downtown area. Those could come in the form of employment incentives using the city’s main economic development tool, tax incremental financing, for example. Or it could involve new ways the city could help growing companies recruit workers to fill new jobs."

There's no money for potholes, we can't fast-track lead pipe removal, workers can no longer have affordable health care or secure retirements, a living wage is too much to ask, we can't upgrade public infrastructure, but there's endless and increasing money to giveaway to corporations.

Improving the roads and transportation options, upgrading broadband, updating the electrical grid and sewer system, greening public buildings, along with numerous other public projects, would go much further toward growing Milwaukee's economy than simply giving "incentives" to already profitable corporations.

For Further Reading:

Open For Business?

Ticked Off About TIFs

Development Gone Astray

The Con That Is Foxconn or How Republicans Learned To Stop Worrying And Love Socialism For The Rich

Job Piracy

Convention Center Expansion Approved

Hundreds of millions for another boondoggle.

Wisconsin Center Gives Final Approval for $420 Million Expansion

There are many better ways to spend this money.

See Milwaukee's Boondoggle Twofer, The Economic Impact Mythology Of Convention Centers, The Convention Center Cabal and Beware Of The Economic Development Hucksters.

A Much Bigger Income Shift To Top 1% Than Anyone Thought

Landmark Study: A Much Bigger Income Shift To Top 1% Than Anyone Thought

A new analysis by the RAND Corporation examines what rising inequality has cost Americans in lost income—and the results are even bigger than expected.

Republican Business As Usual: Do As They Say, Not As They Do

Legislators Who Opposed Pandemic Aid Grab Grants

Robin Vos and three other Republicans who opposed federal grants got at least $150,000.

McConnell's Wife's Family Business Appears on Trump Admin's List of Companies That Received Most PPP Money

A shipping business started by Department of Transportation Secretary Elaine Chao's family received at least $350,000 in loans set aside for companies struggling as a result of the coronavirus pandemic, according to data published Monday by the U.S. Small Business Administration.

Midweek Reading

A federal judge who accused Barr of ‘distorting’ the Mueller report has read an unredacted version — and now he’s demanding some answers

The devaluing of black property has led to the devaluing of black lives

Minneapolis may be the first city to dismantle the police

10 things we know about race and policing in the U.S.

Alex Vitale, author of The End of Policing, on why cops are being so brutal and what should be done with them

NYC has way too many cops

America’s Civil War

Amazon: Taxpayer Subsidies Help Build its Monopoly

10 Steps States Should Take to End Corporate Giveaways
Milwaukee now in phase 3 of reopening: Here's what that means

As They Scream Voter Fraud, Trump And His Press Secretary May Have Voted Illegally

Trump Has Imprisoned Himself in the White House

US billionaires have regained $565 billion in wealth since the pit of the crisis

Police unions dig in as calls for reform grow

After Protests, Politicians Reconsider Police Budgets and Discipline

Brains Misinformed By Republicans Shouldn't Get A Public Platform

The cognitive dissonance is great in this one.

Scott Walker, former Wisconsin governor and Milwaukee county executive who left both those posts in worse fiscal shape than he found them and the bozo that gave away billions to Foxconn, opines States mismanaged by Dems shouldn't get a bailout over pandemic.

Yes, like his dear leader Donald Trump, Walker believes that if you're not on his team - if you're a Democrat - your state shouldn't get help from the Federal government. Which is just what we all want in a leader, right? If you didn't vote for him/her, you're on your own.

Walker oddly cites Kevin Hassett as support for his rant, as if, by association, this bolsters his argument. Kevin Hassett, if you'll remember, is the same right-wing, know-nothing apparatchik that wrote Dow 36,000 - one of the worst and most laughable pieces of economic forecasting ever published.

These few lines from Walker were especially laughable, "Instead of bailing out state and local governments, the federal government should continue to support programs to keep workers on the payroll and to keep small businesses alive. While so many workers are experiencing layoffs, closures, furloughs or pay cuts, many state and local governments have yet to make meaningful reductions — even in “non-essential” areas."

This from the same guy that made Wisconsin a right-to-work state and gave away billions to a massive foreign corporation. Part of Walker's budgetary game-plan as governor were lay-offs and firings. It doesn't take a genius to cut programs and fire people to make budgetary numbers look better. It looks particularly worse when you turn around and take some of that money and give it to your cronies in the form of tax breaks and subsidies.

This is all typical Republican blathering. Talk about how much you care about workers and the little guy, and then turn around and give tax breaks, cut regulations and bend over backwards for big corporations and the wealthy.

Finally, if these Democratic ("blue") states are so mismanaged, why is it that these states are the ones subsidizing the Republican ("red") states? As an article from the Business Insider details, "Red States — the ones governed by folks who think government is too big and spending needs to be cut — are a net drain on the economy, taking in more federal spending than they pay out in federal taxes. They talk a good game, but stick Blue States with the bill."

As usual Scott Walker and the Republicans are just wrong. And, they are lying about their policies and the outcomes. They don't give a shit about workers, the little guy, small business, budgets, etc. They only care about themselves and power.

Freedom Jerks