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

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! 

Corporate Profits and Inflation

For Further Reading:

Ignoring the role of profits makes inflation analyses a lot weaker

Corporate profits have contributed disproportionately to inflation. How should policymakers respond?

The future of work depends on stopping Amazon’s union busting

There Is No Labor Shortage!!!

Accomplices Reporters keep labeling shitty-paying jobs, that are supposedly going unfilled, as a labor shortage. Labor Shortage Transforming State Workforce

There is no labor shortage. This is about a living wage, health care, and a pension (retirement). Respectable pay for an honest day's work - the mantra America has been shoveling and selling for generations. 

Unions were the answer to the disparity between the Haves and the Have-Nots. Yet, for decades, Republicans have attacked government and the public sector, in general, along with unions. It's no coincidence that as unionization has declined so have the wages and benefits of workers. 

Business news bloviators talk about how CEOs have earned and must be paid millions - that's just the market working. At the same time, Republicans, along with the business news crowd, tell us how these same millionaires shouldn't pay taxes - that would be a disincentive to their genius.

But when everyday workers decide certain jobs (and the lack of pay and benefits associated with such) aren't worth it - you know, the market - Republicans and the business crowd declare these workers to be lazy and ungrateful. Workers don't deserve good pay and incentives will only make them lazier.

I guess when CEOs get to make policy and write the rules, there is a set of rules for them and a set of rules for workers. The market rules for millionaires are very different from the market rules for workers. 

So is it really a surprise that as workers have had to work harder for lower pay and less benefits, the workers have turned away from these lowest-paid and worst jobs? It's not a labor shortage, it's a pay shortage. The labor is here and willing to do the work, they just need to be paid a fair market wage.

Only The Little People Pay Taxes

Proposal Cuts Taxes for 1%

A group of big business lobbyists is pushing a radical change to Wisconsin’s tax structure — one that would give huge tax cuts to the wealthy and powerful while shifting the responsibility of paying taxes to people with lower incomes. The change would also require significant cuts to the critical services that Wisconsin businesses, schools, and communities need to thrive. This one-two punch would make it more difficult for Wisconsin families to get by, while funneling additional resources into the pockets of the top 1%.

Rand Paul - Shameless Hypocrite

Paul isn't alone in the hypocrisy. It's the entire Republican party and anyone enabling, supporting, or listening to them. They deny climate change and obstruct any related public policy. They bash government and any legislation that might improve infrastructure, fight climate change, or help the majority of citizens. They cut government programs. Until it impacts them, then government should open up the checkbook and freely hand over whatever's needed. Republicans are truly despicable trolls.

Things Republicans Are "Good" At - Lying & Cheating

Democrats Increasingly Say American Democracy Is Sliding Toward Minority Rule

Republicans Win Fever Votes, But More Seats Than Democrats

Democrats got millions more votes – so how did Republicans win the Senate?

3 stats showing how much the deck is stacked against Democrats

America’s anti-democratic Senate, by the numbers

Extreme Maps

These maps show how Republicans are blatantly rigging elections

Thanks to gerrymandering, Republicans can continue to behave abominably and win the midterms

Keep It Simple, Stupid

Visit Milwaukee is claiming the Bucks Championship Had $58 Million Economic Impact.

That's possible. Anything is possible. But claims of such an impact are dubious at best. 

As Roy Cordato's article noted:

Economic impact studies are everywhere.

Whether it’s to support a new highway project, special tax breaks for solar energy, the building of a civic center or sports complex, or to promote subsidies for Hollywood film producers, you can find an economic impact study, often touting how great the project will be for the state or local economy.

The formula is simple, predictable, and effective. A special interest group that stands to benefit from the project funds an economic impact study that purports to provide hard numbers on the number of jobs, the increase in wages, and the additional output that will be generated by the project or subsidy, and it will do this on an industry-by-industry basis. It makes grandiose claims about how much overall economic growth will be enhanced for the state or region generally. Once the report is completed, the special interest group that paid for the study will tout these results in press releases that will be picked up by the largely uncritical media establishment, ensuring that the political decision makers and others who determine the fate of the project receive political cover.

These studies all have several things in common. First, they typically use proprietary, off-the-shelf models with acronym names like IMPLAN (Impact Analysis for Planning), CUM (Capacity Utilization Model), or REMI (Regional Economic Model, Inc.). Rights to use the models are purchased by professional consulting firms who are hired by the interest groups to do the studies. Furthermore, seldom do those who actually perform the studies have formal training in economics. Instead their expertise is in using one or more of the aforementioned proprietary models. And finally, all of these studies ignore basic principles of economics and, as a result, do not meaningfully measure what they claim to be measuring—the economic impact of the public policies and projects that they are assessing.

One big problem with economic impact studies is the idea of substitution. If money that would have been spent elsewhere was simply spent on the Bucks, growth did not occur. Spending that would have occurred in one spot was merely spent in a different spot. The project (the development, the event, etc.) hasn't catalyzed growth. They haven't made an economic impact. They've merely realigned spending.

Now, this isn't to say all projects are unable to spur growth. But unless the impact study accounts for concepts like substitution and opportunity cost, it's mostly measuring the rewards that will go to primarily absentee owners.

Milwaukee Magazine had their own questions regarding the local economic impact of the Bucks championship run.

The sparkling, shiny, loud things (sports and entertainment events) often get attention, articles and praise. Yet, as far as being supposed economic catalysts, all too often, the economic benefits and impact are ephemeral to non-existent.

Maybe it's time we stop deluding ourselves in the belief that all activities and projects can be or need to be fun and exciting. Clean water, smooth roads, public transportation, quality schools, affordable housing and health care, and maintained infrastructure provide a better return on investment and generate much more growth than any stadium or convention center could ever hope to. 

Conventional Delusion

There are so many more impactful ways to spend $420 million.

The Boondoggle Bandwagon lumbers on.

For Further Reading:

Milwaukee's Boondoggle Twofer

The Convention Center Cabal

Beware of the Economic Development Hucksters

The Economic Impact Mythology of Convention Centers

We Have A Pay Shortage

Note to media: 

Please stop reporting on a "skills shortage" or a "labor shortage".

We have a "pay shortage".

Mitch McConnell: No Lips, No Soul, No Problem

Screenshots of Wisdom

 

The Dangerous Mythology About The US Labor Shortage

The dangerous mythology about the US labor shortage

In explaining the unimpressive quarterly jobs data recently, there is a dangerous mythology surfacing, a common refrain among pundits, that people don’t want to work because of stimulus checks and extended unemployment benefits.

Some argue that unemployed low-wage workers make more from these benefits than from their previous employment. This may be true, but in my nearly 10-year tenure as CEO of what has become the nation’s largest publicly funded workforce development system, where we have facilitated training and employment of over 70,000 people, I have never once heard anyone say they didn’t want to work.

This is a harmful, corrosive narrative rooted in class, gender and race bias; it is a fallacy meant to demean and stigmatize.

The truth underlying what’s being touted as a “labor shortage” is far more nuanced than glib jabs at the working class. Examining reality invites us to reassess our beliefs about work and workers in this country.

Low Pay, No Benefits, Rude Customers: Restaurant Workers Quit At Record Rate

Suburban Socialism

This is a perfect example of the hypocritical capitalism Republicans preach.

New Great Lakes Water Diversion Request

They choose to live somewhere that is not sustainable. But then they whine, complain and bellow that they are entitled to <insert spoiled Republican entitlement demand here>.

When it comes to others, especially others that aren't white, others that don't believe in their god, others that don't live in their town, they need to go without. Getting things so easily makes others lazy. 

But when the SUV-crowd moves to the middle of nowhere and suddenly gas prices are high, they can't get water and/or any part of their utopia is disturbed, the know-nothing, big, bad government needs to come to their rescue.

And, is this case, the Village of Somers wants to have the State allow them to divert water to what is currently farmland so some well-connected land owner can make a killing off of future development.

As typical economics would have it, if you want a scarce resource delivered to an inconvenient location, the cost would obviously be extremely high. You know, to discourage such a ridiculous and wasteful allocation. Yet, the Wisconsin experience of those expecting their entitled water, outside of a location where it naturally occurs, is they complain and complain until the rest of us subsidize them being able to divert water. We subsidize them in that they don't have to pay the actual price the market would indicate. 

The same goes for the price of gas being subsidized below its market price. Really, the whole suburban mistake is a big subsidized wonderland for whites, where everybody else helps pay for their spoiled, wasteful, gas-guzzling lifestyle.

Invertebrates

The Republicans' idea of governing, in a nutshell:

Businesses tied to Speaker Robin Vos and other lawmakers could see taxes cut after they took PPP loans

Ron Johnson votes not guilty

Government exists for them. It's their piggybank. So they can deregulate and pollute. To assure they and their cronies reap all of societies rewards.  

They are not accountable. They are not responsible. It's someone else's problem. It's someone else's fault.

In The Land of Make-Believe

When your policies only benefit the top 1%, when you have nothing intelligent to add to any conversation, when the majority of your constituents have been hurt by your political decisions, all you are left with is symbolism, revisionism and make-believe.

After COVID shutdown, former Wis. Governor Scott Walker hopes to re-open Reagan’s boyhood home

In fact, it's all about revisionist history, an imagined past, phony accolades and false idols for bozos like Scott Walker.

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

Weekend Reading

Someone Is Going to Have to Explain to Me How This Makes Any Damn Sense

Wisconsin GOP Are Manipulative Pieces of Sh*#

Foxconn Sued For Being Lying Pieces of Sh*#

What happens if the Wisconsin Legislature repeals the state mask mandate? Here are five things to know

In First Speech as Budget Chair, Sanders Rebuffs 'Partisanship' Complaints From GOP That Unilaterally Passed $1.9T Gift for Rich

Here are the 11 House Republicans who voted to remove Marjorie Taylor Greene from her committee assignments

City Creating Plan to Develop and Preserve Bay View

Why Chicago Is Lighting Its Railroads on Fire

Biden Beats Back The Austerians At The Gates

The Economic Consequences of MajorTax Cuts for the Rich

Income inequality in America is at its highest level in more than 50 years

More than 80% of the stocks in the US are owned by the wealthiest 10%

One Emergency After Another: Wisconsin Governor And Legislators Battle Over COVID-19