an appeal to reason

Great post (4.00 / 1)

language matters. She may have meant 'job creation' but it's vitally important that we don't do anything to perpetuate the myth that with policy change jobs can magically be moved (brought) from other states in a significant way.

A while ago you posted some solid data here to refute (the broadly repeated) notion that jobs are leaving the state for greener (tax) pastures. Can you post that link again? If I remember correctly it showed that only something like 4% of new jobs created are the result of interstate moves?

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by: Ivan Jacobs @ Sat Nov 21, 2009 at 23:24:36 PM CST

data (4.00 / 5)

from the Addendum to Phase 9 of the Job Gap Study Vermont Business Climate - Interstate Business Relocation: Myths vs. Reality (High Road Vermont and the Peace & Justice Center, April 2006; see http://www.vtlivablewage.org/P...

We find that:
• The number of businesses moving out of Vermont from 1990 - 2004 was nearly identical to the number moving in.
• The net effect on employment from interstate business relocation is negligible.
• Nearly as many companies move into Vermont from low tax states as move to low tax states.
• Employment change is driven primarily by business contraction and expansion, and by business start-ups and closures.

If we look more closely at the sources of overall job change, we find that the effects from business relocation are dwarfed by other factors. From 2000 to 2004, business relocation accounted for only 1.5% of new jobs, and 2.6% of jobs eliminated.

I am happy to say that the PJC has agreed to fund an update of the report, which should be completed in early 2010.  My preliminary research indicates that the net impact of domestic business relocation from 1998 to 2007 was a loss of about 1,800 jobs -- over 10 years!  In contrast, the impact of jobs lost to offshoring was two to three times that much (which had nothing to do with interstate "competitiveness" and was basically a drive to lower labor costs).

I have presented this data to the Leg. on more than one occasion and nothing has changed.

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by: Doug Hoffer @ Sun Nov 22, 2009 at 09:46:13 AM CST

[ Parent ]

link fix (0.00 / 0)

Vermont Business Climate - Interstate Business Relocation: Myths vs. Reality

Also wondering if this is the study you refer to as based on private data by Dunn and Bradstreet (sp?). Is the 2% you refer to at 3:20 of vid the same as the "move in" # on p.3 pie graph?

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by: Randolph06 @ Sun Nov 22, 2009 at 12:28:41 PM CST

[ Parent ]

thanks (0.00 / 0)

yes, the data source is the National Establishment Time Series (NETS) available from Walls & Associates; it is based on D&B data, which he buys from them and cleans / adds value to every year

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by: Doug Hoffer @ Sun Nov 22, 2009 at 13:07:25 PM CST

[ Parent ]

awesome, thanks! n/t (0.00 / 0)

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by: Ivan Jacobs @ Sun Nov 22, 2009 at 17:54:58 PM CST

[ Parent ]

more language (0.00 / 0)

Who Pays?, The Institute on Taxation and Economic Policy's extensive study of state tax systems finds

The bottom line is that many so-called "low-tax" states are high-tax states for the poor, and most of them do not offer a good deal to middle-income families either. Only the wealthy in such states pay relatively little.

.

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by: Randolph06 @ Sun Nov 22, 2009 at 18:28:21 PM CST

[ Parent ]

Bluster (0.00 / 0)

Ms. M's campaign rhetoric rings as hollow as ever. What amazes me is these candidates sit on these ideas until they are elected? If you have these ideas, why not work with groups now to get the measures moving? Lord knows we need "good jobs". What are you waiting for? Lead by example. In reality though, we all know it's just bluster. So until you have a concrete idea and the people in mind to get it done, please don't throw this empty balony out there.  

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by: HSTGonzo @ Sun Nov 22, 2009 at 09:12:17 AM CST

Change the Rhetoric (4.00 / 5)

You make a good point. I doubt Deb was calling for undercutting the marketplace by "bringing" jobs here at any cost, but was rather talking about a plan to strengthen our economy to create a better environment for business success. Hopefully she will have a chance to define the distinction. Too often politicians talk in sound bite phrases because that's what the public seems to want, but we should expect more. I struggle with that approach as I watch our political discourse get more polarized, and hear politicians (and the public) talk in absolute terms, and embrace inflammatory rhetoric as the standard. That movement is terribly dangerous to our democracy.

Offering massive incentives and tax breaks to lure a business helps drive down wages, and doesn't always result in any positive gain for the state. The competition between states, regions, and countries to convince businesses to relocate will only work as long as there isn't a cheaper option elsewhere, and it leaves a decimated workforce in its wake.

Take a look at http://www.allbusiness.com/tre... It's a story about a Dell computer plant in North Carolina that is just four years old, and is already closing because Dell is facing financial troubles and will be moving operations to cheaper locations. This plant was granted hundreds of millions of dollars in incentives, but the jobs didn't last, and the hoped for benefits didn't materialize. Some of the incentives will be recovered, but the damage to workforce wages will never be reversed.

It's been my impression that incubating small companies and creating a climate in which they can grow is a far better way to build a job base. Companies that grow here will be less likely to leave when times get tough, or when they achieve success. We have a number of solid examples of locally developed companies in Vermont, and should be constantly reaching out to see what holds them here, and what challenges might drive them away.

We should also remember that the engine for job growth is small companies, not massive multinational corporations, and our state should help these small businesses to prosper. There are a number of things that can be done through regulatory relief to make the task of managing a small business easier, without sacrificing tax revenue or hurting workers. Unfortunately, the buzz phrase "regulatory relief" is often code for cutting unemployment benefits, or slashing worker compensation programs, both of which hurt workers...we need candidates that understand the challenges of those programs (and others), yet respect their importance to the workforce.

I think we also need candidates that can speak to other issues, such as healthcare, from the perspective of cost containment and benefit to business. Too often we talk about the social benefits of providing health care to everybody, but there are real economic benefits to a single payer style program that can drive down costs within the medical industry and business community, and serve everybody including business owners who are now being strangled by these unsustainable costs.

I'd like to hear issues discussed by the candidates with more nuance, and I'd like to get a sense of how each balances the needs of business and workforce. It's not easy.

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by: tombuch @ Sun Nov 22, 2009 at 09:54:43 AM CST

There are things state government can do without tax preferences (0.00 / 0)

No argument from me, tax preferences for industrial jobs don't work.  Please note, however, that tax preferences for jobs that can't move often are wildly successful.  Northern New England's dependence upon the Education and Health Care sectors of the economy are what's keeping our unemployment rates at 60% of the national average.  The vast majority of these institutions are government funded or non-profit, and thus untaxed.  This is a huge tax advantage for hospitals, to name one industry.

We can also make sure that all towns in Vermont have

Widespread fast internet
Available power
Well staffed and successful schools
Well maintained roads

All of these are done with tax dollars and the new governor should make sure that we do the things that allow businesses to grow without choosing ones to give specific tax breaks to.

My republican friends (yes, I break bread with the enemy on occasion) would also point out that it's much easier to be doctrinaire on this issue if you live in Burlington, Rutland, Middlebury, Bennington...you get the point, all places where moving jobs across the state line doesn't matter.  Those of us near the NH border see the direct effect of various policies; for example, there are at least 5 industrial park/business incubators in NH border towns, none that I can think of on the VT side.  Of course, we collect income taxes from the VT workers who find jobs across the border...but if the take is too high, they will find a house on the other side of the river.  And NH gets the corporate profits tax, which is quite high (8%).  There are only so many golden eggs in any given goose.  The new governor needs to understand that reality as well.

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by: Tom C @ Sun Nov 22, 2009 at 11:47:25 AM CST

I agree (4.00 / 2)

but-

1.  the non-profit tax exemption for hospitals & colleges is not unique to VT and, therefore has no bearing on the "competitiveness" issue

and BTW - while health care is one of the few sectors still creating jobs, many are not well paid; the broad category is "health care & social assistance"; there are lots of good jobs in health care but generally not for those who work in nursing homes (a growing number); in addition, the avg. wage in private sector "social assistance" is less than $18,000 per year; this sector has seen considerable growth in the last 10 years (as mfg. declined); so while some jobs are better than none, let's not assume that all growth is good for workers or that the unemployment rate tells us whether they can make ends meet without recourse to public assistance

2.  the other things you mentioned (Widespread fast internet, available power, Well staffed and successful schools, Well maintained roads) are exactly what we need to focus on (and more); but they are NOT tax preferences; they are long-term investments in the community as opposed to a direct transfer of taxpayer funds to individual companies (as you correctly noted); big difference; everyone benefits from these investments and the money can't just disappear later as it does when a subsidy recipient leaves

3.  the NH factor is real but tax incentives won't help  (not that you suggested it would); incubators & industrial parks are sometimes useful but those are decisions for the towns; some might support it some not; FYI: we always hear about businesses leaving VT for NH but never about the reverse; in fact, there is a rough equivalence between the two when you consider small businesses and sole proprietors

and finally, the NH corp. tax rate is a flat 8.5% (plus a 0.75% surcharge) while the VT system is progressive based on taxable income (6% - 8.5%; the top rate reduced a few years ago); in fact, very few businesses in VT pay much of anything in corp. taxes; how come the Governor never talks about our tax advantage?

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by: Doug Hoffer @ Sun Nov 22, 2009 at 13:42:17 PM CST

[ Parent ]

Well put, Doug (0.00 / 0)

The corporate model for delivering health care has downsides that are becoming harder and harder to live with.  The stratification of incomes inside the sector is one of these.  For the life of me, I can't understand why these workers are not unionized...I'm sure someone here can help me on that question. :)

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by: Tom C @ Sun Nov 22, 2009 at 19:23:32 PM CST

[ Parent ]

Plus (4.00 / 2)

... upgraded railroads (relatively green transport, also important for business).

NanuqFC
Change does not roll in on the wheels of inevitability, but comes through continuous struggle. - Rev. Martin Luther King, Jr.

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by: NanuqFC @ Sun Nov 22, 2009 at 18:56:21 PM CST

[ Parent ]

Attacks start (1.00 / 2)

Gee the attacks start on Markowitz already.

Talk about appealing to reason. Your mincing of words is ridiculous. I want a governor that wants to create good jobs to Vermont instead of retail jobs paying minimum wage.

And of course you make this an "Oped" by Deb. Actually, it was the BFP that pulled lines from previous statements.

Taking one phrase to mean selling out to corporate interests for tax credits is incredulous and unfair.

And if it wasn't about politics and calling one specific candidate out, then why didn't you send it to Deb privately?

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by: Wiggles82 @ Sun Nov 22, 2009 at 12:08:54 PM CST

gosh (4.00 / 1)

like Deb much?
a little sensitive?

my remarks were polite and respectful; I made it clear that I am interested in an honest dialogue among all of the candidates; and I never "called out" Deb; she used the words (and it hardly matters if it was an op-ed or cobbled from other sources); words have meanings; I asked the question and made it clear that I wasn't sure how she meant it; and I don't recall suggesting she had sold out to corporate interests so it is your comment that is "incredulous and unfair"

as to why I didn't send it to her privately, I made that quite clear at the outset (or had you forgotten by the time you finished reading & steaming?); the subject warrants discussion, which is exactly what has happened

I too want a governor that will work to help create jobs (or was that not obvious?); the whole point is how we attempt to do that; the Trickle Down approach has failed so we need to shift gears; talking about "bringing good jobs to VT" is (for some) code for looking outside for a savior and wasting taxpayer money in the effort (while enriching those who blackmail us)

my hope was that Deb would think about it, reply if so inclined, and perhaps challenge the others to change the terms of the debate; imagine that, communicating publicly with elected officials; how radical

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by: Doug Hoffer @ Sun Nov 22, 2009 at 14:11:43 PM CST

[ Parent ]

Oh brother. (0.00 / 0)

Must be a planetary alignment. The buttheads are out.

undercaffeinated

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by: odum @ Sun Nov 22, 2009 at 15:15:44 PM CST

[ Parent ]

Facts (0.00 / 0)

Fact is no one other than insiders would ever consider "creating good jobs" to be a negative thing. This is not for discussion, but to raise concerns about Deb, clear and simple.

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by: Wiggles82 @ Sun Nov 22, 2009 at 19:14:28 PM CST

[ Parent ]

yawn (4.00 / 1)

No doubt the next time somebody posts anything even vaguely challenging to Shumlin, Racine, Bartlett or Dunne you'll be right there cheering it on.

undercaffeinated

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by: odum @ Sun Nov 22, 2009 at 19:52:01 PM CST

[ Parent ]

outstanding (4.00 / 1)

now you can read my mind

please tell us how I suggested that "creating good jobs" can possibly be characterized as a "negative thing"

you just don't get it; the whole point is that the status quo has NOT created good jobs; quite the contrary

what you don't (couldn't) know is that I met with Deb earlier this year (at her request) and discussed these issues; I was very straightforward and told her exactly how I felt about this (presumably, she wanted me to be honest); and I've met with other candidates and said the same thing (I'm a simple man)

can you just accept that this is my professional life and that I really do care more about policy than personality? (read my posts on GMD over the last two years); moreover, unlike you, I use my real name and my extensive published work is an open book

if not, than you're just a hyper-partisan hack who doesn't care to engage on the issues; indeed, you've said nothing substantive about my post; can you speak for yourself or are you just here to defend Deb (which she is quite capable of doing herself)?

maybe Odum is right, there's a full moon or something...

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by: Doug Hoffer @ Sun Nov 22, 2009 at 20:28:38 PM CST

[ Parent ]

Thanks, Doug! (4.00 / 1)

You wrote what I was thinking.  I would imagine that Deb and the rest of the field would be glad of a little well-directed chiding to keep them on message.  There has been much grumbling about the candidates sounding too much alike; but I, for one would be disappointed if they weren't all somewhat in the same ball-park at this point.  After all, doesn't it just say that they have been listening to the voters.  Of course, we want them to mean what they say; but the best way to know what they MEAN is to draw them out on statements that we find worrisome, as Doug has done here

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by: Sue Prent @ Sun Nov 22, 2009 at 16:35:23 PM CST

Jobs (4.00 / 2)

No politician is going to bring good jobs to Vermont unless they figure out how to make the jobs that are already here "good-paying?"  So many jobs in Vermont barely pay a minimum wage, much less a livable one.   And what about finding ways to create and expand more jobs here than sending them over to Asia, like GOP has been doing since the Reagan years, or offering massive tax breaks to companies that will move as soon as they find a better tax rate elsewhere.  

And to bring good jobs in the state you have to have good infrastructure, like health care, and roads that do not damage the front end every time you pass over them.  

When you wake up each morning look around you.  It might be the last time you get to do it.  

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by: Watercloset @ Sun Nov 22, 2009 at 16:54:40 PM CST

What will create real jobs? (4.00 / 1)

Real jobs are created only by innovation.  Innovation - a new vaccine, a green energy source, etc., really does add wealth to society.

Both our political parties are committed to the idea that redistribution creates wealth.  

The right has spun a masterful lie, which is that any successful business creates wealth.  In fact, if you stop mowing your lawn yourself, and hire someone to do it, there is no net wealth added to society. It's the same with elder care.  We used to take care of our parents ourselves.  Now, we hire someone.  No net gain.  

The left just says that the right redistributes wealth wrong, not that it's spinning illustion.  

So, the right grabs and holds on.  The left demands a share of what it recovers for us.  

Both sides end up squashing innovation. Innovation always begins with people pursuing ideas, not wealth.  

That's what has changed in America.  The right has succeeded in convincing many people that all good things come from greed.

We can't fix things by being greed lite, or by building an obstructionist bureaucracy.

What we have got to do is get back to the basic values that built this country. The founders believed in ideas, and that's what gave us the chance to do so much. Greed has brought us back to a point where foreign kings endanger our freedom. Our economy is a shell of what it was, because greed overtook ideas and hard work.

Until we are ready to go toe to toe with the right on basic moral issues, greed will continue to consume us from the inside.  

We can govern ourselves better than they govern us!

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by: govt4all @ Sun Nov 22, 2009 at 19:50:28 PM CST

There was a DRAMATIC shift in research funding (0.00 / 0)

Starting with Reagan, there were dramatic cuts in funding for basic research (done for the sake of learning something new), and somewhat less dramatic cuts in funding of applied research (research to support or extend existing technology, with the goal of near-term profit).

Industry stepped in to fill in much of the gap in applied research funding. (Example: Need funding to develop a new drug might be a tiny bit better than an old drug? Get a grant from Pfizer.)

But little has been done for the former, outside of DARPA and other military spending oriented toward technologies that can be weaponized or used for communications.

If we REALLY want to attract business to VT, we should find a way to fill in the basic research funding gap - providing money to enable high school and college students in the state to simply explore. We need to enable schools to buy high-end lab equipment, bring in outside experts, and enable students simply play with their theories and ideas, with no expectation of guaranteed payback in the form of new products in the short-term. They need to be able to simply learn to follow up on their innovative/entrepreneurial thoughts - to create an innovative mindset.

This is where innovation comes from: you have an idea, and you start messing with it - and even if that one idea does not lead directly to a new innovative product, it can lead to new directions of inquiry that DO lead to innovative products. It's the step before incubators, and it's the fundamental fertilizer needed to enable incubators to succeed.

Businesses that need innovative thinking will seek out places where innovators learn.

In addition, supporting incubators that allow these students to take their successful experiments to the next level will help.

There's a reason Cambridge, MA (with MIT at its heart) and the area right around Hanover, NH (with Dartmouth at its heart) are becoming centers of innovative new companies: the schools support at least some basic research, and get students involved in it from the beginning of their undergraduate careers. If we extend this to our high schools - getting kids excited about following up on their own ideas, they'll be ready to jump into collegiate programs that will allow them to extend their creative/innovative skills.

And here's the kicker: if our kids are learning these things in conjunction with their friends, like Bill Gates and Steve Ballmer, or Steve Jobs and Steve Wozniak, they and their friends will start turning their ideas into garage industries, which will then grow into real businesses in their own communities, bringing long-term, good paying, real jobs to those communities.

Our kids hold the seeds for future innovation. We need to provide them with the environment that will enable those seeds to germinate.

Beware the Everyday Brutality of the Averted Gaze

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by: mataliandy @ Mon Nov 23, 2009 at 13:07:57 PM CST

[ Parent ]

You're right, of course, though the shift started before Reagan (4.00 / 1)

In the 60s and 70s, there was DOD funding for research, and then there was everything else. Even in linguistics, if DOD was interested, then people got plenty of funding. Otherwise, people fed their research on table scraps.  

There never was that much research funding, and too often it was controlled by the whims of rich benefactors.

But, it was Reagan who made sure that the government stayed out of funding the common good, and just funded what DOD and business wanted.

I agree that we need to give kids more practical education earlier. If education is all books, kids are not prepared for life.  And, kids need some education in reality.  As long as we have a capitalist system, we should be teaching free markets, and accounting by the fifth grade. Kids need to see how anti free market our system is.  

The next big problem would be to keep big business from controlling all the human capital. People need a chance to be independent, and take their own chances, rather than being controlled by big money.  

We can govern ourselves better than they govern us!

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by: govt4all @ Mon Nov 23, 2009 at 14:27:08 PM CST

[ Parent ]