Courting Google

I'm still bitter about Governor Easley getting down on his knees and begging Michael Dell to open a plant in Winston-Salem. I'm not against business, we need it, I love it, and I'm glad every time a new job is created here. However, the deal with Michael Dell was a deal from hell.

On the one side we saw billionaire Michael Dell, who heads up the WalMart of computer manufacturing, and is a non-stop money machine for the Republican Party, twist the arm of Gov. Easley with the promise of 1,500 jobs for a part of the state that was relatively prosperous. On the other side we saw Governor Easley give the billionaire from Austin $240mm in tax breaks with the promise that Dell could fire up to 40% of the people he hired and still get the payola.

The whole deal left a bad taste in my mouth.

However, I'm in support of Gov. Easley's courtship with Google, and let me tell you why.

* The tax breaks being offered are $4.7mm for 210 new jobs which works out to $22,380 per job, as opposed to the obscene $160,000 per job given to Michael Dell (if he hired and retained all 1,500 people.)

* The site being proposed in Caldwell County is hurting economically and has been heavily impacted by the closure of two textile plants.

* Sergey Brin and Larry Page founded a company world famous for treating its workers well, and Google gives generously to the Democratic Party (See the Republicans whine here.)

With all of that said, it's far from a sure thing that Google will come to North Carolina, and for those that are interested there's a blog at Daily Tech with plenty of insight on the issue.

However, let's assume for a moment that Google does open up a server farm in Caldwell County. Then let's hope that the governor does one additional good thing with the $137,620 per job we will have saved compared to the mugging we took from Michael Dell. It would be nice if some of that capital could be used to retrain many of those textile workers who are now jobless in Caldwell County. As much as I love Google, I'd hate to see their facility become nothing more than a magnet for workers living elsewhere who would follow Google where ever it might go.


This is good, George.

The free-market fundamentalists have a point when they say government should not be in the business of supporting this or that business. But the act is, government IS in that business at virtually all jurisdictional levels. Internationally, the playing field is totally tilted by policies of governments around the world. And at regional, federal, state, county and local levels, the same dynamic occurs.

That situation has evolved for a host of reasons, mostly from government encouraging private enterprise to pursue initiatives that serve the common good. Over time, that encouragement has evolved into tax incentives and subsidies that have long distorted the "natural markets" beyond all recognition.

So whether the FMF's like it or not, incentives are part of the equation. How we use them is really what's at stake.

It's totally reasonable to be FOR incentives that foster opportunities in disadvantaged areas or where some other kind of greater good is being realized, while being AGAINST incentives that further clog busy urban communities with supporters of the Party of Greed.


Job surfing at Google

The NY Times has this timely article today for NC hopefuls:
Google Answer to Filling Jobs Is an Algorithm

Have you ever made a profit from a catering business or dog walking? Do you prefer to work alone or in groups? Have you ever set a world record in anything?

The right answers could help get you a job at Google.

Google has always wanted to hire people with straight-A report cards and double 800s on their SATs. Now, like an Ivy League school, it is starting to look for more well-rounded candidates, like those who have published books or started their own clubs.

Desperate to hire more engineers and sales representatives to staff its rapidly growing search and advertising business, Google — in typical eccentric fashion — has created an automated way to search for talent among the more than 100,000 job applications it receives each month. It is starting to ask job applicants to fill out an elaborate online survey that explores their attitudes, behavior, personality and biographical details going back to high school.

Samples from Google application survey

Agree, agree, agree

The deal with Dell was obscene. I have no problem with reasonable financial incentives and I have no problem with Google. I love the fact the site chosen is in need of employers and I agree that we need to invest in retraining displaced workers in jobs that have a future and I'll add one more thing. We need to take the training to them instead of making them travel a good distance to a training site or community college.

Robin Hayes lied. Nobody died, but thousands of folks lost their jobs.

Vote Democratic, the ass you save may be your own.

Going to Dell in a handbasket

It's a hard problem. These things always start out cheap, and then the price goes up. The "It's cheaper than the Dell deal!" defense is not a strong one.

On the other hand, what is the state suppposed to do in competing with states with deep pockets? We can't lose every competition.

This problem is generically a "rent-seeking" competition, of the kind I
describe here, in this post. I don't blame the governor for trying, but it is not clear that this is the best use of state funds, in the long run.

"It is to secure our rights that we resort to government at all." --Thomas Jefferson to Francois D'Ivernois, 1795.

Michael C. Munger

Oh, oh, Greg Flynn

You have some serious competition for BlueNC Punmaster!

On Dell and Handbaskets

Thanks for the link to your article on rent seeking and the costs that are hidden, but inherent, in a system where benefits are distributed by the government.

To me it seems that these arguments are akin to setting up a straw man and then knocking him over to the amusement of those who are watching. There's no arguing with the fact that a free market is a marvelously efficient way to create and distribute value.

Look at the computer industry for example. It's a wonderful engine of productivity that has created huge fortunes, ever lower prices and a product so wonderful that it's virtually indistinguishable from magic. Anyone can take that model, compare it to the areas of activity in which government is involved and say, "My God, government is a wasteful embarrassment."

Yet that comparison, except on a very superficial level, is never ultimately convincing. The reason the comparison fails is because the government operates in areas that free markets can't appropriately address.

If we had two very well run companies called Acme and Zenith competing against each other in the widget manufacturing business, I'm sure they'd produce excellent widgets at a great price. Everyone would benefit, especially the widgets.

However, if the entirety of the air transportation business were given over to private enterprise it would be a disaster. Would Charlotte have an Acme airport and a Zenith airport, or several more airports if there were more than two competitors? Who would regulate airline safety? Where would the air traffic controllers come from? Who would provide security?

It's easy for a businessman stranded at an airport to complain, "If I ran my business this way I'd go bankrupt." However, not all areas of life are well adapted to the unique capabilities of a free market. The key to a well ordered society is understanding what areas of public and private activity are best served by government, and which areas are best served by private enterprise.

Once there's a consensus on which is which, each should respect where one begins and the other ends. Unfortunately, what we have today is an economy where private enterprise looks askance at government, resents taxes, and hungers after the opportunity to cherry pick areas for which government is responsible and then privatize them without concern for those people who fall in certain niches that can't be served at a profit.

In your article, "Rent Seek and You Will Find," you do a wonderful job of describing the Byzantine system of federal grants and how inefficient that system is. I agree that it does seem terribly complex. However, before we condemn it, let's return to your final example which serves as the coup d'gras of your argument.

WASHINGTON, DC—Senator Richard Burr today announced $8,329,494 in United States Department of Housing and Urban Development (HUD) grants for the City of Charlotte. The funds will expand affordable housing and emergency shelter to the homeless and sick and extend homeownership opportunities to low-income and minority households.

Homeless, sick, low-income, and minority households? Who could object to that? Besides, its free money! Isn't it?

I would contend that our choice here is not between one system that would handle this problem efficiently, and another that would not. Our choice is between one system that would handle the problem inefficiently, and another that wouldn't handle it at all.

I'm 56 years old. I moved to North Carolina five years ago. The previous twenty-five years I spent as a resident of Chicago's north shore and before that Wisconsin, Utah and California. I live in Moore County. My Congressman is Howard Coble, my State Sen

Men of Straw, and What We Saw

You certainly win on the straw man point. That article does present a caricature.

But there is a kernel of truth that I would defend, even in the last passage you quote. Charlotte got $8.3 million for the homeless (who, as you rightly say, are left out of the market entirely). But it cost Charlotte a lot of money, in employees and time, to apply for those grants.

I don't mean to pose markets as an alternative, since they can't be, by definition. But how about a a federal agency to target funds affordable housing based on objective need?

The reason the politicos (and the Repubs are the WORST!) don't want experts doing the targetting is that they can't claim credit. Let's say (I'm making up numbers) that Charlotte spent $800,000 to put together the proposal. Then they get $8.3 million. Some cities get nothing, and also spend $800,000, but lose out to Charlotte.

What is the effect:

Charlotte--wins $7.5 million, net (8.3m grant - 800k cost), for good purposes.
Other cities--ten cities spend $800k each on failed proposals, waste $8 million
Feds--spend $8.3 million.

Cities, and the homeless, overall get....about nothing. Charlotte gets $7.5 million, other cities divert $8million from their homeless budgets to losing effort on grants. Fed taxpayers spend more than $8 million for no net effect.

But, Richard Burr (R, NC) gets to claim credit in the newspaper for "bringing home" $8 million! And he may well have voted against the legislation to reauthorize the program.

So, let me be clear: markets are out of the question, irrelevant. If markets helped the homeless, they wouldn't be homeless. Not a viable alternative at all.

The question is: should we have competitions (which serve politicians) or use federal agency expertise (which serve the homeless). My point, which I apparently made badly, was that *IF* one wants to give away money to do good, one must use experts, not competition. Competition in politics is wasteful. The free market analogy that many people use is wrong. Let's avoid wasteful competition, and the HUD grant process is an example of such wasteful competition.

And, competition over new firms and plants is similar. Can be expensive for states. Sometimes it works (RTP, a government success, not a market success) and sometimes it fails (Global Transpark, pure pork barrel project in once and still economically blighted area).

I don't know the answer, on the what the governor should do. On one hand, we criticize the gov for whoring around state funds to attract Dell (and we DID spend too much). On the other hand, we all want the gov to attract new business to the state, and each new investment dollar returns some large multiple of what we give out. What is the answer?

"It is to secure our rights that we resort to government at all." --Thomas Jefferson to Francois D'Ivernois, 1795.

Michael C. Munger

I agree

I agree that using a federal agency that could make an objective assessment of need and supply resources in tandem with the state sounds like an improvement over the current system.

Somewhere at the local or state level, however, someone will have to be making application to address a need that a centralized agency can't be expected to know about on its own. Yet the difference between a report and a complex and competitive grant application might well represent a substantial savings.

You win that point.

When it comes to setting up a straw man, I myself might have to assume some responsiblity here. What I've done is extrapolate from your argument against a wasteful and overly political process to my own understanding of classical libertarian philosophy. I assume you're making a point that actually exceeds your argument. Every libertarian I have known was quite doctrinaire, however, you seem to be much more pragmatic.

I'm 56 years old. I moved to North Carolina five years ago. The previous twenty-five years I spent as a resident of Chicago's north shore and before that Wisconsin, Utah and California. I live in Moore County. My Congressman is Howard Coble, my State Sen

My thoughts exactly

Every libertarian I have known was quite doctrinaire, however, you seem to be much more pragmatic.

Kind of nice to be surprised like this.

Wow, I wish I had $800,000 to apply for a $8 Million grant.

Or, how about $45,000 to apply for the $450,000 grant due in March.

Perhaps the problem is the format and not the grant-based competition at all. Certainly, if NIH grants required a 10% input just to APPLY, there would be a lot less grants. I know that researchers spend money putting together preliminary data, but that is different from spending 10% on preparation of the grant.

Where are the candidates?

Jesus Swept ticked me off. Too short. I loved the characters and then POOF it was over.

Most of the federal and state

grants that my agency applies for has matching requirements. Usually 10% - and you can't use "state money" to match "state money". Our budget is roughly 1.5 million a year, and most of that comes from either state or federal grants. I realize that's small potatoes in the realms we're talking about, but we don't have trouble coming up with the match, through private funds, private grants, etc. It's not as much of an up front cost as it's being made out here, and often "in-kind" donations are accepted as matching funds.

"Be the change you wish to see in the world." - Gandhi

matching is different than spending 10% up front.

I have submitted grants with matching funds as well, but unless I'm wrong, and I totally could be, it seems that the cities are paying "consultants" or someone $800,000 to put together a $8 million grant.

If so, someone please give those consultants my name and email, as I can now retire from this job and begin working from home writing grants full time.

Where are the candidates?

Jesus Swept ticked me off. Too short. I loved the characters and then POOF it was over.

I might have read it incorrectly, too

I've been fighting migraine all afternoon. Lord knows I've caught some interesting grammar configurations in the reports I'm working on in between working on.

But if you get any nibbles on the grantwriting thing and need a partner, let me know. :-D. When I'm not migraining, I'm pretty good - and I could use that kind of money.

"Be the change you wish to see in the world." - Gandhi

Most Community Colleges can

Most Community Colleges can be convinced to do a class off-site if there are enough students (usually 10) in order to 'make' the class. We've been using that fairly effectively with child care providers for a few years.

"Be the change you wish to see in the world." - Gandhi

In a new feature on NC Policy Watch

I read the article by Mr.

I read the article by Mr. Schweke and emailed him as follows below. He graciously answered and said he would get back. I sent him George's kickoff and told him of bluenc.

Mr. Schweke:

I just read your article in NC Policy Watch.

I am not sure what you said. I was sort of led to think you were
progressive, but then it is not clear what that means in this day

Your implied, and stated, faith in Economic Development is, well I think
misplaced. I worked in industry, for corporations for 25 years following
a successful career in the US Army. I know for certain that nothing is
certain. I also know when I am told, "you just do not understand', I
grab the silver and run like hell.

I have watched for years while business has both assaulted and used
(think of that in scatalogical terms) government -- the government for which
you and I pay, dearly in many cases.

The amount of scammery that goes on when the government and industry
scheme together is unmeasureable, simply monumental. And, no I cannot
think of ONE person in a position of authority in industry, and very damned
few in government, I trust to do something jointly. Take the Dell deal. I
immediately forecast the Dell would rub their faces in it - Dell is a really
hard, tough negotiator - might better want to negotiate with John Gotti.
NC had and has dummies negotiating for us. Is that purposeful? Yes.
Is there a level playing field--hold on I am rolling on the floor. The fix is
always in, always.

So spare me, (I am a radical progressive - a Jacobin) if you will, the stuff of
"industry and government cooperation". Cui bono! That is the only question
to understand what took place. Who had the power and wanted the
benefit. Our government has forsaken antittrust. Corporations are citizens
under the 14th Amendment in one of the most egregious mucking with the
books ever done.

Industry and government should square off across the negotiating table, with
advantage to the government in every case, and with a stiff limit to the
pettifoggers that industry can bring to the table. And, should industry lie,
hit it with fraud, felonies.

Your article is fog sir, fog. It is a part of the deliberate confusion and noise
in the environment designed to confuse, delay, obfuscate. You may mean well
but I think you may not have some grasp of the real situation, whether you
block it, or not. I just wanted to simplify this whole concept for you. I presume
that industry is habituated to criminal intent and action at all times. I further
presume that it is through bribery and cunning disarmed legislators and
governments to the advantage of industry. And, I presume that in the upper
echelons of the elite, Dem or Repub, they convince themselves it is all for the
greater good of some so and so like me, and mine. Calvin and Savanarola
thought that way as they burned people, quartered them. Nothing changes
and the idiot on bottom gets the shaft.

Not one cent or help to any industry. Income tax at 12% or higher. Control
corporate behaviours at the border -- if they dont play our game, they dont
do business in NC. Castrate the fine people at(such as are males and that is
most of them) NCCBI and like lobbying groups hiding as nonprofits. We might
take some short term hits, but eventually, they will come -- and they will come
because the people that wanted a government that really protected them and
were smart and productive came here to live for the quality of life, which the
Home Builders mafia is destroying at great rates, insulated from impact fees
by a bought legislature.

I am not Pollyanna. I think you may well be. Your clever article, attractive to
many, has for me the markings of more propaganda - intended or not. I ask
you to rethink your position, no matter that it pays your way.

When do we make a clean break with the past and take control of the corporations that run our lives?

Well, he did reply to me, for which I give him quite a bit of credit. We will see. Perhaps we can get him on BlueNC.



Google Server Farm Goes to Caldwell

says the Greensboro News & Record at

RALEIGH (AP) — Search engine giant Google Inc. plans to spend up to $600 million to build a data center in North Carolina, state officials and the company said Friday.

The so-called "server farm" could eventually employ 210 people in a region hit hard in recent years by layoffs in the furniture and textile industries.

"We're absolutely thrilled to death for our community and our citizens," said Lenoir Mayor David Barlow. The center will be built in his city of 60,000 about 60 miles northwest of Charlotte.

"This company will provide hundreds of good-paying, knowledge-based jobs that North Carolina's citizens want," Gov. Mike Easley said in a statement. "It will help reinvigorate an area hard hit by the loss of furniture and textile jobs with 21st century opportunities."