By on April 2, 2014

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Leaked documents linked to the United Auto Workers battle for the Volkswagen plant in Chattanooga, Tenn. point to a connection between Governor Bill Haslam and the German automaker regarding a $300 million incentive in exchange for over 1,300 jobs at a proposed SUV plant within the state.

WTVF-TV reports the incentives were contingent “to works council discussions between the State of Tennessee and VW being concluded to the satisfaction of the State of Tennessee.” By the time Volkswagen entered into election talks with the UAW in January, however, the Haslam administration formally notified the automaker that it was withdrawing the offer, citing that it had kept the offer on the table past the 90-day window normally reserved for incentives when the incentive in question had no such expiration date.

Though Haslam has denied any such connection to the incentive — dubbed “Project Trinity” — U.S. Senator Bob Corker claimed as early as February of this year that the offering would be made should the workers at the Chattanooga plant vote against representation by the union.

As for the UAW, organizer Gary Casteel stated the following in response to whether the now-public documents were a game-changer in the union’s appeal to the National Labor Relations Board over the election results:

To me, it puts pressure on the state to do what they should have done in the first place — and that’s give the incentives with no strings attached, just like they would any other company, union or non-union.

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116 Comments on “Leaked Documents Link Anti-Union VW Incentive Offer To TN Governor’s Office...”


  • avatar
    28-Cars-Later

    $300 million for only 1200 jobs? Wow…

    • 0 avatar
      FormerFF

      If you look at the incentives and the low pay, it’s almost as if the workforce is free. Or, something like the state pays half the cost of the facility, take your pick. It’s good to be a big corporation in the South. Porsche got state money to move their corporate office from one part of the Atlanta area to another part.

      • 0 avatar
        cpthaddock

        Corporate socialism hard at work.

        • 0 avatar
          28-Cars-Later

          Union thing aside, there is a greater malfeasance here. Extreme corporate welfare and “elected officials” willing to sell their mothers for such a sh*tty deal.

          • 0 avatar
            raph

            But corporations are “job creators”! That’s a better use of capital than handing it over to those no good dirty entitlement scavengers

            Apologies if the quotes don’t indicate dripping with sarcasm.

          • 0 avatar
            xtoyota

            I guess it would be better for Volks to move to Mexico then work out a deal to keep jobs in Ten.

          • 0 avatar
            28-Cars-Later

            @raph

            *beep beep* I just detected 100 sarcs per minute from that comment! Obviously p*ssing money away as you suggested is just as bad as buying 1200 jobs @ $250K apiece.

            Maybe half should go into cheap loans for whatever else Tennessee produces for export to other states and half be held back into a fund when the local gov’ts inevitably come with their hands open after their various bankruptcies.

            @xtoyota

            For only 1200 jobs I say have fun in Mexico. You could build an entire business and employ ten thousand people with $300 million.

          • 0 avatar
            APaGttH

            @xtoyota

            If those 1200 lower middle class jobs, which will go away in the next downturn in the economy, or if the products management dictates the workers build are tone deaf to the market (not that VW is doing that today).

            Yes, yes it would be better.

            Tennessee could instead invest 300,000,000 in secondary education.

            $300 million would send 8000 students to the University of Tennessee for four year degrees, full pull.

            Huh – wonder if those 8,000 fresh grads with no student loan debt anchors around their neck could figure out how to create 1,200 lower middle class jobs in Tennessee not tied to the whims of economic conditions and the price of a gallon of gasoline.

          • 0 avatar
            28-Cars-Later

            @APaGttH

            I do see your point on the Univ of Tenn comment, but with no strings on the grant you’re still wasting money by rewarding the education cartel. Would you get 1200 real jobs out of it? Probably, but its not going to be that much better unless you add constraints (i.e. STEM only majors). I still say loans to whatever profitable industry already is in Tennessee for expansion is a better investment.

          • 0 avatar
            jim brewer

            You got that right. Tennessee paid I believe $550 million for the plant originally, this would bring their incentives up to nearly a billion dollars. In eight years that plant produces maybe a million cars, so at a reasonable rate of amortization, there’s roughly $700 of Tennessee largesse in every Passat. $300 mil was equivalent to nearly half their transportation budget.

            These people are insane.

        • 0 avatar
          doctor olds

          It is only available to foreigners. :-(

        • 0 avatar
          carguy

          It not even corporate socialism – its just corporatism. When most of the money to get you reelected comes from corporations then you become their serf. Today’s SCOTUS decision will not help that cause.

          • 0 avatar
            APaGttH

            Exactly – the republic died a little more today and we took a big step close to being a corporatism.

            Tennessee was willing to bribe VW $250,000 per job created to get the factory there. It would take about 4-1/2 years based on average salary to break even.

            Who pays for the tax incentives? Why the very citizens this package was supposed to, ehem, help. Finally, at the end of the day, the profits are counted in Euros.

            But hey – we stuck it to the UAW!!!

          • 0 avatar
            28-Cars-Later

            Yeah, that’s not gonna work out too well.

            http://en.wikipedia.org/wiki/Corporatism

          • 0 avatar
            Neutron73

            Ding! Ding! Ding! This nation is going to hell in a corporate gold lined basket of swag to the best bought politicians.

            Far be it for Corker and his ilk to…oh I don’t know…use that money to help their poor, hungry, or sick. But I guess he feels that cutting social programs to help poor people is necessary to hand out cash to corporations while denying the common man the ability to collectively bargain (unionize) to protect themselves

    • 0 avatar
      SomeGuy

      No kidding. What a bad deal. I’d love to hear about the ROI on that from the people who thought of that deal.

      • 0 avatar
        doctor olds

        I am Not lobbying for state incentives, but recognize they are the way local governments try to attract business.

        A vehicle assembly plant is a multi-billion dollar money machine that creates far more economic benefit than the handful of jobs in the plant. Incentives are typically in the form of tax deferment.

        Considering these facts, no taxpayer money is spent, the economy booms, and after the deferral period, the tax dollars roll in, too.

        Please correct me if the specific detail of this offer is not in the form of deferral of taxes, but cash up front. I didn’t study it.

        • 0 avatar
          jim brewer

          This is fallacy. Tennessee has the highest sales tax in the country–9.5% on average. That’s not a coincidence. These plants impose real costs on society. There is a multiplier to be sure, but the politicians in Tennessee evidently just make up a number and declare victory in the economic development wars.

          Its better from a dollars and cents standpoint to buy a cheap VW subsidized by the kind people in Tennessee than it is to have a VW plant in your state.

          • 0 avatar
            alsorl

            How far off can one be ? Have an auto plant in ones state is a tax on that state? This type of right leaning ignorance is very sad for our country.

          • 0 avatar
            Rick T.

            I’m more than happy to pay the sales taxes in return for paying no income taxes.

            I voluntarily relocated from IL to TN because I was paying 10% sales tax AND 6% income tax in Chicago.

          • 0 avatar
            Chicago Dude

            “I voluntarily relocated from IL to TN because I was paying 10% sales tax AND 6% income tax in Chicago.”

            Well it’s a good thing you’re in the volunteer state now since you seem to voluntarily pay more more than your required amount in taxes!

            Seriously though, moving just because of local taxes seems to put the more important issues of place low on the priority list. The difference in tax burden between the highest state (New York) and lowest (Wyoming) is only about 5%. Is that really a large enough difference to make it a reason for moving from one to the other? The tax burden difference between IL and TN is half that – about 2.5%. That seems pretty small to me. I’d decide on weather, cultural amenities, family location, etc long before I considered taxes.

            The cost-of-living calculators say that Chicago is 8% more expensive than Nashville. But the (after taxes!) per capita income in Illinois is 18% higher than Tennessee. It’s impossible for me to know your salary in IL and in TN, so I can’t say anything about you in particular – but the average person in Illinois seems better off than the average person in Tennessee. Money-wise, that is.

            A billionaire (not me) once said “Anyone who thinks money can buy happiness has never had a lot of money.” I hope you are happier in TN.

          • 0 avatar
            Rick T.

            Chicago Dude –

            Probably should have been more specific. I relocated to middle TN. The county where I live has the 16th highest per capita income in the nation. All the corporate people from CA (Nissan) and other states are not taking salary cuts when they move here.

            My property taxes are 20% of what they were in Chicago even though I went from a fairly modest (for the neighborhood) home on a 3,125 sq ft lot to a 4,400 sq ft home on 7 wooded hilltop acres. Forgetting about any other cost of living items, I gave myself a $2,000/mo raise by moving.

            The economy here is strong. Housing has recovered for the most part. We are expecting over a million new people here over the next couple of decades.

            And we are loving it here. We do miss some of the cultural and dining experiences but we can always go back occasionally for that.

    • 0 avatar
      Pch101

      To be fair, a lot of the incentives are in the form of tax credits and exemptions. Presumably, the state wouldn’t have had those tax revenues in the first place if the company didn’t expand its operations.

      And then the state gets it back in the form of other taxes paid, such as the extra incomes earned by the workers and the in-state suppliers. It doesn’t end up costing the state anywhere close to $300 million, net net.

      • 0 avatar
        28-Cars-Later

        I think we’ve discussed this before but I’d be interested in the numbers behind these deals and the cost breakdown (assuming anyone in gov’t has done the research).

        • 0 avatar
          Pch101

          The cash grant component is $100 million. If I am not mistaken, the rest of it is in the form of credits and tax forgiveness, such as a sales tax exemption for equipment purchases.

          Presumably, the state has produced a report that puts the deal into a positive light. Those types of reports often include some combination of factual information, wishful thinking and bits of pure puffery.

          • 0 avatar
            28-Cars-Later

            Thanks for the info. The hundred million figure takes it down to a mere $83K per job in direct cash as state subsidy. I’d feel better about it if there were penalty fees per job if VAG later downsizes the jobs or moves out of state and said penalty money was prepaid being held in escrow.

        • 0 avatar
          jim brewer

          Well, there are multipliers for other things, like heavy construction. The rule of thumb is 17 jobs for every million spent (construction has a good multiplier effect). So a state initiative to spend and extra $100 mill on transportation for eight straight years would employ about 1700 people per year during that time. To be sure, they wouldn’t all be in Tennessee, but that’s true of the VW multiplier, which is probably somewhat lower to begin with.
          Of course the project would end after 8 years and with it the jobs unless you did it again, but probably VW would be back with its hand out in that time too.

          At the end of the eight years you would have improved infrastructure to show for it. As for VW, the day will probably never come where they settle down and pay their taxes like every smaller business in the state.

      • 0 avatar
        asapuntz

        $300M over 1200 jobs is $250K per job. I think employers budget $100-$200K per employee per year, incl salary, benefits, lights, bathrooms, desks, parking spots, etc.

        • 0 avatar
          28-Cars-Later

          Although there’s a big difference between 100K and 200K, I did not know this is how an employer approaches employee costs (utility usage and desks and parking spots oh my). Thanks for the reply.

          • 0 avatar
            Chicago Dude

            Take a look at the FICA section of your paycheck. That’s only half of the actual tax. Your employer is paying the other half to FedGov. They also pay unemployment taxes to your state (and a tiny amount to FedGov). There are definitely a lot of costs to having an employee beyond just that salary number.

            But it would probably make you sick if you found out the amount of profit you generated for them ;) The capitalist gets a better deal than the worker.

      • 0 avatar

        > To be fair, a lot of the incentives are in the form of tax credits and exemptions. Presumably, the state wouldn’t have had those tax revenues in the first place if the company didn’t expand its operations.

        The relationship between cash grant and tax break act correlates with the act in question’s dependence on the incentive. If they were going to build a factory *somewhere* anyway, it’s more or less the same thing.

        The proper way to understand this is not incidentally through collective bargaining. Had the various principalities shopped around formed a united front, they all get a better deal as a whole rather than trying to outbid each other. Unfortunately the leadership in these place are all unsurprisingly as dumb as they people they represent.

        • 0 avatar
          Rick T.

          “Had the various principalities shopped around formed a united front, they all get a better deal as a whole rather than trying to outbid each other. Unfortunately the leadership in these place are all unsurprisingly as dumb as they people they represent.”

          How does that work when there is only one factory to be built?

          • 0 avatar

            > How does that work when there is only one factory to be built?

            It’s important to keep in mind these issues are systemic. For example, collective bargaining for service jobs across the industry has an effect even if the individual case is one shopkeeper looking for a janitor.

            Presumably this is not the only factory or whatever favor any entity ever fishes for.

        • 0 avatar
          Pch101

          “Had the various principalities shopped around formed a united front, they all get a better deal as a whole rather than trying to outbid each other.”

          If people were always nice to each other, then we wouldn’t have wars or bar brawls.

          A federal system necessarily creates competition among localities. But even without that, today’s global marketplace would pit nations against each other as companies haggle for the best deal. These corporations have leverage, everyone knows it, and it isn’t possible to simply ignore their power and influence.

          • 0 avatar

            > These corporations have leverage, everyone knows it, and it isn’t possible to simply ignore their power and influence.

            At least according to predominant social wisdom it’s best to explain the problem(s) conceptually before trying to argue any specific solutions.

            “Now you know, and knowing is half the battle”
            — GI Joe

          • 0 avatar
            Pch101

            Power follows money.

            Major corporations have money and can influence economic activity.

            Ergo, companies have power.

            Some of these companies are more powerful than are the governments with which they are negotiating. Good luck trying to fix that; in the meantime, it’s probably best to accept it for what it is, and start haggling for some of those jobs.

          • 0 avatar

            I wasn’t disagreeing about public spending in general; after all, those asian companies good at making cars might as well be state enterprises.

            Also btw, “predominant social wisdom” refers to the quote.

  • avatar
    SCE to AUX

    Per Mr Casteel: “To me, it puts pressure on the state to do what they should have done in the first place — and that’s give the incentives with no strings attached, just like they would any other company, union or non-union.”

    If the state feels compelled to give incentives – because they always do – he is correct and I agree.

    But IMO the incentives/subsidies game is destroying our economy, and both parties are guilty of it.

  • avatar
    APaGttH

    Lots of popcorn eating while reading TTAC this week.

    Suspect the anti-union brigade will be a bit muted on this one.

    • 0 avatar
      28-Cars-Later

      I’m more outraged by the horrible allocation of capital. Folks knock union management dysfunction, but then gov’t shows up and says step aside *I’ll show you dysfunction*.

      I think the guillotine will eventually be making a comeback tour…

      • 0 avatar
        05lgt

        The guillotine is far too humane. If the wealth concentration contunues to accelerate the “pop” will, much like the reign of terror, have more mob beatings than sanitary executions.

        • 0 avatar
          thelaine

          Their wealth has nothing to do with your wealth. Money is not limited. Go make your own.

          • 0 avatar
            SayMyName

            Not to mention the majority of the “haves” are significantly better armed this time around.

          • 0 avatar

            > Their wealth has nothing to do with your wealth. Money is not limited. Go make your own.

            When so many are willing to carry water or whatever it takes for free it’s hard for everyone else to make money.

            > Not to mention the majority of the “haves” are significantly better armed this time around.

            LOL I guess with these slipping standards even the trailer crowd are the haves now.

          • 0 avatar
            05lgt

            When they keep getting in the middle of my trades with you and soaking us both… you’re off your rocker. I’m not sure the quality of the hand carving on the italian shotgun makes it more lethal than the AR’s and AK’s most of us can afford. A nice fancy Barret is no match for a pump 12 indoors.

    • 0 avatar
      thelaine

      Wonder if the big government people will mute themselves…nah.

      • 0 avatar
        Ubermensch

        You mean like the Reagan and Bush administrations that grew the federal government more than under democratic administraions?

        • 0 avatar
          thelaine

          Sure. Whatever. Zing. Go ObamaJesus.

        • 0 avatar

          > You mean like the Reagan and Bush administrations that grew the federal government more than under democratic administraions?

          I don’t think you get it. See, these are the “new” Tea Party “independents” who *never supported* the previous shams.

          That way, they can be told to vote straight conservative to dump the commies, yet avoid the toxic R brand.

          To be fair and balance though it’s not unlike liberals voting for a right-wing authoritarian because he represents the “lesser evil”:

          http://www.politicalcompass.org/uselection2012

          • 0 avatar
            28-Cars-Later

            Unfortunately in a two party system you are always voting for the lesser of two evils, which is by design.

          • 0 avatar
            Ubermensch

            Yeah, I didn’t vote for either R or D in the last presidential election. I am well aware of how right-wing Obama really is, contrary to the wailing’s of the tea-pary and fox news goons.

          • 0 avatar
            thelaine

            Yep 28, that is the unfortunate reality.

          • 0 avatar

            > Unfortunately in a two party system you are always voting for the lesser of two evils, which is by design.

            IMO the problem isn’t so much the candidates or positions themselves but rather the lie of what they represent.

            For example, the politician in question for this article no doubt campaigned on small gubmint to quash (black) welfare queens, yet are more than willing to put rich white ones on the dole.

            IOW, we shouldn’t mind open classist bigotry as much as conducting it under the table.

          • 0 avatar
            Ubermensch

            FYI – I have taken that political compass quiz several times over the years and I am deep in the lower left hand corner every time. Sure hope the NSA doesn’t see those results or I may find myself locked in a holding cell in Cuba some day. ;)

          • 0 avatar

            ^ also, again to be fair and balance, obama seems to have no problem putting his Kenyan muslim heritage aside by selling “his people” down the river.

          • 0 avatar
            28-Cars-Later

            I see your point but I don’t think its so simple, u mad scientist. I suppose you could focus on that issue and pander for votes but would such a thing on its own really win an election?

          • 0 avatar

            > I see your point but I don’t think its so simple, u mad scientist. I suppose you could focus on that issue and pander for votes but would such a thing on its own really win an election?

            The point is that if there were greater transparency between what people say and what they do, it’s a problem that may well solve itself.

            IOW, is “the media” asleep at the wheel or bought and paid for? Certainly the worst “leftist media” ever to rubber stamp George Bush’s 3rd & 4th terms as an act of progressive liberalism.

          • 0 avatar
            28-Cars-Later

            Transparency from *any* elected official would certainly be nice. Heck while we’re making a wish list, honesty, integrity, humble can go on there too

          • 0 avatar

            > Transparency from *any* elected official would certainly be nice.

            I don’t pretend it’s the job of politicians or anyone in power to be transparent, however there is a group whose job is ostensibly point out discrepancies or any other relevant social info.

            We complain about the corrupting influence of money in politics, but don’t seem as concerned by the same phenomenon within those who write about it.

            This really shouldn’t be a new insight to readers of a pub who editor in chief is somewhat known for speaking up on this subject.

          • 0 avatar
            05lgt

            sadly first past the post voting pretty much cements 2 parties. Meh, our system is horible until you compare it to something else. It’s hard to convince people who “learned” economics from a work of fiction.

        • 0 avatar
          28-Cars-Later

          Really, more than what has happened in the last five years?

        • 0 avatar
          Roader

          Bush, yeah, but not Reagan. Reagan cut domestic spending more than any other president since FDR in WWII.

          http://www.forbes.com/sites/leonardburman/2012/11/02/big-spending-republicans/

          • 0 avatar
            Pch101

            Year – Federal Outlays ($ millions)
            1980 – 590,941
            1981 – 678,241
            1982 – 745,743
            1983 – 808,364
            1984 – 851,805
            1985 – 946,344
            1986 – 990,382
            1987 – 1,004,017
            1988 – 1,064,416

            Moral of the story: Forbes is generally crap.

          • 0 avatar
            Roader

            Note the word “domestic.” Your data show total spending: domestic + military.

            Military spending doesn’t permanently “grow the government” as domestic spending does. See WWII, when total government spending exceeded 40% of GDP but was quickly scaled back after the war to <25%. Similarly, the defeat of the Soviet Union in 1991 allowed Clinton to severely reduce defense spending, creating an economic boom by freeing up resources for the productive (non-governmental) sector. But it would have never happened if Reagan hadn't goosed defense spending in the 80s, forcing the collapse of the USSR & Warsaw Pact governments.

            Moral of the story: words matter.

          • 0 avatar
            Pch101

            Year – Federal Outlays, defense excluded ($ millions)
            1980 – 456,946
            1981 – 520,728
            1982 – 560,434
            1983 – 598,461
            1984 – 624,394
            1985 – 693,601
            1986 – 717,009
            1987 – 722,021
            1988 – 774,056

            You really ought to look at the numbers, instead of just believing what you’ve been told (or perhaps I should say “sold.”)

            http://www.whitehouse.gov/omb/budget/historicals

          • 0 avatar
            Roader

            I couldn’t find a table called “Federal Outlays, defense excluded ($ millions)” in the link you provided, a page that had 50+ other links.

            Here’s a lefty site’s graphic of Nixon’s-thru-Bush II’s domestic/military/entitlement spending if that makes you feel better:

            http://www.huffingtonpost.com/david-paul/some-facts-about-spending_b_132135.html

          • 0 avatar
            Pch101

            You see, there are times when looking at the numbers requires that you make a bit of effort.

            As you can see, the government is kind enough to slice and dice the numbers in many ways, and to provide them in spreadsheet format so that you can perform your own calculations.

            It’s obvious that you’ve never looked at the numbers, so it might be wise of you to avoid discussing them until you have. You’re obviously misinformed.

            Instead of reading bad articles from skewed sources, just go directly to the source where you can get the data yourself.

            (Hint: Look at Table 3.1, and deduct the defense spending from total outlays.)

          • 0 avatar
            Roader

            Thank you for the hint; now I see your error. That spreadsheet’s figures are nominal, not real, and inflation was pretty high, at least through Reagan’s first term. But that’s OK, we can use that same spreadsheet and, instead of using the nominal dollar amounts, we can use the % of GDP amounts, which reflect the reality of the inflated dollar. Subtracting defense out of those numbers:

            1981 16.6
            1982 16.9
            1983 16.8
            1984 15.8
            1985 16.1
            1986 15.8
            1987 15.1
            1988 14.9

            A fairly steady drop after his second year in office. An eight-year, 80 billion cut in 1988 dollars; about 160 billion in today’s dollars. A chunk of change, doncha’ think?

          • 0 avatar
            Pch101

            This is hilarious. Now you want to move the goalposts, since you can’t bear the thought that you’ve been snowed for all these years.

            Unfortunately, I have bad news for you: even after moving the goalposts, you’re still wrong. On a CPI-adjusted basis, spending still went up:

            Year – Federal Outlays, defense excluded ($ millions) – In 2014 dollars
            1980 – 456,946 – 1,301,969
            1981 – 520,728 – 1,344,962
            1982 – 560,434 – 1,363,516
            1983 – 598,461 – 1,410,716
            1984 – 624,394 – 1,410,932
            1985 – 693,601 – 1,513,423
            1986 – 717,009 – 1,535,950
            1987 – 722,021 – 1,492,225
            1988 – 774,056 – 1,536,210

            You may notice that the last number is 18% higher than the first.

          • 0 avatar
            Roader

            You’re right. I’m wrong.

            Domestic spending did increase in real dollar terms during Reagan’s tenure.

            To their credit, though, the Reagan/Tip O’Neil combo grew the hell out of the economy. Growth can mask a variety of sins, a concept that the current administration can’t seem to grasp:

            http://datamarket.com/data/set/vro/seasonally-adjusted-quarterly-volume-growth-in-gdp-1980-2011#!display=line&ds=vro!2s1=6

    • 0 avatar
      SayMyName

      Meh. I’m pretty much fine with anything that keeps unions in the gutter where they belong, but as 28 pointed out, that’s a ridiculous amount of money to waste for a comparatively paltry number of low-skill jobs.

      • 0 avatar
        28-Cars-Later

        You articulate my thoughts well. I’ve never been to Tennesee but I imagine throwing this amount of money around is the result of (1) reward to a political donor, (2) the desperation of local citizens who will take 1200 low skill jobs while their gov’t is fleeced, or both. Fixing the problem is beyond the gov’t of Tennessee, I’m not sure there is a magic bullet but one thing holding jobs and industry back is the Federal octopus and alphabet agencies. Neuter some of those agencies and you might see new industry emerge.

  • avatar
    lacy1

    And of course, Governor Haslam has no idea about the proposed deal…not knowing about shady deals of underlings must be genetic.

  • avatar
    Jeff Waingrow

    I mentioned here the other day that the tail is now wagging the dog. Take your pick as to who’s the dog. I’d say both the unions and the state governments. Either or both, this has become a zero sum game where the corporations play their adversaries for fools, which they are. I can’t imagine this happening in Germany where they seem to have worked out an accord that takes all parties interests into account.

    • 0 avatar
      05lgt

      Ah yes, the German market utopia. You get one of those when your customers are willing to let you control thier currency valuation in exchange for being able to borrow too much money from your banks. It even works for a while until all the PIGS fail.

      • 0 avatar
        Jeff Waingrow

        Yow! What have I unleashed? I formally retract the German reference to avoid a tedious and largely irrelevant discussion of macroeconomics. Ok? Now to the point, namely that the corporations, largely international in scale, are taking the other parties for a ride. See? That was the point. These entities know no borders and move everything about to further their own ends. You open an office in some favorable venue and transfer your profits there, for example. This goes way beyond national borders and currency issues therein.

        • 0 avatar
          05lgt

          True that. I worked somewhere that made a thing in the UK, shipped some files to the Bahamas where a little simple math was done, then it was installed into a massively expensive system in the US. Guess where all the value got added? We managed to reduce the value by building it into a system.

    • 0 avatar

      Weren’t the workers councils, and their seats on the corporate board of directors, imposed on german industry by the US during the postwar reconstruction?

  • avatar
    doctor olds

    so… the state politicians who publicly pronounce and run on their anti-union position, are elected by the people on that basis, and decide to influence business choice with conditions for business support are doing something underhanded?

    they follow the path they were elected to follow. they may also happen to believe right to work is a key enabler of them being the location of choice for new business and want to assure long term viability and growth.

    • 0 avatar
      APaGttH

      And thankfully for the politicians, the poor dumb masses are too bored, too detached, too numb, to pull out a calculator and figure out that $300 million to create 1,200 jobs is $250K per job – WITH NO GUARANTEES – and the average salary is around $58K – break even is 4-1/2 years best case scenario. Best of all, that $300 million that goes to VW is paid in full by the same idiots that elected these officials in the same place.

      The same citizens who would explode if $300 million was proposed for schools, mental heslth, prisons, or welfare applaud at the idea of handing it to a global corporation based in Germany. The race to the bottom continues.

      Thank you big government for saving me – now if we can get these deadbeats off food stamps, our problems will be solved!!!

      • 0 avatar
        challenger2012

        I liked the last part of your writings, “now if we can get these deadbeats off food stamps, our problems will be solved!!!”. 28 Cars later will not see it as a joke but fact.

        • 0 avatar
          28-Cars-Later

          Honestly as much as I’d like to come through like the middle ages and thin the herd, it’s just not so simple. What has happened is a growing number of able bodied people has joined the welfare class primarily because of the inability to find permanent work. In order to have work for them you need industry, and this started to disappear in the mid to late 80s. NAFTA helped exported many more existing jobs, as did the rise of China on the global stage. Now Obamacare -despite any merits- is creating a mostly low paid part time job culture. If you cut of EBT suddenly you will shock the welfare system and induce riots and general civil unrest. We’re backed into a corner now.

          Take a look at some of the facts from dot gov, in 2012 79.9 of all jobs are “services providing” while only 12.6 are “goods producing”. The one that caught my attention under services was state/local gov’t 13.1%. So 13.1% of all jobs according to BLS is state/local gov’t while construction and mfg combined is 12.1%. Let that sink in.

          http://www.bls.gov/emp/ep_table_201.htm

        • 0 avatar
          28-Cars-Later

          As much as I’d like to go medieval and thin the herd of deadbeats, its really not so simple. The real danger today is too many otherwise able bodied people are falling into the welfare class. Welfare is essentially a drag on the productive economy, the bigger it is, the more is slows things down. The “solution” was to print money and it will continue to be this way until the currency is replaced by a “New Dollar” or is replaced by something else outside of the control of the US. By printing money, this enabled gov’t to keep society relatively stable despite the economic depression we found ourselves in (and still find ourselves in). There are not enough real jobs for the citizens as it is, and now Obamacare is intentionally creating a permanent “part time” economy.

          Lets go to the tape:

          BLS says 79.9% of jobs in 2012 were “service providing”, 12.6 “goods producing, the rest being agriculture (1.5) and non-agriculture self employed (6.1). I’m not an economist by any means but it strikes me many “service providing” jobs cannot be effectively exported, so up to 80% of our national jobs figures are related to interests in the US alone. I do not see how this can work well in the long run, especially when 13.1% of all jobs are “state/local gov’t” when all defined “good producing jobs” are only 12.6%. Let that sink in for a moment. Government exists because of industry, government is not industry as it produced little to no tangible goods.

          http://www.bls.gov/emp/ep_table_201.htm

          • 0 avatar
            thelaine

            Thank you 28. It is a house of cards.

            This sort of corporate subsidy by government is a drop in the bucket compared to the corrupt “green energy” scams, ethanol slop-bucket, the rigging of the federal tax code etc… that takes place on the federal level. Anyone who champions big government as a counterweight to corporate power is deluded.

  • avatar
    RogerB34

    “By the time Volkswagen entered into election talks with the UAW in January, however, the Haslam administration formally notified the automaker that it was withdrawing the offer”

    Was it or wasn’t it withdrawn prior to UAW talks?
    If withdrawn after talks started – stupid Governor.

  • avatar
    MrGreenMan

    They shouldn’t do this. I’m against the idea of government inducing big companies to come and create jobs, because it doesn’t work, because it becomes just a race to the bottom of who can give the most away, because these have a track record of costing far more than is generated, because big companies are far less effective at creating jobs than little companies, and because it sets up the situation where people making $10/hr are subsidizing the wages of people making $20/hr. (And, before you say, are you for small companies – the government at all levels hates small companies; there never was consideration of them in the first place.)

    Just as this is generally a bad thing, it’s bad for otherwise “small government” people to do this sort of thing to try to score political points against union organizing. Yes, unions today are an arm of the Democrat Party. However, since they don’t appear to work for private sector union employees (e.g. Tier II…), there’s no need to try to buy off an anti-union vote. Let things be between the people who own the business and the people they employ; things will work themselves out.

  • avatar
    silverkris

    Mercedes Benz got $253 million in financial incentives from the state of Alabama for putting a plant there with around the same amount of promised jobs. Unfortunately the state came short of cash in the general fund at the time to kick it off that it impacted other budget items such as education.

    • 0 avatar
      APaGttH

      Who needs education. That is just socialist wasting of money driving a liberal agenda. Home school and charter schools are the answer. Sheeze, why does government have to solve everything.

      Damn you our founding fathers, the Bay State Colony, and this dumb idea that a primary education for the masses should be free.

      • 0 avatar
        28-Cars-Later

        I love your MST3K-esque references, APaGttH

        Here is the text to the Massachusetts General School Law of 1647 which was amended from the law of 1642:

        “It is therefore ordered that every township in this jurisdiction, after the Lord hath increased them to fifty households shall forthwith appoint one within their town to teach all such children as shall resort to him to write and read, whose wages shall be paid either by the parents or masters of such children, or by the inhabitants in general, by way of supply, as the major part of those that order the prudentials of the town shall appoint; provided those that send their children be not oppressed by paying much more than they can have them taught for in other towns.”

        In other words, educator’s wages are to be paid by parents/masters of children or by the inhabitants in general provided the monies involved are not much more than they could pay in other towns. The entire current public education system is the opposite of this as parents (who aren’t necessarily taxpayers) do not pay for children but landholders and taxpayers of all stripes, and there is no accountability in cost vs schools in other towns. If we could go back to this law I would gladly support public education.

        Incidentally, ignorance was Satanic.

        “The 1647 legislation specifically framed ignorance as a Satanic”

        http://en.wikipedia.org/wiki/Massachusetts_School_Laws

        • 0 avatar

          > The entire current public education system is the opposite of this as parents (who aren’t necessarily taxpayers) do not pay for children but landholders and taxpayers of all stripes, and there is no accountability in cost vs schools in other towns.

          What’s generally left out of such a conversation is that reciting a book to kids is not a difficult job, but teaching them something is.

          If we’re to believe capitalism works to some extent, $30k and $100k buys very different levels of competence at said job.

          • 0 avatar
            28-Cars-Later

            Agreed on the first point, but not necessarily true on the second. Increased education funding != more intelligent students.

          • 0 avatar

            > Increased education funding != more intelligent students.

            I never had you pegged as a socialist.

            In this case the capitalist are right given the capitalist framework. The actual B&B often prefer wall st. not main st. for obvious reasons.

          • 0 avatar
            28-Cars-Later

            Not even close, sir.

        • 0 avatar
          APaGttH

          But lets remember something. In 1647 you didn’t have 2.3 kids on average. You had A LOT more.

          If you didn’t have kids in 1647 Massachusetts you might not even be able to survive. The idea of summer vacation and spring break emerges not from lets take the summer off, but the kids needed to plant the fields in the spring, and tend to them over the summer. No “free” labor in an army of kids, which did exactly have a high survival rate to adulthood – you might not have food on the table.

          So to say anyone with a kid should pay up – would in 1647 mean – basically every household would be paying up anyway.

          I shell out about $4K a year in property taxes and don’t have a rugrat in the local school system. I guess I could say I should get 50% of that back darn it – I’m getting, “no benefit.”

          The benefit I get is young minds in schools (in what is one of the nation’s best school systems by the folks who track this sort of stuff) who will likely not grow to be criminals, putting a gun in my face to take from me what I worked for.

          That is worth far more to me than $2K a year. Never mind I get to write off that $4K every year anyway.

          I “get” your point – but there is the letter of the law and the spirit of the law. Fifty households pooling together to pay a single educator is not a heavy load. The good citizens of the Bay State sure didn’t see it as a burden – and those young minds educated in those systems went on to found our nation, fight a guerilla war and win, and become a global power.

          That was pretty good ROI

          • 0 avatar
            28-Cars-Later

            I don’t own a home for the reason you gave and I think its ridiculous we created a society were you can allow citizens to procreate at will and then demand “education” for them while skipping financial responsibility through things like Section 8.

            “fifty households pooling together to pay a single educator is not a heavy load.”

            I agree, and if fifty households in a neighborhood no matter the individual’s situation want to pool money to educate the neighborhood’s children, I’m all for it for the reasons you gave. But instead money is stolen from landowners and used as transfer payments to gov’t workers with no accountability and eventually to union coffers and later to local Democrats who eventually tax you further. Vicious cycle and in this cycle there is no guarantee the students actually benefit from the education product being provided to them.

          • 0 avatar
            APaGttH

            @28CL

            …But instead money is stolen and used as transfer payments to gov’t workers with no accountability and eventually to union coffers and later to local Democrats who eventually tax you further…

            Well thank God we live in a corporatism to take care off all of that for us now.

            If you don’t like it, when you move to Delta City you can invest in shares of OCP to have voting rights at the shareholder meeting. Clean, efficient, modern, safe. Everything provided.

          • 0 avatar

            > I don’t own a home for the reason you gave and I think its ridiculous we created a society were you can allow citizens to procreate at will and then demand “education” for them while skipping financial responsibility through things like Section 8.

            Given the choice in cars it’s reasonable to assume that you and pretty much all peers with the same attitude fall on the charity-case side of the dole rather than providing it.

            That bar is much higher than most of the “middle class” looking down on the poor presume.

            > But instead money is stolen from landowners and used as transfer payments to gov’t workers with no accountability and eventually to union coffers and later to local Democrats who eventually tax you further.

            Careful there, those gubmint workers are what stand between the land owners and those who work it.

          • 0 avatar
            28-Cars-Later

            @APaGttH

            Nice! OCP FTW.

            I think no matter the “ism” the problems of our society run deep. So many people are not able to survive on their own, its to the point where they require a nanny state to do everything for them. This is the opposite to the values and ideals of the people of the Bay State Colony. My mother is famous for throwing money at everything instead of learning how to do things for herself (not much money mind you lol). I even noticed this with my brother recently with the new-old car he purchased. It needed work beyond my skill level (rocker panels needed welding/replacing) but I can certainly tackle the broken sunroof, the bumper stickers, and the new rotors/pads. He would prefer to throw money at the shop instead of trying to tackle it with me as I offered to help. If this lifestyle/attitude keeps increasing, humanity may be significantly less in a few generation’s time.

            @u mad scientist

            I’m referring to the school districts, not emergency services. Schools do not need to be gov’t run but even the most libertarian of folks might not care for privately owned/operated emergency services such as police and fire depts.

        • 0 avatar
          Exfordtech

          I think you overlooked this: “whose wages shall be paid either by the parents or masters of such children, or by the inhabitants in general”. “The inhabitants in general” would refer to all of the people within the town, with or without children. There is a positive societal benefit, recognized even then, that everyone stands to gain from an educated population.

          • 0 avatar
            APaGttH

            The British Crown would have likely disagreed that all that education was a good thing.

            Educated minds that are capable of rational thought, reasoning, and question authority are very hard to control.

            Damn Intolerable Acts!

  • avatar
    alsorl

    How are we surprised? The anti Union leaders look more like criminals then the union itself.

  • avatar
    Big Al from Oz

    I consider this form of incentive is quite socialist and isn’t part of capitalism. Should we term it ‘socialised capitalism’?

    People who try and defend this form of expenditure must realise it isn’t creating a real market. Imagine if a market is dependent on protectionist barriers, handouts, interest free loans, etc to exist or even subsist, is this a capitalist approach.

    Is this money better spent on more viable industries, pay down debt, or reduce taxation?

    I’m really glad our auto manufacturing industry is moving offshore. I’m glad I will not be taxed into subsidising each vehicle to the tune of $2 000 here in Australia.

    I’m glad we can buy a car manufactured in the US that has been subsidised $3 000 by the very nice US taxpayer so we don’t have to fork out our hard earned cash to unions and corporations via taxation or worse still debt.

    Yes, the US is doing a fine job in manufacturing.

    Even with the impending demise of our auto industry we are still short over 20 000 people in the automotive industry. We apparently aren’t losing all of our industry a sizable portion of component manufacturers will remain. I think that is a smart move, weed out the $hit and let profitable business reign.

    Here’s a very interesting link that will negate the comments supporting US right wing Socialised Capitalism via proetectionism/handouts, etc and the UAW Socialist model via protectionism/handouts. They seems quite similar!

    Maybe I was correct in my assumptions regarding the so called demise of the Australian automotive industry.

    Told you so.

    http://www.dailytelegraph.com.au/business/work/australias-automotive-industry-is-set-to-boom-says-new-report/story-fnkjjdfa-1226868524592

  • avatar
    Rick T.

    What everybody forgets is that having both Nissan and VW in the same general area has created a magnet for automotive supplies to locate businesses in Middle TN. I read somewhere that about 100,000 jobs have been created because of that.

    Also no one appears to be taking into account the multiplier effect that all these jobs have on retailers, home builders, and other businesses. I live here and I am fairly ok with the deal.

    • 0 avatar
      28-Cars-Later

      I certainly was not aware of this. Bring on the facts, Rick.

      • 0 avatar
        Rick T.

        Ah, here we go:

        “Even Bill Hagerty, commissioner of economic development for the state’s Republican governor, acknowledges that he’s had little trouble attracting auto suppliers to Tennessee in the years since VW started talking about a works council. There are now a total of 650 firms, employing 94,000 people.

        “They’re concerned whether the activity in our state might spill over into their operations, but we’ve been able to allay their concerns,” Hagerty says. “We’ve still been able to succeed in this environment.” ”

        http://www.washingtonpost.com/blogs/wonkblog/wp/2014/02/13/all-eyes-on-chattanooga-vws-workers-are-deciding-the-future-of-unions-in-the-south/

    • 0 avatar
      Pch101

      Sure, the question is the size of the multiplier effect.

      Automakers and suppliers have a symbiotic relationship. Just-in-time systems require that at least some suppliers are located close to the factory, so increasing one side of that equation will support the other.

      If VW expands, suppliers will probably also expand and/or new ones will be attracted to the area. That, in turn, could attract more OEMs to set up factories that can take advantage of the supplier base, and so on.

      One can debate the size of the multiplier effect, but there is undoubtedly some sort of multiplier at work here.

      • 0 avatar
        jimbob457

        OMG some real discussion as opposed to political bloviating.

        Fact numero uno: over the past six years total employment in Chattanooga MSA has declined from 248,900 to 236,900. The idea of using tax breaks to attract new jobs to the area has to be, at the very least, seriously considered.

        Fact numero dos: an offer of $250k per auto assembly job is just a first offer.

        Fact numero tres: in my experience the multiplier for almost any new primary employment in an area is three or close to it. For automotive assembly plants with their possible network of local suppliers, it might be as high as six. So, 1,200 becomes 3,600 and maybe as high as 7,200 looking at southeastern Tennessee altogether.

        Fact numero quatro: Both Chattanooga and the state of Tennessee will no doubt consider area development options other than attracting a VW assembly plant.

        I wish you local folks well in your community efforts to repair your regional economy.

        • 0 avatar

          Fact número cinco: Often overlooked, auto makers and suppliers provide well paying jobs. Money which gets invested into the local economy in homes, mechanics, dealerships, restaurants, bars etc., etc., etc. I remember reading that though Alabama had let go of almost 2 billion in tax breaks to car makers in their nascent auto industry, just in salaries, over the first ten year period of said tax breaks, the balance is very, very positive for the local economy.

          So that’s the thing, despite maybe negative in a country wide view, local tax breaks, especially in economically depressed areas to big business, bring about a huge multiplying effect due to salaries. not everyone can afford to fly in from NY or wherever everyday to do their job at the local factory. A factory always brings in new blood, with new money (that wouldn’t be available otherwise) that help out, immensely, the local community.

      • 0 avatar
        jim brewer

        Sure there is a multiplier effect The problem is its just assumed to overtake whatever incentive the politicians happen to offer. At most the state hires a conslutant to validate whatever deal they make. Probably not even that.

        • 0 avatar
          jimbob457

          @ jim brewer
          True. You often need a sharp pencil to calculate if a particular local tax break is justified. The main thing you have to assume is that they are needed in the first place, i.e. that local infrastructure will be abandoned without giving tax breaks as part of an area development effort. This represents taking a view about hypothetical futures – never a certainty to say the least.

          That said, you only have to compare Windsor, Ontario to Detroit, Michigan just across the river to see what a difference an area development effort with tax subsidies can make. A horror of abandoned homes, buildings and other infrastructure on the US side. A solid and stable community on the Canadian side.

          Of course, Canada and Ontario also subsidized an auto assembly facility in Brompton, Ontario, a thriving and growing Toronto suburb that needed and deserved a subsidy like a hole in the head.

  • avatar
    oldyak

    Lets place the blame where its due.
    This whole mess started with the VW ‘works council’!
    When in America has a foreign union had such an influence on
    an American plant on American soil with American workers??
    I smell a rat…
    and me thinks VW smells a little ‘ratish’


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