New State Investment Model for Job Creation
[Part of the problem with the immigration debate is the assumption that we are trapped in a zero-sum supply of jobs, where any jobs for one group means less for others -- instead of talking how to expand good jobs throughout the economy, so here's a repost on that topic from today's PLAN Stateside Dispatch.-- NN]
How do states encourage job growth? For too long, the answer by many state governments had been to hand out fat tax subsidy checks to corporations with little accountability and with little for the taxpayer to show at the end of the day.
But that's changing. States are increasingly taking a more active approach to job creation and becoming direct investors in job growth. When states invest funds directly, the returns on those investments come back to the taxpayer for reinvestment in new ventures, whether for technological innovation or revitalization of previously abandoned communities.
In an age when progressives are asked to answer the question of how their policies can create new jobs and new opportunities, these programs provide at least one large answer.
The Success of State Venture Funds
Hawaii is the latest state moving in that direction with a proposed Hawaii Innovations Fund which could grow to $200 million in government funds over four years to invest in Hawaii's renewable energy, life science and technology companies. If enacted, Hawaii will join thirty-six states that run venture capital funds, including New York's Small Business Technology Investment Fund and the Maryland Venture Fund.
The Maryland Venture Fund (MVF) has been one of the largest such funds, existing for ten years and investing over $48 million in more than 100 companies, usually at the startup phase when seed money is most crucial. It has nurtured Maryland-based biotech and information technology companies that have not only enriched the state's economy but returned profits back to the state as they've gone public—yielding an annual internal rate of return of 30 percent and allowing MVF to move towards self-funding with only minimal additional appropriations from the state legislature each year.
A variant approach has been in Pennsylvania, where the state has seeded an investment organization Bioadvance and its venture capital arm, BioAdvance Ventures, with $33.8 million in tobacco settlement money. This fund has been dedicated to encouraging the development of biotechnology in the southern Pennsylvania region -- with two sister organizations investing in other parts of the state. (See here for more). The overall goal is to dedicate $2 billion of the tobacco settlement to encourage the development of life-saving (and job-creating) biotechnology firms in the state.
In a number of states, these investment efforts have been assisted by state and local employee pension funds—their $2.7 trillion in assets making them what writer William Greider has called a potential "New Colossus" for expanding public investment in the economy:
- In Indiana, the public pension funds collaborated with state universities and various health-based companies to launch the Indiana Future Fund, a $73 million investment fund designed to benefit Indiana companies, especially in the life sciences and high technology arena. And this is just a small part of the state's public pension fund investments encouraging in-state economic growth.
- Washington State holds nearly $1.3 billion in Washington-based investments, using the money to leverage additional capital from other sources to invest in the state.
- Wisconsin's pension fund is also increasingly concentrating on support for state venture funds that can create jobs in that state.
- The largest scale pension investments, however, are in California, where the main public pension fund, CALPERS, has in-state investments totaling $20 billion or 11% of the fund's assets, a portion of which are dedicated directly to venture capital funds in the state.
Investing in "Domestic Emerging Markets"
While investments in high technology get a lot of attention, a number of these new state government investment strategies are also looking to revive areas devastated by deindustrialization and chronic poverty. Around the world, "emerging markets" are hotspots for investment, so many states are treating these poor domestic areas as "domestic emerging markets" that just need a bit of patient capital to revive.
Back in 2000, California State Treasurer Phil Angelides laid out the philosophy that undergirds the new wave of tough-minded investment in "The Double Bottom-Line: Investing in California's Emerging Markets." Angelides compared "the ease with which billions of dollars of American capital have flowed during the past decade to risky and highly volatile developing countries across the globe and the difficulties faced by California’s own underdeveloped communities as they struggle to attract desperately needed capital investment to fuel their resurgence." But as the state has increased investments in California communities needing investment, he emphasized the hard-headed investment principles for using public funds:
Community reinvestment initiatives should be structured to contribute to community revitalization while achieving market returns…
[T]o build a long-term community reinvestment dynamic, these investments must be viewed and approached as primary opportunities offering strong returns — not as investments of lesser worth agreed to as a matter of politics.
This last point emphasizes the idea that whether the investments are in high technology or in urban revitalization, these state investments deliver economic returns that are measurable on the financial bottom-line. One study found that eight large public pension funds have more than $3 billion invested in urban development projects – and have helped leverage private equity partners that have validated their economic returns.
This state government and public pension investment is part of a broader trend of expanding investments in a range of community-based investment vehicles, from Community Development Banks to Community Venture Capital Funds, all designed to increase capital access in communities often starved of the financial capital needed to revive local businesses. The Social Investment Forum highlights the quiet revolution as the assets of community investment institutions have grown from $4 billion in 1995 to $19.6 billion in 2005, a growth of 388 percent in a decade.
In a multi-trillion dollar economy, even these amounts haven't been enough to revive all of the communities undermined by deindustrialization and poverty, but their initial success and growth point the way towards where public policy should be heading.
A New State Policy Model for Job Creation
What makes this change in policy most striking is the dismal policy of corporate subsidies that it is (still too slowly) replacing. The community organization, Good Jobs First, has been the premiere chronicler of tax subsidy boondoggles handed out to corporations by state and local governments, corporate handouts that do little to spur healthy growth and that usually leave public treasuries too empty to address other public needs:
- Wal-Mart alone has received $1 billion in taxpayer money for a retailing model that not only generally fails to spur additional growth but quite often undermines healthy retailing districts in its vicinity
- Southern states have paid out billions of dollars in subsidies to foreign car companies without getting any equity for taxpayers and at a cost per job that has often undermined other public investments.
- New York City has wasted hundreds of millions of dollars on subsidies to "retain" companies, where there were usually no long-term commitments that the firms actually keep jobs in the city and state.
And most of these corporate subsidies don't create new jobs, but, at best, pit states against each other in bidding to influence the site location of jobs that would have been created in any case.
In contrast, the new state policy model concentrates on investments that create new jobs and industries, not just cannibalize jobs from other locations, and investments that actually generate new revenues for the government because the state itself has an equity stake in the new growth created. States use control of their own capital sources, from state venture capital funds to public pensions, to leverage local investment by private investors. And instead of trying to bribe big corporations to come to a location, this approach to public investment more naturally builds the skilled workforce and local network of firms that convince multinational firms to build a branch in a location on the merits of its underlying economic vitality.
Gar Alperovitz, a leader at the Democracy Collaborative, outlined the principles of this new approach in a recent essay, The New Ownership Society:
What is striking is that the idea that wealth should benefit the community directly is quietly becoming a commonplace. This community-oriented concept is the polar opposite of the Bush ownership principle that wealth should be concentrated among individuals (especially those at the top)…
[T]hese approaches differ from traditional social programs in that they do not depend primarily on taxing and spending--at a time when the ever-deepening fiscal crisis will continue to constrain traditional strategies. Many also anchor jobs firmly in local communities--at a time when globalization and runaway corporations threaten local economic stability.
Alperovitz emphasizes that "most of the strategies have enjoyed unusual support that transcends traditional left-right divisions--above all because at the local level, practical solutions to problems matter far more than ideological rhetoric, even to conservative Republicans."
There are still rightwing groups that want to hand all public capital, such as our state pension funds, over to distant Wall Street managers, but more and more state government leaders are committed to the idea that our public capital is best invested with an eye to revitalizing our states' economies and reinforcing community-owned wealth that can be reinvested for further growth.
By contrasting such positive community-led investment with the failed policies of corporate tax giveaways, progressives can take control of the jobs debate in their states
I think the one philosophical idea that you added to the discourse in this diary is the fact that immigration and jobs is not a zero-sum game. Much of the outrage about immigration comes from those who have seen their jobs eliminated, or their pay scales lowered. I just had a debate on a blog with a fellow who is convinced that immigrants have produced a labor "glut" and this has resulted in job loss for US natives. He was unwilling to hear that the wage stagnation and job loss started during the Reagan era, much before the latest rise in illegal immigration.
Indeed, if immigrants were creating a job glut then how come there is no corresponding rise in unemployment. New arrivals are finding work. Existing workers may be displaced in some industries by immigrants, but if they remained permanently unemployed the labor participation rate would be falling.
I realize the focus of this diary is on state initiatives, but I think the idea that the US is still growing (even if unequally) and that immigration doesn't just eat up existing jobs is worthy of further discussion. Immigration isn't the reason GM and Ford are firing thousands of workers. We need to stop blaming immigration for the poor national industrial policies and the focus on militarism at the expense of domestic social programs.
--- Policies not Politics
Daily Landscape
April 17, 2006 12:23 PM | Reply | Permalink
".., if immigrants were creating a job glut then how come there is no corresponding rise in unemployment. New arrivals are finding work. Existing workers may be displaced in some industries by immigrants, but if they remained permanently unemployed the labor participation rate would be falling.
The fact is if you are unemployed for too long IMS over 9 months you are automatically assumed to have a job according to the Feds and you are automatically removed from the unemployment role. Basically the Feds employ magical thinking to gloss over Wallstreet shenanighans.
Also illegals are often hired off the books and paid under the table in many businesses thus making the task of keeping track of how many are actually employed very hard.
April 17, 2006 1:08 PM | Reply | Permalink
These state programs are a nice start and all. However they don't prevent companies from off-shoring decent paying jobs and only keeping the low wage/low benefit service jobs here at home.
Also I would like to see progressives actually address this issue rather than skirt around it and also how a they can find good paying jobs for the 3 million plus Americans who got downsized and underemployed by "free" trade and off-shoring.
April 17, 2006 1:26 PM | Reply | Permalink
The more responsibility state governments take in solving their own problems, the better our nation will be. If only we could rely on state governments more as opposed to Washington...
April 17, 2006 1:56 PM | Reply | Permalink
Ignoring the fact that the immigration debate is about law, and special treatment, not jobs, you are still left with one fact, there seems to be plenty of capital around, and always has been. The real problem is worthwhile investments. For example, DOL has plenty ofmoney in SBA and other funds, just nothing they can invest it in.
There aren't many good investments available. You just don't start or build a company and employ people, you have to have a viable business plan, or all you do is wealth destruction.
Access to capital is not a prescription for jobs, unless you happen to be in the pork barrel or earmarks industry. Even so, that leads to creating jobs for entrepreneurs and a few employees.
More significantly, most of the unemployed aren't entrepreneurial...its not something everyone is interested in or has a talent for. What do you do about them? Startups can't possibly account for a significant fraction of the jobs needed.
I wish I had an answer...I don't. But this isn't it, either.
April 17, 2006 1:57 PM | Reply | Permalink
Re: The fact is if you are unemployed for too long IMS over 9 months you are automatically assumed to have a job according to the Feds and you are automatically removed from the unemployment role.
This is not true, As long as you report yourself as actively looking for work you are counted as unemployed (if you are contacted by the survey from which the figures are derived.) Unemployment figures are NOT based on who is collecting benefits.
April 17, 2006 2:39 PM | Reply | Permalink
It's true that states can only do so much, but stopping the race to the bottom in the U.S. is critical -- especially in preventing bad practices in industries where outsourcing is not a pressure.
That said, there are actions states can take to have a bigger impact on trade. As Nathan has pointed out in work at PLAN, states can follow Maine Governor John Baldacci's lead and require sweatshop free procurement and demand workers' rights internationally.
Pension investments also create an opportunity for states to impact the trade debate.
April 17, 2006 3:17 PM | Reply | Permalink
While access to capital is one of many issues facing economic development types, the prospect of states using their own or employee pensions has potential to help grow indigenous, sustainable industries. It's a lot more desirable than providing jobs that will be leaving for the third world before too long simply to keep the business or industrial park fully leased.
April 17, 2006 4:48 PM | Reply | Permalink
While access to capital is one of many issues facing economic development types, the prospect of states using their own or employee pensions has potential to help grow indigenous, sustainable industries. It's a lot more desirable than providing jobs that will be leaving for the third world before too long simply to keep the business or industrial park fully leased.
April 17, 2006 4:48 PM | Reply | Permalink
While access to capital is one of many issues facing economic development types, the prospect of states using their own or employee pensions has potential to help grow indigenous, sustainable industries. It's a lot more desirable than providing jobs that will be leaving for the third world before too long simply to keep the business or industrial park fully leased.
April 17, 2006 4:50 PM | Reply | Permalink
While access to capital is one of many issues facing economic development types, the prospect of states using their own or employee pensions has potential to help grow indigenous, sustainable industries. It's a lot more desirable than providing jobs that will be leaving for the third world before too long simply to keep the business or industrial park fully leased.
April 17, 2006 4:51 PM | Reply | Permalink
While access to capital is one of many issues facing economic development types, the prospect of states using their own or employee pensions has potential to help grow indigenous, sustainable industries. It's a lot more desirable than providing jobs that will be leaving for the third world before too long simply to keep the business or industrial park fully leased.
April 17, 2006 4:53 PM | Reply | Permalink
hey, newman, if you have 1000 dollars to put into my investment scheme, I will join it with my own 1000 dollars and invest it. The increase will be 10%, so the total after investment will be 2000 + 200== 2200 dollars.
I will give you back 800 dollars and I will keep 1400 dollars. I know you will not complain about losing money! After all, I did increase the total, and I know that a neoliberal like you cares only for growth. I grew the total amount. What more could a neoliberal ask for?
Anyone with common sense and a connection to the real world can look at the want ads for low end jobs ads like janitor and cashier and security guard
and see that those jobs pay exactly the same as they did 10 years ago in 1996. EXACTLY THE SAME-- 5 to 6 dollars an hour here in Houston texas. And that is exactly what they paid in 1996. I know because I look. You do not know because you do not look, or else you lie about it.
Housing and transportation has nearly doubled since 1996, as has food. Healthcare has gone up about 4 multiples.
But wages for low end jobs have remained the same, because the supply of illegal scab labor immigrants has gone up greatly.
As for neoliberal, corpwhorate shills who spread propaganda to support the illegal immigration scab labor scam, I think they ought to be tried for treason in a court of law.
Our constitution (as bad as it is) does define treason as aiding and abetting the enemies of America. The illegal immigration scab labor lobby has driven down wages for tens of millions of American citizens. Certainly they are the natural enemy of America.
Illegal immigraion/scab labor lobbyists and propagandists are aiding and abetting these enemies. Thus they are traitors and should be indicted and tried for treason.
My documentary/book in progress is at http://www.leftwingmediamachine.blogspot.com
April 17, 2006 5:06 PM | Reply | Permalink
What's amazing to me is the one-note nature of the anti-immigrant crowd. Any suggestion that we can create jobs and raise wages for both native-born and immigrant workers is rejected out of hand-- and the subject comes back to attacking the least powerful folks in the economy.
Here you have various organizations looking at the literally trillions of dollars controlled by state governments and asking how it can be used to build jobs for a whole range of people in the economy.
But you don't want to think about positive solutions, just scapegoating immigrants as the only approach worth discussing. Labor unions, religious leaders, and a range of other folks are promoting living wage laws and other approaches to use public money to raise wage standards in the economy. But again, no time for that when there's scapegoating to be done.
April 17, 2006 5:11 PM | Reply | Permalink
I'm not sure I like the idea of states investing taxpayer money in domestic firms. It strikes me as begging for cronyism and kickbacks to those in charge of oversight to look the other way while the money gets absconded with.
I'd like to see more subsidies put into the physical and technological infrastructure of states. Rather than paying out some big sum to a large internet firm, or investing money in them, I say tell them that you'll build them a high-speed data pipeline and give them a low cost, long term lease on using it as long as they hang around. Or if you're trying to attract firms that do lots of shipping, build them some rail or road right up to their site. That way, even if the firm decides to pack up and leave, you've still got the infrastructure.
Of course, it means you have to be smart about what infrastructure you build, so that you don't build a big white elephant for a dot com that disappears tomorrow, but because the assets are geographically fixed and non-liquid, there's fewer ways for firms to up and walk off with them.
April 17, 2006 5:30 PM | Reply | Permalink
nnewman said:
"What's amazing to me is the one-note nature of the anti-immigrant crowd. Any suggestion that we can create jobs and raise wages for both native-born and immigrant workers is rejected out of hand"
end quote///
I guess my little analogy went over your head. The analogy ACKNOWLEDGES that wealth is created. But the wealth is distributed to the upper class. You have cut low end wages by 50% -- or more -- in the last ten years. That is a heinous crime in my opinion.
As for creating jobs, OF COURSE you created jobs. But that is NOT the point. You need to create more jobs. Else, the increase in the labor supply does not match the labor demand. You know what happens when labor supply grows faster than labor demand? In those sectors where demand lags supply, wages go down. You and your overclass collaborators have flooded the low end job market with scab immigrant labor. THe result is that those low end jobs I spoke of have much lower wages 10 years later, when inflation is factored in.
BY DEFINITION, because these low end jobs have taken an effective 50% pay cut in the last ten years, you have FAILED TO GENERATE ENOUGH JOBS. If demand for these jobs have even maintained at the same level as in 1996, these jobs would be paying at least $9 an hour. But they pay $5-6 an hour. I know people -- legal Americans-- who are getting paid at that rate right now for those jobs.
Do I need to go over that again?
nnewman wrote:
"But you don't want to think about positive solutions, just scapegoating immigrants as the only approach worth discussing. Labor unions, religious leaders, and a range of other folks are promoting living wage laws and other approaches to use public money to raise wage standards in the economy. But again, no time for that when there's scapegoating to be done."
end quote////
Those at the top of such institutions are out for themselves. THat is why and how they got there.
THe operative word here is BLAME, not scapegoating.
B-L-A-M-E.
Talk about "one note." Scapegoating? Growth? Spare me...
I am surprised you failed to roll out the rest of the usual neoliberal fauxleft lexicon used in mass imigration propaganda, e.g., "rich," "diverse," "vibrant" etc etc etc.
THe overclass takes the blame, and so do the scab labor immigrants.
My documentary/book in progress is at http://www.leftwingmediamachine.blogspot.com
April 17, 2006 6:01 PM | Reply | Permalink
I think we all miss a critical point.If in fact we have eleven million plus immigrants in our country. We have no way to know how many are actualy employed. So what is our actual unemployment? What are they costing the taxpayers? How many use our emergency rooms and never pay? How many have come in the back door of our public school system? And if those working have driven down construction and technology wages ,as published, they do drive down our wage scale. When is the last time you received a ticket,and fine for a traffic violation? If the rule of law exists for us citizens, when will the rule of law be inforced for eleven million illegals?
April 17, 2006 6:04 PM | Reply | Permalink
nnewman said:
"What's amazing to me is the one-note nature of the anti-immigrant crowd. Any suggestion that we can create jobs and raise wages for both native-born and immigrant workers is rejected out of hand"
end quote///
I guess my little analogy went over your head. The analogy ACKNOWLEDGES that wealth is created. But the wealth is distributed to the upper class. You have cut low end wages by 50% -- or more -- in the last ten years. That is a heinous crime in my opinion.
As for creating jobs, OF COURSE you created jobs. But that is NOT the point. You need to create more jobs. Else, the increase in the labor supply does not match the labor demand. You know what happens when labor supply grows faster than labor demand? In those sectors where demand lags supply, wages go down. You and your overclass collaborators have flooded the low end job market with scab immigrant labor. THe result is that those low end jobs I spoke of have much lower wages 10 years later, when inflation is factored in.
BY DEFINITION, because these low end jobs have taken an effective 50% pay cut in the last ten years, you have FAILED TO GENERATE ENOUGH JOBS. If demand-supply ratio for these jobs had even maintained at the same level as in 1996, these jobs would be paying at least $9 an hour. But they pay $5-6 an hour. I know people -- legal Americans-- who are getting paid at that rate right now for those jobs.
Do I need to go over that again?
nnewman wrote:
"But you don't want to think about positive solutions, just scapegoating immigrants as the only approach worth discussing. Labor unions, religious leaders, and a range of other folks are promoting living wage laws and other approaches to use public money to raise wage standards in the economy. But again, no time for that when there's scapegoating to be done."
end quote////
Those at the top of such institutions are out for themselves. THat is why and how they got there.
THe operative word here is BLAME, not scapegoating.
B-L-A-M-E.
Talk about "one note." Scapegoating? Growth? Spare me...
I am surprised you failed to roll out the rest of the usual neoliberal fauxleft lexicon used in mass imigration propaganda, e.g., "rich," "diverse," "vibrant" etc etc etc.
THe overclass takes the blame, and so do the scab labor immigrants.
My documentary/book in progress is at http://www.leftwingmediamachine.blogspot.com
April 17, 2006 6:19 PM | Reply | Permalink
mnewman:Now that's really unfair.
It is just that throwing money at a problem probably won't work if a ton of money has been thrown at it and it hasn't worked already.
We would all like to see America succeed. Just because we disagree with you doesn't mean we consider you an enemy, That kind of behavior isn't professional, even if it is de rigeur aong the far left.
There has been an enormous amount of research and experimentation done on the competitive strategy of nations since the mid 1980's and Porters original work.
The problem isn't capital, and it is only vaguely related to immigration. The worst problem, as far as I can see, is that the people we have in charge of solving the problem, don't see it in their best interest to do so.
If you have been following my posts, you will know that I normally don't believe in attacking anyone. I have to make an exception in this case.
If we could get our intelligence agencies to seriously start investigating foreign espionage activities in our research and industrial areas, I think the mechanisms we have in place for promoting innovation would start to work again.
Don't get me wrong. I like Chertoff personally, his worst problem is that he inherited a department whose lineage derives more from the three stooges than the Untouchables.
But, from the 100 foot level, the evidence is pretty incontrovertable, America is getting cut to shreds by multiple competitive intelligence operations by many different organizations and nations, and as near as anyone can tell, nobody is doing anything about it, or worse, actively opposing anyone doing anything about it.
April 17, 2006 6:25 PM | Reply | Permalink
That last is the only real serious point. We can handle illegal immigrants, even the two fake congressional districts mentioned in the Gonzales hearing two weeks ago aren't all that tremendously important.
However, we can't handle any more loss of respect for following the law. Many third world countries have just as many talented peopple, and even more resources than America. The resaon they haven't succeeded in becoming rich is that they lack the cultural institutions that prevent corruption from getting out of hand.
We are seriously in danger of losing those institutions ourselves.
April 17, 2006 6:34 PM | Reply | Permalink
Around the world, "emerging markets" are hotspots for investment, so many states are treating these poor domestic areas as "domestic emerging markets" that just need a bit of patient capital to revive. nnewman
But the emerging market labor this investment capital is hiring goes for $.65/hr. Is that what we'll be paying the workers in our own "domestic emerging markets"?
Subsidies by any other name are subsidies, and in this case the worst of all types: undemocratic, non-transparent, and hidden from the electorate -- an electorate which will be surprised to find the kitty bare when it's time to pay state employees their pensions.
April 17, 2006 7:39 PM | Reply | Permalink
The US government is taking the long view. If it can develop third world markets american companies can sell more, and thus hire more workers (theoretically). It is assumed the illegal immigrants are sending enough money home to generate the income to make the purchases.
It is called capitalism. where every dollar you can get in circulation generates several more dollars, sorta like a viral infection.
Personally, I think there is a very good case for aiding Katrina refugees with this same argument. Unfortunately, apparently the Katrina victims advocates can't get past the victim mentality enough to present it.
Advocacy is always a tricky thing, but the Katrina victims advocates are amazingly inept, even for amateurs. It would be hard to believe they are even serious about it, except for the fact that they also appears to have no sense of humor at all.
April 17, 2006 10:31 PM | Reply | Permalink
"if they remained permanently unemployed the labor participation rate would be falling."
rfd, the labor participation rate is falling. That's one of the keys to understanding the official measures of unemployment. The number of or rather the percentage of folks participating in the labor market is down.
I know economies are dynamic- changing. But these past few years the labor market- at least the one for decent paying jobs- has been something like a zero sum game. It wasn't supposed to be like that. Wages going down even while productivity and corporate profits are going up. A lot of things are happening that don't seem to make sense. And they all feed into the dis-ease with the direction and shape of our economy.
Immigration is probably one source of that troubled economy for working people. One more- greater or lesser- source of insecurity and lowered expectations. I think we should be honest about that- and try not to explain it away.
April 17, 2006 11:50 PM | Reply | Permalink
On April 18, 2006 - 12:31am randyjg2 said:
The US government is taking the long view. If it can develop third world markets american companies can sell more, and thus hire more workers (theoretically). It is assumed the illegal immigrants are sending enough money home to generate the income to make the purchases.
It is called capitalism. where every dollar you can get in circulation generates several more dollars, sorta like a viral infection.
Personally, I think there is a very good case for aiding Katrina refugees with this same argument. Unfortunately, apparently the Katrina victims advocates can't get past the victim mentality enough to present it.
Advocacy is always a tricky thing, but the Katrina victims advocates are amazingly inept, even for amateurs. It would be hard to believe they are even serious about it, except for the fact that they also appears to have no sense of humor at all.
end quote///
From previous posts you stated that the displaced NOLA residents aren't entreprenuerial there won't benefit from many programs designated to create new businesses. You then say that the government is taking a long range view where if illegal immigrants take jobs and send money home (out of the US) this money will be used to buy goods made in the US and create jobs.
How do you know that the money sent out of country isn't being used to buy locally grown food and provide housing rather than buying iPods (which are probably actually manufactured in China)? Where are the US created jobs in this scenario?
Next you comment that the jobs that illegal immigrants are taking could be done by displaced Katrina residents. Theeir advocates are then ridiculed as being ineffective.
Isn't it the role of government to recognize the fact that it's better to have NOLA displaced doing a job, rather than just providing housing in hotels or cruise ships. If a party controls the Presidency, the Senate and the House and this scenario is observed that party should rightly come under fire. At least in a divided government, the other side will almost by default be forced into the opposite position.
Next I'm not sure why you included a comment about a lack of a sense of humor on the part of Katrina advocates. I seem to be missing the humor found in experiencing a hurricane/flood, an inept government response (city, state and federal), bodies of victims still being found in NOLA,etc
But then my humor tends to be in the Bill Cosby/Chris Rock/Bill Mahrer/John stewart range.
Finally in previous posts you stated that you liked Chertoff. Do you really trust this guy to respond well during a bird flu pandemic (and don't get me started on the fact that a lawyer, not an epidemiologist of infectious disease specialist is at the head of the bird flu response group)or a nucler/bioweapon attack?
In summary what is your solution to the immigrant issue?
How are US workers benefiting from dollars from low wage immigrants going out of the US to provide food, housing etc for poorer people in another country that's already recieving foreign aid?
What should/should have been done with NOLA victims?
What should NOLA advocates be laughing about?
Why don't you think Chertoff's an idiot?
April 18, 2006 6:08 AM | Reply | Permalink
Woot!
You really ought to get a little context here before going off. Ellen and I have debated Katrina in other posts before...this was a cross reference as much as a reply.
First of all I was explaining the rationale the government used for emerging markets in response to Ellens comment. I wasn't endorsing it, just providing context (I would be happy to explain the economics offline)
I never said NOLA residents weren't entrepreneurial. I said that many unmployed are not entrepreneurial, and an solution that is entrepreneurial, like financing startups, doesn't help those sort of people at all.
NOLA is very relevant to this thread, because, in a microcosm, it is about government funding for development, and. more specifically, how to use it effectively.
One of the conversations that I am having with various NOLA residents is how to get the government to invest in NOLA. RIght now, the approach has been mostly, "You owe us", either by sueing the Army Corps of Engineers, or by demanding various other entities, such as rebuilding funds or insurance companies pay.
I watch CSPAN every day for many years, and I watch the funding debates when they show up. The problem is that the arguements for funding are not getting traction, the various entities are not coughing up serious funding. In my opinion, thats because the approach used is "You owe us". Not that that that isn't true, just that the people doling out hte money do not find it compelling enough to actually dole out money. Bean Counters tend to respond poorly even to legitimate victim arguments.
And yes, I think that the NOLA advocates are highly inept in pursuing this approach when it is obvious it is not generating results. There are many other alternative approaches.
One alternative approach might be to show how the funding could generate a Return On Investment. Bean counters do respond to that.
What I was proposing was that the same argument that is used for "developing markets" could be used for NOLA; for all effects and purposes, NOLA is a developing market. It would however, require giving up the "victim" argument, at least for those advocating it.
The same thing applies to any state funding for jobs. If you have a clear ROI in mind, the approach works. The problem is, NOLA is a special case, and this approach is not applicable in general. THere is plenty of capital, there is just few opportunities with a demonstrable ROI.
There are many other alternative approaches that NOLA advocates could be taking. Take rally the voting public to support your lobbying efforts. NOLA advocates might try focusing on a little piece of funding at a time.
For example, try starting an "adopt a block" program, where inducements to the American public to support lobbying efforts are concentrated on small pieces of the whole problem at a time. Target a few congresspeople in key races, and get the American public to pressure them on this specific issue. You may not be able to get a major bill through, but I bet you can get hundreds of minor ones.
Another approach that has actually worked very well in many third world countries is called microinvesting. Unlike the big venture capital approach, microinvesting can actually generate good results for non entrepreneurs, but it requires much more community involvement. This is true in general for state funding of anything, lots of small investments help a lot morethan giant ones. This is especially true of non venture capital style funding.
As far as the sense of humor comment goes, that was literally a comment on the lack of serious effort at alternative proposals. However, it was also in response to some of the more off the wall alternatives I have proposed.
The idea was to give America a entertaining show while rallying the voters in support of NOLA issues. WHile these suggestions are NOLA specific, keep them in mind for general state fundiung proposals.
For example,I once suggested that NOLA, famous for it's voodoun community, announce that the voodoo priestess's offer to cast a curse that would cause anyone writing a letter in favor of funding to their congressperson to lose one pound for each letter (a la the movie "Thinner"). Considering the number of dieters in America, you might very well inundate some representatives. I mean, nobody believes in voodoo, but dieters will try anything once.
Some other suggestions included a reality show NOLA monopoly game (when you landed on a square and built a house, you built a real house.), and anti march (like the immigration marches, except that everyone stayed home and simply notified the press that they would have marched) and Girls Gone Economic (don't ask), and a whole raft of other proposals.
NOLA advocates can't just simply sit there and assert their rights to be made whole, however legitimate that complaint may be, they have to go out and make it happen.
April 18, 2006 11:36 AM | Reply | Permalink
Explanation appreciated. I am somewhat new to this type of forum and don't mind getting slapped punched or kicked around as I learn (as long as I get educated-which your post did). I agree that a business approach is required especially given a business oriented presidency, House and Senate. I agree that such an approach would be useful in getting Mexico to face its fiscal responsibility to its citizens who appear to have a long and proud tradtion of intellect (pyramids), crafts (leather work etc) that is being untapped due to an inept government in Mexico. Our own inept government seems to think that taking advantage of people willing to work for poverty wages is good business and has no detrimental effect. I position i find difficult to accept. I'm not an economist so I can't make a scientific argument against study A or study B ,but the diversity of findings of different studies seems similar to the classic quantum physics question posed by Schrodinger's cat in a box experiment. The experiment staes that once you make an observation in the experiment, you have changed the conditions of the study. Given the debates going on here quantum physics seems a lot more sane than economics.
Again I appreciate your response and look forward to more abuse in the future.
April 18, 2006 12:36 PM | Reply | Permalink
It's an amazing group of folks here, with an incredible range and depth of opinions. I am honored that they tolerate my poor efforts with good humor (mostly). Trust me, you can't do half as badly as I have at times.
But you do need to stay on topic, and the topic on this post is State funding for job growth and its effects.
Mnewman has posited that the funding by various agencies directly as investments in local domestic markets produces positive effects on job growth. I, more or less, believe that access to capital isn't an issue, the department of labor, for example, has plenty of funding it never uses because it cannot find projects worth investing in, even with very liberal criteria.
While it is true that most job creation is done by small businesses, those sort of businesses rarely provide jobs for the majority of the unemployed, who are looking for replacements for the blue or white collar jobs they lost, not for capital to start or grow their businesses. And the businesses that are funded, usually don't need to hire employees, they need capital for other reasons. If they needed to hire more employees, they would not need the capital in the first place.
The real problem is that the number of people working is at the right level for the market that is available to American businesses. If you want businesses to hire more people, what you need to do is find some way for those business to sell to a bigger market for what they produce.
The problem is finding those markets. America's markets are mature, the only real growth possible there is the equivalent of taking in each others washing. mnewman thinks throwing money at those markets will develop them further. I wish that was true. It isn't, it hasn't worked in the past, and nothing has changed since then. America needs to look outside for markets.
The US Trade Representative has been trying to make deals to gain access to other markets..NAFTA, etc. Needless to say, that hasn't been going too well. In practice, USTR's are responsible to agricultural states, mostly (they are the ones on the congressional committees the USTR takes seriously), and there isn't a heck of a lot of job creation potential in big agriculture.
So what other markets are there for US business to access?
The Pacific Rim countries have an internal market that American companies could sell to. Unfortunately, those markets are not available to American companies for various reasons, including the fact that if employment in those countries drops much below it's present rate, they will have a revolution.
Europes employement is slipping below that level, and the riots in France are the result. Which is why Europes markets aren't available to American companies either.
The oil countries, with all their oil wealth, are a good possible market to expand into, unfortunately, not only are the Chinese fighting us effectively for access, but in cases where we have intervened to make the oil wealth accessible to the ordinary people, such as in Iraq, the markets are still not accessible, due to political issues.
Right now, Iran is a good possibility, but, while the people would love to deal with America, the government is somewhat less than enthusiastic.
Which leaves only the third world poor as a potential market to exploit. Problem is, they are poor, and their leaders are not really interested in changing that, which means the US cannot give loans to those countries and have it filter down to the poor.
So the American government allows those poor to come here, earn money and send it back, where it will be used (hopefully) to expand their economy and thus provide the markets necessary for American job growth. Not really the best solution, but the best available.
However, the Chinese would like those markets as well, and have been encouraging friction between those immigrants and America via Chavez and his adherents as their proxy, well documented in various anti Chavez blogs.
In short, there really isn't a good solution.
April 18, 2006 6:49 PM | Reply | Permalink
Everyone's gone to the moon
April 18, 2006 9:29 PM | Reply | Permalink
I think job growth is strictly related with business environment. Of course, the state has it's own contribution to this but a major contribution is that of business environment. In the end we reach a long equation that leads us to the real engine for a healthy economy: small businesses. I think these investors need help and encouragement on their own.
Cash Advance
December 10, 2007 9:54 AM | Reply | Permalink