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Economic Development: Last Week Tonight with John Oliver (HBO) - YouTube
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[4]
Jobs. Literally, the only reason
that anyone gets up before 11am.
[9]
Politicians care about jobs
more than anything else,
[12]
as you can tell from how often
they mention them.
[14]
These are the things I focus on.
Jobs, jobs, jobs--
[17]
Jobs, jobs, jobs.
[19]
Jobs, jobs, and jobs.
Period.
[21]
-Jobs... jobs... jobs.
-(AUDIENCE LAUGHING)
[26]
It's about jobs, jobs, jobs.
Good-paying jobs.
[30]
It's about jobs.
[31]
Jobs, jobs, jobs, and more jobs.
American Jobs.
[34]
Politicians seem to think
that jobs are like Beetlejuice.
[37]
If you just say the word
a magic number of times,
[40]
eventually they'll just pop up
out of nowhere.
[43]
Now, more specifically tonight,
I'd like to talk about
[45]
one of the ways that politicians
try to create jobs.
[47]
Economic development incentives.
[49]
And I know that
that doesn't sound interesting.
[52]
Wait, wait, what are you doing?
[53]
You're putting me
picture-in-picture?
[56]
Is that<i> Entourage: The Movie?</i>
[59]
Fine, you know what,
switch over the audio,
[61]
listen to the first line.
You'll be back.
[64]
I may have to jerk it
before we even get there.
[67]
-(AUDIENCE LAUGHING)
-Oh! Oh, how about that?
[71]
All of a sudden, a show about
economic development
[74]
doesn't seem like
the worst thing
[75]
you could be watching, does it?
[76]
-(AUDIENCE LAUGHING)
-So... (CLEARS THROAT)
[79]
-As I was saying...
-(AUDIENCE CHEERS)
[82]
Economic development incentives
are essentially when state
[86]
and local governments
offer perks to companies
[88]
to entice them to build
or expand in their area.
[91]
Here in New York
[92]
there is a program called
StartUp New York
[95]
which launched with some pretty
astounding tax breaks.
[98]
AD ANNOUNCER:<i> Start-Up New York
creates zero tax zones</i>
[100]
<i> for new businesses
for ten years.</i>
[102]
<i> Zero property tax,
zero corporate tax,</i>
[105]
<i> zero business tax,
and zero income tax.</i>
[109]
Wow. Zero property, corporate,
business, and income tax.
[115]
(SLIDE WHISTLE ASCENDING)
[116]
And I believe that that sound
you just heard
[118]
was Donald Trump
getting an erection.
[119]
(AUDIENCE LAUGHING)
[121]
Wait for it. Don't wor--
Wait for it...
[122]
-(SLIDE WHISTLE DESCENDING)
-It's gone again.
[124]
-(AUDIENCE APPLAUDING)
-See ya next year, little buddy.
[127]
And look,
it's not just New York.
[131]
All 50 states
offer some kind of incentives,
[134]
like tax-breaks
to attract companies,
[136]
and the argument is,
that they attract employers,
[138]
which attract jobs,
which lead to spending,
[141]
which creates more jobs
and so on, and so on, and so on,
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and many places have
bought into this, hard,
[146]
trying to outbid one another
for businesses.
[148]
Indiana even once took out
attack ads on other states,
[152]
like this billboard, which read,
"Illinnoyed by higher taxes?
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Come to Indiana,
a state that works."
[158]
And that's pretty aggressive,
although, it's actually much
[161]
tamer than their
original billboard,
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"Just Arkan-saw your tax bill?
[165]
Ida-hope you like
our tax breaks.
[166]
Because if you Colora-don't,
[168]
we'll Conneti-cut
your fucking balls off."
[170]
(AUDIENCE LAUGHING)
[171]
And if a company is big enough,
[174]
it can even start
a bidding war itself.
[176]
That is actually happening
right now, with Amazon.
[179]
They are planning to build
a second headquarters
[181]
somewhere in North America
[183]
and they are making
governments bid for it.
[185]
They even released eight pages
of instructions for candidates
[188]
telling them to "think big
and be creative,"
[191]
which led many cities
to do stupid shit like this...
[195]
NEWS REPORTER 1:<i> Overnight,
the Big Apple</i>
[196]
<i> looking more like an orange.</i>
[198]
<i> New York City mayor,
Bill de Blasio</i>
[200]
<i>lighting up the city in, quote,
"Amazon orange."</i>
[202]
The city of Birmingham is using
giant Amazon boxes
[206]
<i> to try to get
Amazon's attention.</i>
[208]
NEWS REPORTER 1:<i> Stonecrest,
Georgia offering to create</i>
[210]
<i> a new town of Amazon, Georgia.</i>
[213]
They would create a new town
and name it "Amazon."
[218]
You know, to compete,
I'm not surprised
[219]
that Omaha, Nebraska didn't
offer to let Jeff Bezos
[222]
kill any three people he likes.
[224]
'Cause you know he would.
Look at him, he wants it so bad.
[228]
It's the only thing
he can't have and he wants it.
[232]
And numerous mayors
made direct appeals to Amazon
[235]
with videos ending in versions
of the same bad joke.
[239]
Hey Alexa, where should Amazon
locate HQ2?
[243]
ALEXA:<i> Hmm. In Frisco, Texas.</i>
[245]
Alexa, where is
the most interesting company
[248]
in the world gonna locate?
[251]
ALEXA:<i> Obviously,
Washington, DC.</i>
[253]
So, Alexa,
where is the best place
[255]
for Amazon to locate
its second world headquarters?
[258]
ALEXA:<i> Danbury, Connecticut.</i>
[260]
I told ya so.
[262]
You know, my one and only worry
with all of those ads,
[264]
and I mean this sincerely, is,
are they almost too hilarious?
[269]
But those stunts
are just window-dressing.
[272]
What Amazon cares much,
much more about,
[275]
as they mentioned
in their instructions 21 times,
[279]
are incentives.
[280]
And while few places
are revealing what they offered,
[283]
we do know that New Jersey
reportedly offered
[285]
seven billion dollars
in tax breaks,
[287]
which is an insane amount
that other places
[291]
may now have to compete with,
and think about what that means.
[293]
That could mean billions
of tax dollars
[295]
that would not be collected
for things like roads,
[298]
or schools, or hospitals,
and Amazon already has
[302]
more money than it knows
what to do with.
[304]
How else could you explain
the existence of<i> Goliath?</i>
[307]
A show that, and this is true,
literally nobody has ever seen.
[313]
Nobody. No human.
No animal. Nobody.
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-Nobod-- No one.
-(AUDIENCE APPLAUDING)
[320]
Does it even exist?
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If you make a show
and no one watches it,
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does it exist? Discuss.
[325]
And...
And that is the thing here.
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We give companies a lot of money
through these incentives.
[331]
By one estimate, in 2015
they cost state
[334]
and local governments
45 billion dollars.
[337]
And that money can go
to some questionable projects.
[339]
For instance, a few years ago,
[340]
Kentucky took a big swing
on this...
[343]
A full-size replica
of Noah's ark
[346]
is drawing thousands of visitors
to Williamstown, Kentucky.
[349]
REPORTER 2:<i>
This is the Ark Encounter.</i>
[351]
<i> A chapter from Genesis
told on a $100 million budget.</i>
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<i> Four floors of Noah,
his family,</i>
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<i> and beasts great and small.</i>
[361]
<i>The project received $18 million
in Kentucky tax incentives.</i>
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Eighteen million dollars
[368]
of tax breaks
for a gigantic ark museum.
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And I'm not saying that is
inherently a bad idea,
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I do kind of want to see
this thing,
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especially as its website
genuinely has a section
[378]
devoted to the question,
"What about all the manure?"
[383]
The answer, apparently, is,
[385]
"Slatted floors
or multiple-level cages,"
[388]
which is really
not a good answer,
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'cause you do not want to be
the animal on the lowest level
[393]
of that ship.
[394]
And while the ark
clearly created some jobs,
[397]
there were some caveats
to those positions...
[400]
REPORTER 3:<i> Critics complain
of discrimination in hiring.</i>
[403]
<i> Only Christians,
no gays or lesbians,</i>
[406]
<i> and single people have to sign
a chastity pledge.</i>
[409]
-(AUDIENCE GASPS)
-Oh, come on!
[412]
Aside from the homophobia,
[414]
chastity is a pretty weird rule
to put in place for a museum
[417]
that's pretty much a gigantic
replica of a floating fuck-zoo.
[421]
They... they weren't brought in
two by two
[424]
so that everyone
would have a swim-buddy,
[425]
they were on that boat
to fuck.
[429]
(AUDIENCE APPLAUDS, CHEERS)
[431]
To fuck!
[435]
But the justification
[436]
for taking a gamble
on a gigantic ark,
[438]
was that it would be
a boom to the whole area,
[441]
and to hear one
local official tell it,
[443]
the economic impact
has been underwhelming.
[446]
The ark's success has not had
the ripple effect
[448]
many hoped it would.
[450]
REPORTER 4:<i> Downtown
Williamstown,</i>
[451]
<i> which was expecting
increased car and foot traffic,</i>
[454]
<i> has almost as many
empty store-fronts</i>
[456]
<i> as occupied store-fronts.</i>
[458]
REPORTER 5: What's it meant
for downtown Williamstown?
[460]
Nothing.
[462]
I don't wanna sound negative
in this interview, but...
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there's nothing here.
[467]
Yeah,
and that kind of makes sense
[468]
because once you've spent
three hours walking around
[470]
a wooden boat with
sexually frustrated tour guides
[473]
and haunted by the mental image
of a miserable zebra
[476]
neck deep in shit,
[477]
'cause apparently decks
were assigned alphabetically,
[481]
you're probably gonna
skip lunch in town.
[485]
And look, a well-designed,
closely monitored program
[488]
with clear goals
might make sense to an area,
[491]
but too often the terms
are extremely lax.
[494]
Some don't require
that jobs be created at all,
[497]
and some require
almost laughably few.
[500]
Remember StartUp New York?
Zero taxes for a decade?...
[504]
-(SLIDE WHISTLE ASCENDING)
-Oh shit, I'm sorry. I'm sorry.
[508]
Don't think about it,
I'm sure it will pass.
[510]
That program
is hiring requirements--
[513]
That program's hiring
requirements
[514]
were that you create just
one new job a year,
[518]
and the state
recently considered
[519]
scaling that back to one
new job in the first five years.
[524]
And sometimes these incentives
are given out
[525]
even when
they may not be necessary.
[527]
Take a look
at Fargo, North Dakota.
[529]
-(SLIDE WHISTLE DESCENDING)
-You know what, he's not wrong.
[531]
He's not wrong and I knew
that would do the job.
[534]
Fargo gave a tax break to FedEx
[536]
for moving a facility
to their city, but why?
[539]
Did they really need to?
[541]
'Cause just listen to what
happened when one
[543]
city council member
asked that very question
[546]
of a FedEx representative.
[548]
Mr. Wilson, if you don't get
this exemption,
[550]
will you still move to Fargo?
[551]
-MR. WILSON: Yes, sir, we will.
-Okay.
[553]
Yet, ten minutes later,
[555]
the council voted
to give FedEx that exemption.
[558]
Why?
[559]
Also, if someone wants to
willingly move to Fargo,
[561]
you don't offer them
tax incentives,
[563]
you simply offer them
a full psychological work-up
[566]
that starts with the question,
"Who did you murder?
[569]
We'll still let you live here,
but we do need to know."
[573]
(AUDIENCE LAUGHING)
[574]
And then...
Then there are programs
[576]
narrowly set up to encourage
a particular industry to grow.
[579]
Which can sound great,
but may not lead
[582]
to good, permanent jobs.
Take film and TV incentives.
[586]
At some point
in the last couple of decades,
[588]
nearly every state decided
that they wanted to be
[591]
the next Hollywood, and now,
31 states
[593]
have incentive programs
for film or TV.
[596]
The problem with that is,
if you are one of them,
[598]
you have 30 other states
competing with you... hard.
[602]
And because film productions
are portable,
[604]
if you try and scale back
your incentives,
[606]
they'll just go
wherever a better deal is.
[608]
Just listen
to this movie producer
[610]
who has taken advantage
of multiple states' incentives.
[613]
I would never make a movie
where I didn't get an incentive,
[616]
and I don't ever intend to.
[618]
But at the end of the day,
if there's an incentive...
[621]
it's good for me.
[623]
-And look...
-(AUDIENCE LAUGHING)
[625]
He's not wrong,
I mean yes,
[627]
he looks like every woman's
worst ex-boyfriend,
[629]
but he's-- he's not wrong.
[631]
It is not his job to worry
about whether his incentives
[634]
are good for the states.
[636]
It is his job to, I'm assuming,
refer to sushi as "sush,"
[639]
because he definitely does that.
[642]
But it should be someone,
someone's job,
[646]
to worry about the effect
of these programs.
[648]
And on some occasions
when states have done that,
[650]
the news they got was not great.
[652]
For instance,
Louisiana found that
[654]
for every dollar
it spent on its film program,
[656]
it generated just 22 cents
of tax revenue.
[659]
Which sounds bad,
but which is still better
[661]
than Maryland,
which made just 10 cents
[664]
for every dollar spent,
which is still better
[666]
than Connecticut's program,
which returned only
[668]
seven cents on the dollar.
[670]
That's like putting a dollar
into a vending machine,
[673]
and getting a single,
yellow Starburst in return.
[676]
At some point,
what you're getting out
[678]
is not worth what you're
putting in.
[680]
And defenders
of economic incentives will say,
[682]
that's just a fraction
of the broader economic benefit
[685]
that they bring.
The problem is,
[687]
there's not much evidence
for that.
[689]
And I know that accounting
for the total economic impact
[691]
of anything is tricky,
but we are gambling
[694]
billions of dollars
on little more than faith.
[697]
And even basic information
can be really hard to come by.
[701]
One study found that
three quarters
[702]
of major state
development programs
[704]
don't even disclose actual jobs
created or workers trained.
[708]
So, we're basically throwing
money down a hole
[711]
and hoping it bring us
prosperity,
[713]
which is the exact
business model
[714]
of a fucking wishing well.
[716]
(AUDIENCE LAUGHS)
[718]
And to see this at perhaps
it's most pointless,
[720]
just look at Kansas
and Missouri.
[722]
They've offered competing
tax breaks
[724]
to businesses for years.
[725]
Which has made things
particularly interesting
[727]
in one metro area.
[729]
So,
I'm in Kansas City, Missouri.
[731]
That's it behind me. Uh,
there is Kansas City, Kansas.
[735]
Two states, one metro area,
but those states offer subsidies
[738]
for job creation. Create a job,
you get a tax break.
[741]
So, what do businesses do?
[742]
A Missouri business will move
some employees
[744]
over to Kansas City, Kansas
and claim a tax break,
[748]
move 'em back,
claim another tax break.
[750]
It's true.
[751]
For instance,
Kansas City, Missouri
[752]
lost corporate offices
for all these companies
[755]
to Kansas City, Kansas
which, in turn,
[757]
lost offices
for all these companies
[759]
to Kansas City, Missouri.
And that isn't creating jobs
[763]
any more than moving your couch
from the bedroom
[765]
to the living room
is creating fucking furniture.
[769]
And this war has come
at a real cost.
[772]
A local foundation has studied
[773]
two state-level
incentives programs
[775]
and estimates that since 2009,
around 6,600 jobs
[779]
have moved from Missouri
to Kansas.
[781]
While around 5, 500 jobs
[783]
have moved
from Kansas to Missouri.
[785]
Meaning there's been a net-gain
of around 1,100 jobs
[788]
on the Kansas side of the line
and a combined cost
[790]
to the two states of
$331 million
[795]
in lost tax revenue, and
think about that for a second.
[798]
You could create a program
where the first 1,100 people
[802]
to move from-- to Kansas City
from Missouri
[804]
would each get a Ferrari
which they could then
[807]
drive around a giant pile
of $30 million
[810]
that the state had set
on fire
[812]
and you'd actually be
fiscally responsible,
[814]
because you would have
saved the area $20 million.
[818]
Look, it is pretty clear
that economic development
[822]
needs to be done
in a much smarter way.
[824]
And I don't fully blame
the companies for this.
[826]
Because if governments
are going to offer
[828]
ridiculous incentives,
they are going to take them.
[831]
So, governments need to
hold themselves,
[834]
and companies,
more accountable.
[836]
And if companies aren't
producing what they promised,
[838]
we need a system to claw
our money back.
[840]
But to find that out,
we're going to need
[843]
much more oversight
over these programs
[846]
and what we're getting
in return.
[847]
Although, I will tell you
[848]
one thing that I know for sure
we got in return,
[851]
the<i> Entourage</i> movie.
[853]
That got a $5.8 million
tax credit from California
[858]
and where else were they
going to film<i> Entourage?</i>
[862]
Idaho? So,
California, please know
[866]
that you indirectly had a hand
in producing a movie,
[868]
which, may I remind you,
[869]
had this,
for it's very first line...
[873]
I may have to jerk it
before we even get there.
[876]
You know what,
I've got to say this,
[878]
"Congratulations,
Kentucky Ark Museum,
[880]
because somehow, you've become
the second worst
[883]
tax-payer subsidized
fuck-boat in this story."
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