One might consider that branding a city state, such as Greensboro, NC, by advertising the same city state brand locally, at the price of $35,000, year after year, to the same residents of said city state, is quite ridiculous. That observation would be the “seen”. What about the “unseen”?
Branding the city state is an extension of a zero sum game. A zero sum game, known to power purveyors within the city state and advertised to the same residents of the city state as: “Economic development”.
Economic development, as deployed by directing politicos, through local and state economic development authorities, ends as a zero sum game as locality X merely wins while locality Z loses. The economic pie does not grow, rather one locale gains at the expense of another locale with the economic pie, the size thereof, remaining the same. For instance, building airplanes doesn’t occur in Seattle, Washington, it merely occurs in South Carolina. The same airplane is built, merely in a different locale. Seattle loses and South Carolina wins. But in the aggregate, the economic pie does not grow, rather one locale gains at the expense of another locale.
Moreover, the political exercise of “economic development” is an exercise of picking winners and losers as the exercise favors firm A over firms B - Z within, say, the widget industry. Hence firm A receives special treatment within the universe of widget producers, putting the remaining widget producers at a competitive disadvantage as they did not receive such special benefit. Firms B - Z, the losers, now at a competitive disadvantage to firm A may have to reduce output and consequently reduce inputs such as labor and capital. Firm A, the winner, now at a competitive advantage increases output and consequently inputs such as labor and capital due to their new artificially competitive position, with such increases, occurring at the expense of firms B - Z within the widget industry. Once again the economic pie does not grow, rather, winners gain at the expense of losers.
“Economic” incentives directed by politicos through their quazi-political branch known as economic development authorities must have resources to bestow upon the winners. Since government creates nothing, the resources bestowed must come from the private sector in the form of taxes. Therefore an incremental tax is levied against existing firms and households within locale L, that in turn, after bureaucratic overhead expense, is bestowed upon the winner.
The entire political process of this zero sum game of picking winners and losers through taxpayer funded prizes is framed as a cost/benefit winner. Enter political dupery and nitwitery. The sponsoring politicos through their quazi-political branch known as economic development authorities fashion an economic impact study. An economic impact study, the results thereof, better known to James and Jane Goodfellow as: A wild guess.
The wild guess aka economic impact study is based upon predictive economics which makes many, many assumptions about trends and patterns, none of which may occur. The predictive economics is then dipped in normative economics (the way things ought to be), then a miracle occurs, and the wild guess becomes framed as fact. Positive economics (if this, then these possible outcomes) is thrown out the window as the vast majority of economic impact studies fail to present the counterfactual. The counterfactual being: If the incremental tax levied, which represents the prize bestowed, never occurred, would the now non-taxed firms and households with additional resources available have created as much or more “economic impact”?
Returning to the proposition of branding the city state as an extension of a zero sum game: Is the branding merely an attempt to brand the city state’s economic development activity as a positive game? Stated alternatively, one takes a zero sum game, paints a smiley face on such, in a grand attempt to present the zero sum game as a happy little positive exploit. Hence the “brand” is no more than the city state’s particular brand of zero sum. One’s happy face “brand” might be that of aviation, internet service providers, biotech, green energy and so on. But in the end corporate welfare is not a happy face.
Saturday, November 8, 2014
Branding the City State
Labels: branding the city state, corporate welfare, Economic Development, economic development authorities, picking winners and losers, public choice theory, zero sum games
BS Economics, cum laude, Private and Public Sectors, 1979, West Virginia University, Morgantown, WV. Undergraduate Minor in General Insurance. Chartered Life Underwriter (CLU), Huebner School of Economics, American College, 1992, Bryn Mawr, PA. Life Underwriter Training Fellow (LUTCF), 1986, National Association of Life Underwriters, Washington D.C.. Currently enrolled and completed one half of Chartered Property and Casualty Underwriter (CPCU) from the American College. 38 years insurance industry experience.