I'm for it.
As always there are tons of links embedded in the article, so check out the link.
http://www.slate.com/articles/business/moneybox/2015/03/obama_s_stadium_plan_would_limit_public_financing_of_sports_complexes_could.single.html
Quote
How to Stop the Stadium Wars
Cities and suburbs compete for the privilege of wasting millions on new sports complexes. Obama has an idea to end the madness.
By Henry Grabar
In 2013 the city of Atlanta lost its baseball team to one of its suburban neighbors, the more prosperous and populous Cobb County. The Braves won't move for two more years, but in the meantime, one Georgia state senator from Atlanta has come up with a crazy idea: Expand Atlanta's municipal boundary by nearly 2 miles into unincorporated Cobb County, and annex the 60 acres where the team is building its stadium.
The proposed land grab is about as likely as 81-year-old Hank Aaron starting this season in right field, but it might not be any less reasonable than the proposal from the Braves that Atlanta rejected: Hand over $77 million in real estate and float a $200 million municipal bond issue to rehabilitate a ballpark still in its teenage years.
What happened in Georgia was a lesson in the business of American pro sports. Like the San Francisco 49ers—the ones now playing in Santa Clara—the Braves took advantage of a highly fragmented metropolitan area to pit city and county against each other in a kind of prisoner's dilemma. After more than a year negotiating with both governments, the Braves got what they wanted from Cobb: $397 million in public money for stadium construction.
At the center of such stadium bidding wars are government bonds, which, in Cobb County, will be paid off mostly by homeowners. For a ballpark in their backyard, they'll fork over $8.6 million in property taxes every year for the next three decades. They'd better hope the Braves stick around longer than the 20 years they will have spent in Atlanta's Turner Field.
Or better yet: The next time the Cobb County Braves decide they're ready to spin the Wheel of Taxpayer Subsidy, we should all hope the whole practice has become illegal.
That's what the Obama administration proposed in its budget last month: to end the issuance of tax-free government bonds for professional sports facilities, a practice that has, according to research by Bloomberg, siphoned $17 billion of public money into arenas for NFL, MLB, NBA, and NHL franchises over the last 30 years and cost Americans $4 billion in forgone federal taxes on top of that. It's too late for residents of Cobb County, but Congress might yet save the rest of us some dough.
Extortion at the hands of our sporting oligarchs is, of course, a popular source of outrage. The U.S. has enough major league sports stadiums built with public money to fill an NCAA bracket. The ascent of stadium costs and the financial myopia of public officials ensure that the contest will stay lively for some time to come.
So how did we wind up in this situation? Local authorities have long used tax-exempt bonds to raise money for certain private uses—whether factories, train stations, or home mortgage loans—in addition to schools, sewers, and other infrastructure projects. In most cases, the ensuing economic growth was at least intended to pay back the municipal investment. Sports stadiums were no different: Governments could raise money in exchange for a share of future revenue.
After an initial attempt in the 1960s to steer government bonds toward true public works, Congress placed a provision in the 1986 Tax Reform Act that seemed sure to kill tax-free, no-limit stadium deals. It had exactly the opposite effect. Essentially, qualifying projects now need either to serve public uses or to rely on public funding. With pro sports facilities, the former is obviously impossible, so the latter, though politically improbable, has become the way billionaire team owners retain access to cheap government financing. Cities and counties wound up borrowing more for their teams than ever before.
It's been clear for decades that new stadiums don't bring the business they promise, let alone enough economic activity to justify the investment. It's a ruse, but it works because public officials are more worried about being blamed for the loss of a team in the short run than, say, for failing public schools in the long run. And it works because the country has more big cities and rich counties than sports teams in each league, so that even if Cincinnati taxpayers wise up, their counterparts in Austin will step in.
The professional sports industry demands consumer loyalty but shows little in return. In Bloomberg, Aaron Kuriloff and Darrell Preston illustrate how smoothly the tax-money merry-go-round spins: "In March 1984, the Colts left Baltimore one snowy morning for Indianapolis and a new $95 million stadium built partly with public debt. Baltimore lured the Browns from Cleveland after the 1995 season with a $229 million muni-bond-financed structure. To land an expansion team in 1998, Cleveland provided a $315 million publicly financed building."
But with only two intercity moves in the last 17 years of the NFL, MLB, and NHL (NBA teams have been more mobile), it's clear that the era of big moves has largely made way for a period of intra-metropolitan battles. These face-offs don't grab national headlines, require new jerseys, or motivate big fan protests. But they cost just as much money.
Atlanta is just one recent example. When voters on Long Island rejected a $400 million renovation of the Nassau Veterans Memorial Coliseum, New York Islanders owner Charles Wang announced he would move the team across the county line to Brooklyn's new Barclays Center, which was able to pick up hundreds of millions of dollars in subsidies. The 49ers spurned an offer from San Francisco and instead moved some 40 miles down the peninsula to Santa Clara.
Obama's budget isn't the first national political effort to impose federal taxes on stadium deals. New York Sen. Daniel Patrick Moynihan proposed ending the loophole in 1996, and it's been kicked around in committee since. But with groups like the Koch brothers' Americans for Prosperity now opposing stadium deals at the local level, Obama's idea has a chance of gaining bipartisan support.
Still, it wouldn't stop cities from paying for stadiums. The last time Congress made public financing more onerous, in 1986, the result was a disaster: Cities jumped to meet the new, harsher terms, opening a three-decade stadium construction spree.
One solution, instead, could be to change the way teams operate, either by bringing antitrust suits against the leagues (which sports economist Andrew Zimbalist has suggested) or by allowing cities to exert greater control over their brands (as law professor Mitchell Nathanson has imagined). Should names like the Irving Cowboys, the East Rutherford Giants, and the Orchard Park Bills be forced upon suburban squads? In his 2000 book Leveling the Playing Field, Harvard Law professor Paul Weiler fantasizes about a nationwide union of cities that could lock out pro sports teams to obtain a league-imposed "stadium cap" on taxpayer subsidies, which would effectively end bidding wars.
Stadiums may be the brightest stars in our constellation of subsidized businesses, but they are not the biggest. The main event, for subsidy reformers, is the $80 billion per year in tax breaks and incentives that cities, counties, and states use to lure and retain corporations of all stripes. In Camden, New Jersey, the state is providing a $315,000 subsidy per job. If Tesla's growth projections in Nevada fall short—as they so often do in these deals—the state could wind up paying $400,000 per job. It's a destructive cycle for every function of government and a zero-sum game.
That's a crisis that tests the limits of federalism. If we're going to meet it, we might as well warm up with a little baseball.
Henry Grabar writes the Dream City column for Salon and the Science of Cities column for Next City. His work has also appeared in the Guardian, the Atlantic, and the Wall Street Journal.
Quote from: jimmy olsen on March 18, 2015, 08:14:48 PM
In 2013 the city of Atlanta lost its baseball team to one of its suburban neighbors, the more prosperous and populous Cobb County.
:nelson:
Quote from: Peter Wiggin on March 18, 2015, 08:32:04 PM
Quote from: jimmy olsen on March 18, 2015, 08:14:48 PM
In 2013 the city of Atlanta lost its baseball team to one of its suburban neighbors, the more prosperous and populous Cobb County.
:nelson:
From a public policy standpoint, the issue isn't whether the Brave play within the city limits of Atlanta or in the suburbs, it's the taxpayers of either Atlanta or Cobb County being on the hook for the stadium costs.
While personally I'm opposed to the public funding of stadiums for professional sports teams, I don't really like the idea of the federal government telling states and municipalities what they can or can't issue bonds for.
Quote from: dps on March 18, 2015, 08:41:05 PM
While personally I'm opposed to the public funding of stadiums for professional sports teams, I don't really like the idea of the federal government telling states and municipalities what they can or can't issue bonds for.
That's the dilemma. If the voters vote in favor, then is it right?
Yes x 1000
Not on a national basis, no. I'd be in favor if it were banned in Virginia, but I'd leave it up to State governments. Public funding of professional sports venues is almost always stupid. The only time it would make sense is in situations when the government entity doing the funding has some potential to actually turn a profit from it, which has happened in a few narrow scenarios when the arena/stadium has created a thriving downtown business district with a strong tax base, and where the city keeps the venue booked all year with various concerts, conventions, events etc. But the typical professional sports venue is a gift to the team and a big time loser for the municipal government that buys into it.
That kind of legislation would be more inline with regulating interstate commerce than most of the things the Feds regulate I suppose.
Quote from: MadImmortalMan on March 18, 2015, 09:09:15 PM
That's the dilemma. If the voters vote in favor, then is it right?
I guess the dilemma is the setting cities off against each other. I mean all businesses do it though. Seems weird to single out sports franchises, except for maybe MLB with their anti-trust exemption.
No. But pro sports should be nationalized.
If some place wants to spend money to generate civic pride or whatever, I don't see any reason to stop them.
Quote from: Admiral Yi on March 19, 2015, 08:16:24 AM
If some place wants to spend money to generate civic pride or whatever, I don't see any reason to stop them.
Well if it really cost the Feds 4 Billion dollars I can see why they may want to do something about it. I mean presuming 4 billion is actually still a lot of money.
Quote from: OttoVonBismarck on March 18, 2015, 11:02:44 PM
Not on a national basis, no. I'd be in favor if it were banned in Virginia, but I'd leave it up to State governments.
Yep.
Quote from: Grey Fox on March 18, 2015, 09:10:38 PM
Yes x 1000
Are you just hoping that we stop building sports stadiums so all our awesome teams move to Canada? :hmm:
Beeb already ripped out the heart of my city with the theft of the Thrashers. :(
No, well just one.
#BringtheExposBack
This is a good example of why I am not much of an economic libertarian anymore.
The obvious libertarian answer is that you should let municipalities do as they wish - if people want to give huge piles of cash to sports teams, let them. Why should anyone interfere with that?
However, this is a *classic* case of a prisoners dilemma. We make decisions at some local level, but the market is NOT local. This gives the owners of sports teams a massive negotiating advantage on an emotional and political issue, which allows them to then divorce themselves of what would normally be considered perfectly standard business decisions. This then warps the economics of professional sports.
The net effect of all of this is something that if we all stepped back and looked at it holistically nobody would agree is a reasonable outcome. We end up having public funds paying exorbitant salaries to athletes, team owners making outsized profits because they don't actually have to bear one of the largest costs of running their business, and all of it being funded not by the people who actually want to watch or go to these events, but rather the taxpayers! That is not libertarian or free market economic theory at all!
This is no longer an economic decision. The question of whether the Braves should be in Atlanta or Cobb county is not being driven by business concerns, but rather by *political* concerns. At that point, this is not longer a question of economics at all, but one of politics. And if the owners want to try to extract massive funds from the state by getting into politics, then I don't at all think we should be holding to some faux allegiance to "free market" ideology. Free markets don't involve politics and state funding of entertainment.
Libertarian theory would demand that if some team wants a $400 million stadium, then they should be able to support that cost by selling their product - not by blackmailing politicians into funding it for them.
The same holds true, IMO, for any public subsidizing of private business, btw. If we are going to allow that, then we've already thrown out the free market principles that would normally drive business location. And we should absolutely then make systemic rules and choices that cross local boundaries so that everyone can agree on standard to avoid these kinds of prisoners dilemmas that allow business to play one community against another to the detriment of all of them.
I don't see how blackmail comes into it.
It seems like a perfect case of the free market in operation. Franchise owners possess a finite resource, and auction off a part of it to those willing to pay for it. If it's a bad deal for the city building a stadium, then that's on them.
Quote from: Admiral Yi on March 19, 2015, 10:09:34 AM
If it's a bad deal for the city building a stadium, then that's on them.
Yep. Boy are city governments stupid.
However if the Feds are being screwed by these deals in someway, I can see why they may want to re-arrange things to keep them from being screwed out of billions of tax dollars. But that is all they should do, and indeed, it looks like that is all they will do.
Of course it is blackmail. You pay for something that is part of my own business costs, or we go somewhere else.
And this argument is not being made to the people who actually have to pay, it is being made to politicians. It is basically "Pay up, or be the guy who lost the beloved home team to whoever".
That is not a free market in operation, since the decision makers are politicians, not consumers.
If the Braves example was a free market decision, it would be a matter of the owners saying "Hey, we think moving to Cobb Country will result in more people coming to the game and hence we can make more money moving their which justifies the cost of us building a new stadium". Not "Hey, if you don't build us a new stadium, we are moving to Cobb County who WILL build us a new stadium on the backs of the taxpayers".
It is no more a free market than public service unions negotiating with politicians about how much their votes are going to cost is a free market.
You can't have a free market if the people who are consuming the product are not the people making the decision, and the decision isn't even being made for market reasons. The politicians who are making the choices are doing so for political reasons.
Quote from: Valmy on March 19, 2015, 10:14:39 AM
Yep. Boy are city governments stupid.
However if the Feds are being screwed by these deals in someway, I can see why they may want to re-arrange things to keep them from being screwed out of billions of tax dollars. But that is all they should do, and indeed, it looks like that is all they will do.
The Feds are screwed out of tax revenue on all state and municipal bonds.
Quote from: Berkut on March 19, 2015, 10:15:54 AM
Of course it is blackmail. You pay for something that is part of my own business costs, or we go somewhere else.
So? The place where they currently play doesn't have any rights over the team. They have a stadium lease, and that's all.
Quote from: Valmy on March 19, 2015, 10:14:39 AM
Quote from: Admiral Yi on March 19, 2015, 10:09:34 AM
If it's a bad deal for the city building a stadium, then that's on them.
Yep. Boy are city governments stupid.
Anytime you have a systemic problem which the root of seems to be "Gee, all these groups are stupid" it is pretty likely that the core problem really isn't that some entire group are all stupid.
It is almost certainly that you have perverse incentives leading to businesses being able to manipulate the system to unload their costs. It is easy to just say "Yeah, the politicians are dumb" but mostly they are not dumb. They are reacting to their own sets of perverse incentives.
Quote from: Admiral Yi on March 19, 2015, 10:16:19 AM
The Feds are screwed out of tax revenue on all state and municipal bonds.
If the team built that stadium the Feds would get the money, but since they blackmailed a city to do it for them the Feds get nothing. I am not sure the same dynamic exists for other bond issues.
BTW, in answer to the question, no, I do not think it should be banned.
However, I do think there would be nothing wrong to come up with systemic regulations of public funding of private businesses in order to mitigate the ability of businesses to use the political process to play political actors against one another.
This is because I do believe in a free market, and it is NOT the free market at work when business blackmail communities to subsidize them.
Quote from: Valmy on March 19, 2015, 10:19:04 AM
If the team built that stadium the Feds would get the money, but since they blackmailed a city to do it for them the Feds get nothing. I am not sure the same dynamic exists for other bond issues.
Airport construction. Roads and water lines to a greenfield factory or office.
Further to berkut's point all the pro sports leagues are to some degree or another cartels, with de facto or even de jure partial exemption from antitrust law. In that economic and institutional context, Berk's concerns about the lack of a free and fair market are well taken.
Quote from: Admiral Yi on March 19, 2015, 10:51:16 AM
Quote from: Valmy on March 19, 2015, 10:19:04 AM
If the team built that stadium the Feds would get the money, but since they blackmailed a city to do it for them the Feds get nothing. I am not sure the same dynamic exists for other bond issues.
Airport construction. Roads and water lines to a greenfield factory or office.
Where is the blackmail here?
Quote from: Valmy on March 19, 2015, 11:02:40 AM
Where is the blackmail here?
That's the same question I asked before.
Quote from: Admiral Yi on March 19, 2015, 11:05:55 AM
Quote from: Valmy on March 19, 2015, 11:02:40 AM
Where is the blackmail here?
That's the same question I asked before.
If the City wants to pay up to keep their stupid sports franchise from leaving that's fine but I do not see why the Feds are obligated to not tax it. That franchise is probably not leaving the US. Airports and utilities are something else.
I think my biggest point is simply that the "free market" "free market" mantra is just kind of silly when it comes to issues like this.
The free market is an economic market. It is a principle that applies to the relationship between consumers and business, and the desire to allow them to conduct their transactions with as little interference as possible, since it is assumed that interference distorts the fundamentals of what makes a free market efficient.
The decision about where to locate a business, and the tax implications and costs of building said business is a relationship between businesses and politicians. It is a not a market decision at all, except in the most tortured definition of the term. I guess you can argue that the business owner has a resource they want to sell to communities (in that they provide a tax base, jobs, etc., etc.) and they should be allowed to market that resource. But that is a pretty tortured concept of a market, and given the political implications of these decisions, it is certainly not a free market at all. It is most certainly a very, very highly managed market with an incredible number of non-free incentives that result in incredibly perverse results in many cases.
Professional sports are a high visibility, huge dollar example of this, but it happens all the time with other businesses.
The simple, TLDR, version:
The decisions to locate businesses is not anything like a free market at all - so demanding that one side of the negotiating spectrum cripple their ability to negotiate in order to protect a non-existent free market is, simply, bullshit. It is just a crap excuse to allow businesses to blackmail communities in order to let them make yet more profits and concentrate wealth more effectively in the hands of the rich at the expense of everyone else.
It is one of many excellent examples of how corporate powers use faux ideology to continue to concentrate wealth and power.
Quote from: Valmy on March 19, 2015, 11:11:14 AM
Airports and utilities are something else.
How so?
Quote from: Admiral Yi on March 19, 2015, 11:14:03 AM
How so?
Well in Texas it is not even legal for non-Utility companies to build utilities so how exactly would the owners of the factories and offices be paying for them themselves? No federal tax money is being lost there.
I am not sure why I have to go into the idea why having Airlines build Airports would be a little rough on the transportation network, even if they could afford that.
Quote from: Valmy on March 19, 2015, 11:17:10 AM
Well in Texas it is not even legal for non-Utility companies to build utilities so how exactly would the owners of the factories and offices be paying for them themselves? No federal tax money is being lost there.
I am not sure why I have to go into the idea why having Airlines build Airports would be a little rough on the transportation network, even if they could afford that.
Privately owned roads are built.
You don't have to go into the idea why having airlines build airports would be rough on the transportation network, even if they could afford it.
Quote from: Admiral Yi on March 19, 2015, 11:32:04 AM
You don't have to go into the idea why having airlines build airports would be rough on the transportation network, even if they could afford it.
Oh good because I figured it would be obvious.
Quote
Privately owned roads are built.
Without eminent domain that strikes me as tricky. Are roads really something a company could demand or they are abandoning their factory for a road being built in Indianapolis?
Three is clearly a radical difference between the state funding infrastructure and the state shoveling cash to businesses in return for them locating in their area.
Building the 49er's a new stadium is not public infrastructure. Again, excepting only the most tortured definition of the term.
Quote from: Valmy on March 19, 2015, 11:34:09 AM
Oh good because I figured it would be obvious.
Not to me.
QuoteWithout eminent domain that strikes me as tricky. Are roads really something a company could demand or they are abandoning their factory for a road being built in Indianapolis?
I imagine eminent domain is required to build a private road. I don't understand your question.
Quote from: Berkut on March 19, 2015, 10:04:50 AM
However, this is a *classic* case of a prisoners dilemma. We make decisions at some local level, but the market is NOT local. This gives the owners of sports teams a massive negotiating advantage on an emotional and political issue, which allows them to then divorce themselves of what would normally be considered perfectly standard business decisions. This then warps the economics of professional sports.
The net effect of all of this is something that if we all stepped back and looked at it holistically nobody would agree is a reasonable outcome. We end up having public funds paying exorbitant salaries to athletes, team owners making outsized profits because they don't actually have to bear one of the largest costs of running their business, and all of it being funded not by the people who actually want to watch or go to these events, but rather the taxpayers! That is not libertarian or free market economic theory at all!
This is no longer an economic decision. The question of whether the Braves should be in Atlanta or Cobb county is not being driven by business concerns, but rather by *political* concerns. At that point, this is not longer a question of economics at all, but one of politics. And if the owners want to try to extract massive funds from the state by getting into politics, then I don't at all think we should be holding to some faux allegiance to "free market" ideology. Free markets don't involve politics and state funding of entertainment.
Libertarian theory would demand that if some team wants a $400 million stadium, then they should be able to support that cost by selling their product - not by blackmailing politicians into funding it for them.
The wrench in this is that, with the exception of baseball stadiums, municipalities generally stand to gain from these projects. Take for example the planned $500m renovation to Joe Robbie Stadium. Dade County and many residents rightfully balked at the suggestion from billionaire Steven Ross that the county should fund the renovation. However, at the same time the county was leaning on Ross to pay for it himself they were leaning on him to do the renovation and to make sure it included certain attractive features.
Why? The county wanted the stadium to be an attractive venue that would bring the Super Bowl, World Cup and Olympic soccer, and more college bowl games to Miami. All things that have nothing to do with the Dolphins. In fact, were it only about the Dolphins this renovation would probably not be happening. Ultimately, Ross and the county cut a deal that I think is actually equitable: he pays for the entire renovation, the county pays him a flat fee every time they bring a marquee event to the stadium for the next five years.
So, while expecting cities to fork over billions of dollars and acres of eminent domain land (Hi Jerry!) is offensive, so is the idea that teams should be expected to invest hundreds of millions or billions of dollars in their venues when significant cost is added for the purposes of supporting events that do not benefit the team.
Also, on a tangent, what Federal tax is the article referring to? I may have missed it, but I don't see where the author explained the tax that was being dodged using municipal bonds.
I don't know either vM, I just saw that and assumed it was true for purposes of argument.
Quote from: Baron von Schtinkenbutt on March 19, 2015, 11:42:52 AM
Also, on a tangent, what Federal tax is the article referring to? I may have missed it, but I don't see where the author explained the tax that was being dodged using municipal bonds.
Income tax on interest.
Quote from: Admiral Yi on March 19, 2015, 11:45:44 AM
Quote from: Baron von Schtinkenbutt on March 19, 2015, 11:42:52 AM
Also, on a tangent, what Federal tax is the article referring to? I may have missed it, but I don't see where the author explained the tax that was being dodged using municipal bonds.
Income tax on interest.
So, the tax the lenders or private bond owners would be paying if the team had borrowed the money in a more conventional manner, not a tax the team would be paying directly.
Right.
Berkut thinks business transactions are blackmail? OK. Is his rage at 11 yet?
Far short of 11 I'd say.
Quote from: The Minsky Moment on March 19, 2015, 11:01:02 AM
Further to berkut's point all the pro sports leagues are to some degree or another cartels, with de facto or even de jure partial exemption from antitrust law. In that economic and institutional context, Berk's concerns about the lack of a free and fair market are well taken.
Does the fact that they are cartels make it worse than, say, offering a manufacturing company a tax break to set up shop locally because the community needs jobs?
Quote from: MadImmortalMan on March 19, 2015, 02:55:20 PM
Does the fact that they are cartels make it worse than, say, offering a manufacturing company a tax break to set up shop locally because the community needs jobs?
That is the main reason I would think they are different. The anti-trust stuff.
But besides that it is basically the same thing...well ok taking out millions in bonds maybe more of a burden than just not collecting taxes. Maybe.
Quote from: The Brain on March 19, 2015, 01:25:31 PM
Berkut thinks business transactions are blackmail? OK. Is his rage at 11 yet?
These are not business transactions though. That is the point.
You can't demand that we honor the free market when we aren't talking about a free market to begin with - there is no "free market" that involves the state subsidizing business relocation.
If you were truly all about the "free market" you would absolutely oppose to state involving itself by bribing businesses to move to their locations. Using government money to circumvent the market is not a "free market".
Quote from: Admiral Yi on March 19, 2015, 01:28:31 PM
Far short of 11 I'd say.
I think that would make the forum explode. :berkut:
Quote from: MadImmortalMan on March 19, 2015, 02:55:20 PM
Does the fact that they are cartels make it worse than, say, offering a manufacturing company a tax break to set up shop locally because the community needs jobs?
Sure it does. The city cannot take bids from competing NFL teams to see which is willing to relocate to Miami for the least amount of investment/tax breaks, and thus play teams off against one another. The city can certainly offer the same repossessed factory to Ford and Volkswagen.
Quote from: Baron von Schtinkenbutt on March 19, 2015, 11:42:52 AM
Why? The county wanted the stadium to be an attractive venue that would bring the Super Bowl, World Cup and Olympic soccer, and more college bowl games to Miami. All things that have nothing to do with the Dolphins. In fact, were it only about the Dolphins this renovation would probably not be happening. Ultimately, Ross and the county cut a deal that I think is actually equitable: he pays for the entire renovation, the county pays him a flat fee every time they bring a marquee event to the stadium for the next five years.
Aren't financial gains from the Olympics or World Cup generally rare for a municipality, murky at best?
Quote from: Berkut on March 19, 2015, 03:54:50 PM
Quote from: The Brain on March 19, 2015, 01:25:31 PM
Berkut thinks business transactions are blackmail? OK. Is his rage at 11 yet?
These are not business transactions though. That is the point.
You can't demand that we honor the free market when we aren't talking about a free market to begin with - there is no "free market" that involves the state subsidizing business relocation.
If you were truly all about the "free market" you would absolutely oppose to state involving itself by bribing businesses to move to their locations. Using government money to circumvent the market is not a "free market".
Indeed. The city government official that signs the contract isn't a consumer, he is a government official. He cares little or nothing about the price the concessions exact from the city, except in terms of how it looks politically. There is no market, buyer, or seller here. If the deal starts to look bad for Miami, the city manager is off to work for Houston before anyone even knows.
Quote from: Berkut on March 19, 2015, 03:54:50 PM
Quote from: The Brain on March 19, 2015, 01:25:31 PM
Berkut thinks business transactions are blackmail? OK. Is his rage at 11 yet?
These are not business transactions though. That is the point.
You can't demand that we honor the free market when we aren't talking about a free market to begin with - there is no "free market" that involves the state subsidizing business relocation.
If you were truly all about the "free market" you would absolutely oppose to state involving itself by bribing businesses to move to their locations. Using government money to circumvent the market is not a "free market".
The business has something the state/similar wants. The state pays money to the business to get it. Sounds like a business deal to me. I don't see the problem.
Quote from: garbon on March 19, 2015, 04:04:33 PM
Aren't financial gains from the Olympics or World Cup generally rare for a municipality, murky at best?
Indeed they are. Doesn't stop cities from wanting these events, though, if only to increase the size of their civic penis.
Quote from: Baron von Schtinkenbutt on March 19, 2015, 04:21:29 PM
Quote from: garbon on March 19, 2015, 04:04:33 PM
Aren't financial gains from the Olympics or World Cup generally rare for a municipality, murky at best?
Indeed they are. Doesn't stop cities from wanting these events, though, if only to increase the size of their civic penis.
Well then those don't really belong to argument that municipalities tend to gain from these deals. :P
Quote from: garbon on March 19, 2015, 04:29:28 PM
Well then those don't really belong to argument that municipalities tend to gain from these deals. :P
The benefits are murky and impossible to quantify, but they are still there. This is especially true if you can get a pro team as the maintainer and primary tenant of the facility. The cities that get screwed over are the ones who build this infrastructure just for the event. In fact, re-reading your original comment I would say that financial gains from these events when new infrastructure is not needed to host them is common, not rare.
Quote from: Berkut on March 19, 2015, 03:54:50 PM
Quote from: The Brain on March 19, 2015, 01:25:31 PM
Berkut thinks business transactions are blackmail? OK. Is his rage at 11 yet?
These are not business transactions though. That is the point.
If you want to argue that it's not a business transaction, that undercuts the argument that the federal government can regulate it under its power to regulate interstate commerce.
Quote
You can't demand that we honor the free market when we aren't talking about a free market to begin with - there is no "free market" that involves the state subsidizing business relocation.
If you were truly all about the "free market" you would absolutely oppose to state involving itself by bribing businesses to move to their locations. Using government money to circumvent the market is not a "free market".
I agree. My argument against the feds banning the practice is about the limits of federal power over the states, not the free market.
Quote from: grumbler
Indeed. The city government official that signs the contract isn't a consumer, he is a government official. He cares little or nothing about the price the concessions exact from the city, except in terms of how it looks politically. There is no market, buyer, or seller here. If the deal starts to look bad for Miami, the city manager is off to work for Houston before anyone even knows.
I don't think the city manager has the power to issue tax-free municipal bonds on his own initiative.
Quote from: MadImmortalMan
Does the fact that they are cartels make it worse than, say, offering a manufacturing company a tax break to set up shop locally because the community needs jobs?
Probably so, for the reasons others have pointed out, at least in principle.
In practice, I'm not so sure. For example, when Walmart first came to Charleston, WV about 25 years ago, they were apparently given about $20 million in tax credits to put a store there. I don't think any other chain could have gotten a deal anywhere near that good. I worked for another discount department store chain at the time, and we certainly couldn't have gotten a deal like that--we would have been lucky to get $2 thousand in tax breaks. And at the time, that $20 million in lost revenue for West Virginia was probably a bigger chunk of the state's budget than $4 billion is for the feds now.