Boeing Would Have Chosen Chicago Anyway, Study Asserts
Good Jobs First, a group that's interested in the
economic effects of government's policies, is having a field day
with some of Illinois' efforts to lure, or retain, companies. One
of the companies that made its short list is The Boeing Company;
and the chronicle of the decision to move to Chicago, seen from the
standpoint of Illinois and Chicago taxpayer expense, makes the case
that the state and city threw away tens of millions of dollars --
Boeing was so impressed with Chicago's intrinsic assets (location,
infrastructure, talent pool) that it would have chosen the Windy
City, regardless the taxpayer-funded giveaways.
The study cites numerous interviews with Boeing officials,
noting, at most, the limited effect the estimated $56 million
giveaway as a deciding factor. A GRID article (June, 2001) contains
what seems the majority opinion: "In terms of economic incentives,
they were certainly one of the things the company was looking at,
and all three cities provided what we would characterize as
appropriate packages. We weren't making our evaluation based on
which package was the biggest."
While
politicians are always happy to talk about the "protection" or
"creation" of jobs, the fact is, "jobs" are not a product -- they
are a result of demand for a product (or service). Giving
away taxpayer money does not stimulate demand for a product; in
fact, it reduces the taxpayers' ability to pay for one, as a result
of the reduced size of the wad of bills in his pocket. Subsidizing
big companies, although a flashy pastime for politicians, also
concomitantly reduces competitive opportunity for small (and
minority) businesses, sectors for which those same politicians
most-often pronounce their support.
Illinois' Republican governor, George Ryan (who stepped down
this week), said in his radio address of May 12, 2001 (the day
after Boeing announced its Chicago choice), "In Boeing's case, the
consulting firm Arthur Andersen says Boeing's new headquarters will
mean $4.5 billion in economic impact for Illinois. For our modest
investment of $2 million a year in state tax credits on new
revenue, Boeing will have an impact of more than $220 million a
year on the Chicagoland region. That is a return on our investment
of 110 to one. That's not bad." [Of course, that's before AA's
(accounting) schemes became a public disgrace, taking the
consulting side of the company down with it --ed.] That particular
Arthur Andersen Consulting report has not been made public.
Greg LeRoy, Executive Director of Good Jobs First,
told ANN, "This is a useful tutorial for site-location basics:
studies make it clear that state and local taxes mean so much less
than the basics: location, talent, infrastructure, and so on. It's
true, aside from a truly marginal case -- where every other factor
is equal -- that there is little incentive to relocate, based
on local tax breaks."
'Why not,' Boeing might have asked, 'take the free money?' Greg
implied, when he told us, "The public officials just didn't
pick up on the fact that the incentives were icing; they weren't
decisive."
Jeff
McCourt, Good Jobs Illinois Project Director, added, "From the
perspective of public officials, it's important to note that, the
only reason those three cities got chosen in the first place, was
that they were already winners. The incentives are a very, very
small part; but it's essentially all they (politicians) talk
about." [It is all politicians can do -- rearrange other peoples'
money --ed.]
For all the hoopla surrounding the move, it's useful to note
that we (the public) were largely in on the proceedings. Mr LeRoy
pointed out that this particular business location decision was
unusual in two big ways: "Boeing is exceptional:
Boeing is a fortune 100 company; and [the site decision] was
public," he said; "but it's illustrative of the point we try to
make: there are a lot more, and more-important factors in play
here."
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