What happened since that the law passed had such a pretty title stating its goal with such incontrovertibly boldness? This is what Marketplace tells us:
C. Fritz Foley teaches finance at Harvard. He found more than half of every repatriated dollar went to something other than job creation.We are told that jobs weren’t created because government fell down on its own job. Under the act Congress passed, the federal government simply did not actively manage the program for the purpose the act was passed. According to economist Allen Sinai, when it comes to companies participating in such a program, Congress “should hold their feet to the fire.” Here is more from Marketplace on Mr. Sinai’s views:C. Fritz Foley: The funds were used to pay dividends to shareholders, and to repurchase shares.
Economist Allen Sinai heads the research firm, Decision Economics. He says back in 2004, companies weren't punished if they didn't use their repatriated profits to create jobs. . . . .Why is an ineffective law from seven years ago and questions about what Congress should do coming up now? Because a “group of high-tech energy and pharmaceutical companies” wants a replay of the tax-reducing American Jobs Creation Act. They’ve launched a website to promote the idea and they are again saying that “the money would be used to create jobs here at home.”Allen Sinai: They can set conditions, set an accountability mechanism, which says you get this money only if you hire people.
The website is WinAmerica (the url contains “winamericacampiagn”) and here is what you read as soon as you get there (emphasis supplied).
The lead-in:What’s the response of the companies promoting the new law when asked about how the old law didn’t create jobs? They acknowledge what they have to and move on to “Rationalization B.”We have an opportunity right now to strengthen our economy, pay down our debt, put people back to work, and invest up to $1 trillion in America.The wrap-up:Providing American businesses with incentives to invest at home is a common sense solution that will immediately inject up to $1 trillion into our economy and provide businesses with the certainty they need to help get Americans back to work. The time to act is now. Let’s invest the money here at home – not spend it there.
According to Marketplace:
The companies pushing for another tax break say that's true. [What Havard’s C. Fritz Foley said about how the corporations used the `repatriated’ monies to pay dividends to shareholders, and to repurchase shares.] But they say the money still made its way into the U.S. economy. Shareholders reinvested the dividends or spent the money.The Marketplace story can be found here: Companies press to repatriate overseas profits, by Nancy Marshall Genzer, Thursday, March 24, 2011.
Applied to New York City Development
What is the fascination of this story for Noticing New York? It reminds us of the non-job-creating “job creation” programs we get that funnel money into real estate mega-developments like- oh, why bother with any other example- Ratner’s Atlantic Yards mega-monopoly.
Basically the same thing is true: Why should we ever expect that these programs would ever be effective at creating jobs when government isn’t on duty managing matters to ensure the programs are being run for that purpose. And when government isn’t, the programs become just about the developer's lining their pockets at public expense.
In the case of Atlantic Yards we have two levels of AWOL government, each level with its own fictional job creation program that is not fulfilling its ostensible purpose: At the state level the ESDC (the “New York State Urban Development Corporation” doing business as the “New York State Urban Development Corporation”) does not monitor or pay attention to how many jobs are created at the megadevelopment and on the federal level (Congress again neglecting the declared core of a program) we have the non-job-creating EB5 program that we will get to in a minute. Perhaps what mightily facilitates the ease with which the EB-5 program is abused is that it is not known by any formal title, like the American Jobs Creation Act, leaving the New York Times to struggle as it refers to Ratner’s `enrollment’ of “498 Asian investors” in “an obscure federal program that grants [“sells” is a better word] green cards in exchange for a $500,000 investment in a job-producing American project,” thereby stumbling compliantly into having referred to `job-production’ which is, as discussed, actually nonexistent.
As for ESDC, it pushed through Ratner’s net-loss-to-the-public basketball arena (now the Ratner/Prokhorov arena) with the unsound idea that even if public money would be lost on it, at least jobs would be created. But there are numerous problems with the idea that ESDC or the government is on the case in this regard:
1. ESDC doesn’t have a place to start from in tracking jobs, since all the job creation figures bandied about to promote the project were insanely phony to begin with.Ratner must have thought, “Gee, the racket of getting credit for phony jobs is pretty good” (a little like the old joke about what a good business prostitution is- “you sell it, you still got it!” Or maybe it's like a four-year-old girl’s tea party with the pretend tea you can keep offering no matter how many Barbie or Winnie the Pooh guests show up- “Would you like some”- and then you pour the invisible liquid of which your imagination has an infinite supply). So Ratner figured he ought to branch out and diversify in the phony jobs business. Hence, the EB5 program where he gets to sell to the federal government the same non-job-creation he sold to ESDC, getting credit twice for the very same quite minimal, decreasing and mostly phantom jobs.
2. ESDC doesn’t itself actively keep track of or monitor job creation. When stories surface about the number of jobs being created (or lack thereof) it is Forest City Ratner that is supplying the figures.
3. The actual jobs, to the extent that they can be detected, are much lower than (expected?- NO) originally bruited. Very low indeed.
4. Ratner is doing what he can to keep employment resulting from the megadevelopment at a minimum, particularly union employment, including through the use of untested modular construction.
5. The role of government to monitor and administer its own job creation programs really oughtn’t be delegated by abdication as, for instance, to the CBA (so-called “Community Benefits Agreement”). Rather, to the extent that this is what ESDC did with Atlantic Yards, Forest City Ratner has actively gone out of its way to avoid hiring an Independent Compliance Monitor as called for by the CBA.
6. To the extent that any part of the provision of jobs is meant to be related to the provision of minority jobs, the responsibility for tracking that remains in the hands of someone Ratner hired, Darrle E. Greene, best known for being indicted for (and ultimately having to make restitution for) falsifying numbers he was submitting to government. When the disgraced Greene was found to be involved in the Aqueduct Raceway scandal (involving multiple parallels to Atlantic Yards) Greene was forced to withdraw from the Aqueduct transaction but he is still around for Atlantic Yards.
What’s lost in all this nonsense when honest government has strolled off the beat is that this vast capacity for delusional benefits is displacing real economic activity that would have a much better chance of creating jobs.
(This is one of two sister Noticing New York articles being posted simultaneously on the subject of what happens when government neglects its duty to manage the actual work of government. To read the sister article, click here.)