basic math you can’t
tell the future because you
can’t tell the future
I enjoyed the article this morning, ‘A really bad deal’: Michigan awards GM $1bn in incentives for new electric cars.
I enjoyed because of what the reporter, a Mr. Tom Perkins of the Guardian, did.
He did the math.
He did the the very basic math.
GM and the State of Michigan have announced a deal that gives GM $1 Billion dollars in tax incentives over 20 years, — that is 9 zeros – $1,000,000,000 — to build a plant in the State that will create 3,200 jobs that will in around $55,000 a year.
Mr. Perkins divided that 1 billion by 3,200 to show that each job will cost State and Local entities $312,000 in lost tax revenues.
Mr. Perkins then figured state and local tax revenue at $4,600 per job over 20 years and came up with $300 Million in revenue.
Leaving the State of Michigan and local towns a $700 Million short fall.
I thought that the basic math employed by Mr. Perkins to be refreshing, simple and to the point.
This announcement, and I am sure the planning of the announcement went through several drafts and plenty of hard work in producing a memo that, used wonderful words explaining the wonderful benefits of this wonderful deal.
So long as no one did the basic math.
As Mark Twain wrote in The Man that Corrupted Hadleyburg, “There is nothing in the world like a persuasive speech to fuddle the mental apparatus and upset the convictions and debauch the emotions of an audience not practiced in the tricks and delusions of oratory.”
To be sure, Mr. Perkins, admits that each job will have an impact as each worker needs banks, gas stations and pizza places.
But Mr. Perkins writes, “The state also claimed the direct and indirect jobs created by the project will generate $29bn in new income over 20 years, or the equivalent of 29,000 jobs paying $50,000 annually. Economists from across the ideological spectrum who reviewed the analysis said that level of job creation is highly unlikely and pointed to a US Commerce Department report that labels such claims “suspicious”.”
Mr. Perkins quotes Michael LaFaive, fiscal policy director with the right-leaning Mackinac Center for Public Policy.
Forecasting 20 years of economic impacts is nearly impossible, LaFaive said, and the MEDC’s (Michigan Economic Development Corporation) job projection “strains credulity”.
“They can’t tell the future because they can’t tell the future,” he said.
Oddly enough, after writing this, I remembered that the ‘Verse of the Day’ for yesterday was:
Jeremiah 29:11-13 (NIV) For I know the plans I have for you, declares the Lord, plans to prosper you and not to harm you, plans to give you hope and a future. Then you will call on me and come and pray to me, and I will listen to you. 13 You will seek me and find me when you seek me with all your heart.
I am okay with some one knowing the future and I am okay that it is NOT the folks running the State of Michigan.
PS: I went searching online for what for me would be the perfect image of the GM building in Detroit. I did not want that silly logo on that silly ReCen. I wanted the old General Motors Building in downtown Detroit over by the Fisher Theater. And I wanted to show the sign, GENERAL MOTORS and I wanted it a night to show the sign how it looked with its glowing red letters. I grew up in a Ford family and GM was kind of a shadowy evil empire. In my mind, that huge, multi winged building looming in the haze that always seemed to be around Detroit with those glowing red letters, was the twin of the Castle of the Wicked Witch of the West. If she drove a car, she would drive a GM product. NEVERTHELESS, my search turned up empty. If anyone can find a photo of the old GM Building AT NIGHT with the sign in red letters, please let me know.