Tuesday, October 11, 2011

Perry's job "creationism" like religious creationism

The Wall Street Journal has a very interesting front-page piece on Texas Gov. Rick Perry's job "creation" programs today. http://on.wsj.com/o2vjUd It makes it clear that Perry's "job creationism" is as scientifically rigorous as religious creationism.
Written by my former colleague and Pulitzer Prize winner, Mark Maremont, the story notes that Texas committed $440 million to new jobs programs starting in 2005 and says they claim to have created 59,000 jobs. It notes that at least 12,000 of those jobs were claimed as a result of a Texas A&M genomics project that actually hired only 12 people. The rest come from adding up a plethora of unrelated jobs, most of which would have happened anyway.
Sadly, it is predictable that when a politician starts counting "jobs created" the number claimed will greatly exceed the reality. It was especially interesting that the best example of jobs created -- Citgo's new U.S. HQ with 820 jobs -- didn't really "create" jobs. It caused the jobs to be placed in Texas rather than some other state. Venezuela created the jobs because it needed a U.S. base for Citgo. Texas just offered a larger bribe to get them there than any other state was willing to provide.
To be sure, these state bribes to business are an important part of plant location decisions. But they aren't job creation in the sense of a venture capitalist providing money that creates a new industry. And it isn't a useful precedent for a U.S. president.
I am familiar with the recent plant placement efforts of a large food manufacturer. It ran rigorous analytical models to try and decide what state should get a new manufacturing and distribution facility it planned. It concluded that the only measurable financial criterion that mattered was the size of the state subsidy. So states are basically in a position of having to tax their existing businesses to bring in a new business. It's an unfortunate game of beggar-thy-neighbor, and governors have to play it. But it isn't job creation.
Perry, of course, criticizes Obama for his job creation efforts. So it's rich seeing him caught playing the same games.

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