Wednesday, December 17, 2008

Ford Received $300m in 2007 To Lose MI Jobs

BBC (January 2007) -- Michigan agreed to give Ford Motor $300m to keep open six of its factories in the state. The move, which amounts to subsidies of about $23,000 per worker, could help safeguard 13,000 jobs in the state.

Ford cannot guarantee that it will create any new jobs, nor offer a guarantee that it will continue to employ all of its existing workforce. This is in contrast to similar deals where states offer car companies incentives to build car factories specifically to create new jobs.

MP: At least when the foreign transplants receive state subsidies, they usually create a net increase in jobs. It appears that Ford received $300 million in 2007 from the state of Michigan even though there's been a net loss of Ford jobs in Michigan over the last few years.

13 Comments:

At 12/17/2008 5:27 PM, Blogger Bruce Hall said...

It appears that Michigan was out-Alabamaed and out-Tennesseed.

Since only some and not all of the Michigan plants were closed, perhaps the money did serve some purpose. Then again, how much did the state continue to collect in taxes from a Company that was running billions in losses?

$300 million is a lot of money... except for the automotive industry where it represents practically nothing in annual operating costs.

Neither Michigan nor Ford could foresee the disaster foisted on the economy by the unscrupulous on Wall Street and within the Federal government. But, gee, they should have seen it. After all, the economists all saw it coming. Oh, wait, they didn't.

 
At 12/17/2008 7:34 PM, Blogger Walt G. said...

Which received more money in state subsidies in Michigan last year--public universities or automakers?

 
At 12/17/2008 8:38 PM, Anonymous Anonymous said...

"Which received more money in state subsidies in Michigan last year--public universities or automakers?"

I would hope that the universities received more subsidies than the automakers. After all getting an education will allow an individual to sell his or her labor at a good price without having to monopolize it. Subsidizing education can make sense; you go to school for the return on human capital. That benefits the state farther down the road in the form of higher tax revenues.

Walt's hostility toward the universities is interesting; you have let it slip that you were a student at UMICH-FLINT. I would imagine you went there to improve your opportunities. I do know that the big 3 had a tuition assistance program for awhile...it makes sense to get out of the big 3/unskilled manufacturing while you can.

The big 3 plants, on the otherhand, employ unskilled line workers, electricians, plumbers, and incompetent management. There is no reason to subsidize them.

 
At 12/17/2008 8:51 PM, Blogger Craig said...

"Subsidizing education can make sense; you go to school for the return on human capital. That benefits the state farther down the road in the form of higher tax revenues."

I suppose it can make sense, but here in New York (which is altogether way too similar to Michigan politically and economically,) the huge subsidies to higher education pay our colleges and universities to educate children for the rest of the country -- because that's where they have to go to find opportunity.

A society certainly needs a base level of education to prosper, but there's a point beyond which its returns begin to diminish. I suspect Michigan and NY have long ago reached it.

 
At 12/17/2008 8:58 PM, Anonymous Anonymous said...

"Which received more money in state subsidies in Michigan last year--public universities or automakers?

I could be wrong but isn't education considered to have a positive externality. So then the government should subsidize it to reach the socially optimum level.

 
At 12/17/2008 9:01 PM, Anonymous Anonymous said...

"the huge subsidies to higher education pay our colleges and universities to educate children for the rest of the country -- because that's where they have to go to find opportunity."

I'm not sure about your state, but where I'm from there is a big difference between in state tuition and out of state tuition, isn't that reflective of who is being more heavily subsidized? The kids in state are the ones that are more heavily subsidized as far as I know.

 
At 12/17/2008 9:05 PM, Blogger Walt G. said...

I don't have hostilities against universities at all. I'm simply pointing out that money is confiscated from people in the form of taxes and someone else decides how it will be spent. Who decides what’s OK and why? I know how I want some of mine spent. Do I have any say in the matter? I think a bridge loan would "benefit the state farther down the road in the form of higher tax revenues."

I have no really let it "slip" that I currently attend UM-Flint. I'm proud of that fact. And I'm not very anonymous either.

Hey, who are you calling an unskilled plumber?

 
At 12/18/2008 8:49 AM, Anonymous Anonymous said...

It just shows that even a favorable tax climate can't help some businesses.

It's truly a shame, because that $300 million could have gone as tax abatement for other industries actually affected by the horrible economy.

The role of government is truly as "Administrator". Anyone who can look at this and think Lansing Democrats are administering things well is delusional.

 
At 12/18/2008 9:14 AM, Blogger RebelRenegade said...

Nice spin job Bruce Hall. I was wondering how long before people started pretending like the Big 3 were in perfect health before the financial crisis.

 
At 12/18/2008 9:17 AM, Blogger bob wright said...

The amazing thing to me is that many politicians claim that higher taxes on some will stimulate the economy. In the next breath these same politicians claim that lower taxes for "favorite son" industries will stimulate the economy.

So which is it? Higher taxes or lower taxes?

And if lower taxes for one or two industries in Michigan [autos, films, colleges] is the silver bullet, why not tax breaks for all companies?

 
At 12/18/2008 10:13 AM, Blogger Walt G. said...

bob wright,

I see it as two arguments with the following questions. 1) Should the government be in the business of redistributing wealth; and 2) If so, who decides where the money goes?

People who are contemplating worthy candidates to question 2, by default, are saying yes to question 1.

Look at it this way: We have a hog trough filled with public money with someone deciding which hogs will feed. Who will that someone be? And how will that choice be made?

 
At 12/18/2008 1:42 PM, Blogger RebelRenegade said...

bob wright

It's possible to be both I suppose. Or not so much both but that it's more complicated. There are many different kinds of taxes that can be enacted. Some will be more harmful than others. To be sure, we should just keep them all low so we don't make any inadvertent mistakes. :)

 
At 12/18/2008 4:06 PM, Blogger Marcus said...

"I'm not sure about your state, but where I'm from there is a big difference between in state tuition and out of state tuition, isn't that reflective of who is being more heavily subsidized? The kids in state are the ones that are more heavily subsidized as far as I know."
-- Anonymous

I don't believe that's what he meant. I took his post to mean that New Yorkers find jobs out of state after they graduate.

 

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