Harvard Professor: Mass. Targeted Industry Subsidies Unfair

January 28, 2011 -

The Boston Herald offers an editorial on state representative Vincent Pedone's proposal to offer tax breaks to the game industry in Massachusetts. The author, Edward L. Glaeser (professor of economics at Harvard University and author of the forthcoming book "The Triumph of the City"), compares it to the disastrous results of Evergreen Solar and ponders aloud if this is all "throwing good money after bad?"

Two weeks ago, a major tax break recipient in the state, Evergreen Solar, announced that it was closing its Devens, Mass. factory. Why are people so ticked off by this news in the state? Because the company took advantage of $58 million in state aid. Evergreen Solar was launched in 1994 as a joint venture of alumni of Mobil's Solar Division and an MIT scientist who pioneered String Ribbon solar cells. As the company matured and prospered the state took notice. In 2007, Massachusetts gave the company $58 million in grants, tax breaks, and other incentives to open a plant in Devens. The company obliged, taking the money and opening the plant. Fast forward to 2001: the company announces that it is leaving the state and moving its manufacturing operation to China. While the state is doing its best to get some of those funds back, the loss of jobs in the region and the investment have given the state a real black eye. In short, the deal seems foolish in hindsight.

Glaeser says that Pedone's proposals for the video game industry seem eerily familiar. While the details are still forthcoming the main part of the deal would be through a transferable tax credit that pays for around a quarter of a video-gaming company's labor costs. The company taking advantage of the bill would get even more credits if the video games are developed in a "disadvantaged community" or if the games prominently feature the "Massachusetts state marketing logo." The logo on the box program sounds exactly like what Georgia does for video game and film companies that promote the state prominently in some way on or in their products.

While the author admits that the video game industry is more likely to succeed because it "plays to the Commonwealth's creative strengths," he also says that that fact "doesn't make it more worthy of subsidy." He also cast doubt on whether the commonwealth's parents "want their children's video gaming supported by state subsidies."

Another point he makes is that the video game tax credit "is paid after, not before, workers get hired, and that reduces the difficult problem of enforcing claw-back provisions."

One of the most ludicrous comments he makes is that some firms that are not in the video game industry might be encouraged "to masquerade as video gamers, even if their main business is something else" to get these tax credits. What?

We will let Glaeser have the last word here - an opinion that many businesses in the state would agree with:

"Targeted subsidies, for Evergreen or video gaming, are neither fair nor likely to engender wide-spread economic growth. The best economic development strategy is to improve fundamentals: fewer regulations, lower tax rates for everyone, good services, and especially good schools."

Source: Boston Herald


Comments

Re: Harvard Professor: Mass. Targeted Industry Subsidies ...

 "Targeted subsidies, for Evergreen or video gaming, are neither fair nor likely to engender wide-spread economic growth. The best economic development strategy is to improve fundamentals: fewer regulations, lower tax rates for everyone, good services, and especially good schools."

Holy smokes, that's about the most clearly sane thing I have heard anyone say about tax subsidies in a long time.

Re: Harvard Professor: Mass. Targeted Industry Subsidies ...

That is true, however he seems to have disregarded the fact (of which I am sure he is aware) that these measures are intended to keep the state competitive with other areas in the US and Canada which offer similar subsidies.

Also, his "doubt on whether the commonwealth's parents "want their children's video gaming supported by state subsidies."" is a moot point that he and many others have tried to apply to the issue. This is not about encouraging the production of video games, it is about maintaining a share in a wealthy industry. Children (and adults) will still be playing video games regardless, but the proceeds would not be going towards jobs in the state if developers move to a location with better trading conditions.

 
Forgot your password?
Username :
Password :

Shout box

You're not permitted to post shouts.
Matthew Wilsonits a bunch of script kiddies. ddosing is one of the easiest thing to do,and most companies can not stop it sadly.12/25/2014 - 5:05pm
MaskedPixelanteI like Nintendo as much as the next person, they're pretty much the only company putting out the games I want to play, but that was pretty embarassing to have NNID go down due to overuse.12/25/2014 - 4:35pm
MaskedPixelanteSee? It's NOT a repeat of last year's fiasco.12/25/2014 - 4:22pm
PHX CorpLizard squad is responsible for The XBL/PSN shutdown https://www.youtube.com/watch?v=QSpZvsoWvig12/25/2014 - 4:17pm
IanCOh shut up bitching about Nintendo. At least they advised people to downloading updates before the big day. Sony/MS? Not a peep.12/25/2014 - 3:50pm
MaskedPixelanteBoth PSN and Xbox Live are down. Since I'm sure Sony and Microsoft have better online support than Nintendo did last year, this isn't from "everyone logging onto their new devices all at once".12/25/2014 - 3:48pm
prh99John Romero's Christmas present, a custom Icon of Sin sculpture. http://www.pcgamer.com/john-romero-gets-the-icon-of-sin-for-christmas/12/25/2014 - 3:37am
Matthew Wilsonthe interview will be on youtube/xb1/ andriod today.12/24/2014 - 1:05pm
james_fudge1900's?12/24/2014 - 12:56pm
james_fudgeYeah we could go way way back :)12/24/2014 - 12:56pm
E. Zachary KnightCopyright law in general has been broken since at least 1976. Could be even earlier than that.12/24/2014 - 12:24pm
james_fudgeWhat he said :) They want to make it worse than it already is.12/24/2014 - 12:14pm
Papa MidnightDMCA has been broken since 1998. Good luck getitng Congress to do something about it.12/24/2014 - 11:39am
Craig R.At least they owned up to the mistake. But doesn't change the fact that DMCA is thoroughly broken.12/23/2014 - 5:23pm
MaskedPixelanteSpeaking of Dark Souls OMG I'M MAKING ACTUAL PROGRESS WTH IS THIS WHAAAAAAA12/23/2014 - 10:49am
MaskedPixelantehttp://www.neogaf.com/forum/showpost.php?p=144500932&postcount=740 Yup, DSFix was part of an unrelated take down, and is being resolved.12/23/2014 - 8:04am
prh99Of course had they not done such a rush on the port we wouldn't dsfix to make the game not look and play like ass. 720 internal renders aren't so hot scaled to 1080.12/23/2014 - 7:38am
Papa MidnightIt was most likely an automated tool. Happens all the time. Just another case of the broken DMCA Claim and Takedown process that puts the entirety of the burden of proof on the accused instead of the claimant.12/22/2014 - 10:09pm
Conster*applauds IanC*12/22/2014 - 7:37pm
MaskedPixelanteSounds like BN was going after an unrelated mod, and took out DSFix in the process. Probably once a counterclaim goes out, this'll all be sorted out.12/22/2014 - 7:04pm
 

Be Heard - Contact Your Politician