Mostest excellent article in the Financial Times today about taking the economy back from finance:
In the 1980-2007 era of cheap credit and deregulation, banks had every incentive to move from real-economy projects, yielding a profit, towards lending against rising asset prices, yielding a capital gain...--------------------
A promising policy avenue is tax reform. During the asset boom of the last decades, taxes on capital gains in the US, UK and most other OECD economies have fallen sharply relative to value added tax and labour taxes. When the banks have recovered, they need a regulatory and policy climate that discourages the pursuit of capital gains for their own sake, and which favours growth of the real economy. Finance should be the economy’s handmaiden, not the other way round.
For the last damn time, quit trying to make vertical farms. They're the equivalent of parking garages and we have plenty of arable land near cities...just so happens they're beneath schlocky tract homes that will begin crumbling upon themselves in, oh...about five more years and change.
A farmer can expect his land to be worth roughly $1 per square foot...if it's good, fertile land. The owner of a skyscraper, on the other hand, can expect to pay more than 200 times that per square foot of his building. And that's just the cost of construction. Factor in the costs of electricity to pump water throughout the thing and keep the plants bathed in artificial sunlight all day, and you've got an inefficient mess.See my Valencia post for proper allocation of food as well as industrial production in relation to the City.
Speaking of water, cash strapped governments are looking to the negawatt to save water and energy (negawatt = the cheapest form of energy, the kind that never gets used.)
Chasing negawatts, the energy that you don't use, is a popular pursuit these days for cash-strapped states, and California is turning out to be excellent at it. Negawatts (a term Amory Lovins came up with) can offer a lot more bang for the buck, so to speak, then building new power. And asSteve Fleischli at HuffingtonPost reports, when faced with choosing a $550 million salination plant that would require lots of water and lots of power but produce fresh water, or a Coastal Restoration $187 million project to swap out 455,000 existing urinals for waterless alternatives and save water and generate negawattsWaterless urinals are the future...speaking of water...
Lastly, and most depressingly, more on cities/counties/states chasing businesses thru various forms of buyoffs. In Milwaukee which has more access to fresh water than the city itself needs, is offering cheap water to businesses. Ok, so what. No harm no foul. Until the whammy:
Cities and states routinely use tax incentives, loan guarantees and infrastructure investments to entice companies to relocate operations. Iowa last year offered IBM $52 million in tax incentives to create 1,300 jobs, while Michigan recently gave Johnson Controls $148 million to create 500 jobs for a battery facility.Jumpin' Jeezus on a Dinosaur! That's $296,000 per job that Michigan forked over. I'd like to think each of those positions would make more than that. How else does that make any fiscal sense whatsoever for the state of Michigan? As I tweeted about this the other day, I suggested why not just go to the top of the tallest building and drop cash on people with balloons filled with smilex gas. That should have the same effect.
When will governments ever learn? At least in the current business climate, 1) the best investment is to invest in your citizenry, meaning a) training programs/education b) if your going to offer incentives offer low-interest loans w/ bankruptcy protection and c) big businesses are only getting smaller. The way towards job growth is investing in small businesses (right now). There are an awful lot of talented people out there, that can be competitive if you lessen the burden of startup (and failure).
Entrepreneurism. The REAL American Way.