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.
SleakerGamestop articles popping up everywhere about their ludicrous new Credit card offerings at a whopping pre-approval for 26.9% APR07/29/2014 - 10:19pm
Matthew Wilsonhttp://arstechnica.com/tech-policy/2014/07/podcasting-patent-troll-we-tried-to-drop-lawsuit-against-adam-carolla/ the podcasting patent troll scum is trying to turn tail and run.07/29/2014 - 9:50pm
MaskedPixelanteOf course it's improved. At launch, Origin was scanning your entire hard drive, but now it's just scanning your browsing history. If that's not an improvement, I dunno what is!07/29/2014 - 8:59pm
Papa Midnighthttp://www.escapistmagazine.com/articles/view/video-games/columns/experienced-points/12029-Has-EAs-Origin-Service-Improved-Any-Over-the-Last-Two-Years07/29/2014 - 8:25pm
Sora-ChanSo it's just a matter of having better emulation software. If it can be done with a 3DS game, with all the memory and what not it takes up, it can be done with a GBA title through emulation.07/29/2014 - 7:30pm
Sora-ChanOther VC titles for the NES and Gameboy had the same setup where you couldn't access the homescreen without quitting out of the game til a later update when those games were released for the public outside of the founder program.07/29/2014 - 7:28pm
Sora-Chanthe 3DS can, and does, run GBA games, as seen by the founder gifts, which included a number of GBA titles. As for running GBA games and still having access to the home screen, I beleive it's more of the game emulation software needs to be updated.07/29/2014 - 7:27pm
Matthew Wilsonthe 3ds already swaps os's with the original ds. plus I dont think people expect miverse interaction when playing a gba game.07/29/2014 - 6:06pm
MaskedPixelanteBut that's not the issue, the 3DS is perfectly capable of emulating GBA games. The problem is that it doesn't have enough available system resources to run it alongside the 3DS OS, and thus it doesn't have access to stuff like Miiverse and save states.07/29/2014 - 5:45pm
Matthew WilsonI am well aware that it requires more power, but if a GBA emulator could run well on a original psp, than it should work on a 3ds.07/29/2014 - 5:36pm
ZenThe reason the SNES could run Gameboy, or the Gamecube could run GBA was because their adapters included all of the necessary hardware to do it in the respective add-ons. The systems were just conduits for control inputs and video/sound/power.07/29/2014 - 4:51pm
ZenMatthew: Emulation takes more power than people realize to run a game properly. You can make something run on less, but Nintendo...as slow as they are at releasing them..makes them run as close to 100% as possible. Each game has its own emulator for it.07/29/2014 - 4:47pm
Matthew Wilsonkind of hard to believe since the 3ds is atleast as powerful as the gamecube hardware wise.07/29/2014 - 4:27pm
MaskedPixelanteYes, the 3DS has enough power to run 16-bit emulators, but not at the same time it's running the 3DS systems themselves. You could run the games, but you wouldn't get save states or Miiverse.07/29/2014 - 4:04pm
InfophileRunning GBA on 3DS shouldn't be hard. The DS had flashcarts sold for it that added just enough power to emulate GBA and SNES games, so the 3DS should have more than enough natively.07/29/2014 - 3:37pm
MaskedPixelanteIt's a bunch of people whining about boycotting/pirating Trails in the Sky FC because XSEED didn't license the Japanese dub track, which consists of about 10 lines per character.07/29/2014 - 11:27am
Sleaker@MP - devolver Digital issued a twitter statement saying they would replace the NISA pledge.07/29/2014 - 10:57am
E. Zachary KnightIs that a discussion about RIAA member music labels?07/29/2014 - 10:48am
MaskedPixelantehttp://steamcommunity.com/app/251150/discussions/0/43099722329318860/ In this thread: Idiots who don't understand how licensing works.07/29/2014 - 9:20am
MaskedPixelantehttp://www.joystiq.com/2014/07/28/gaymerx-in-dire-straits-after-nis-america-allegedly-backs-out-of/ NISA backs out of GaymerX support, but it seems like the only people crying foul are GaymerX.07/29/2014 - 6:30am
 

Be Heard - Contact Your Politician