An article in Plunderbund I read recently about Diebold and the state of Ohio illustrates perfectly the conservative plan to "create" jobs.
In a nutshell, here's the situation.
- Diebold receives $100 million, including $56 million in state incentives, to stay in Ohio.
- In return, Diebold promised to keep at least 1,500 employees. At the time of the agreement, the company had 1,900 employees.
A quick bit of math show's that this lets Diebold eliminate up to 400 jobs while taking in $56 million in state incentives.
What kind of negotiation is this?
It's a great deal if you happen to be a corporation in the State of Ohio. Here's all you have to do to game the system.
To qualify for Kasich's program, your company has to have at least 1,000 employees, agree to make $25 million in capital improvements over three consecutive years, and have received a written offer from another state in 2010.
So the first thing you have to do is see what it looks like to leave Ohio.
Correct me if I'm wrong, but wouldn't this encourage Ohio companies who may not have even been thinking of leaving to look at offers from other states?
Notice there are also no rules stating that companies have to "create" any number of new jobs or hire any number of employees. They just have to invest in improvements which typically means short term construction jobs.
Diebold Outsources Jobs to India
So is Diebold creating jobs?
Not at Diebold. They wrote the terms of the agreement to state that they only keep 1,500 out of their 1,900 employees.
So it was ok for them to outsource 200 IT jobs to India.
"It will expand our capacity to grow," said company spokesman Mike Jacobsen.
Grow, yes. Grow in Ohio, no.
In fact, oddly enough, the new Diebold headquarters in Ohio is slated to have a capacity of 1,500.
A Better Way to Create Jobs
Now conservatives will tell you that if you don't do everything you can for your in-state corporations, they will move elsewhere.
Of course they say this. If you could get the government to chip in $100 million to build you a new headquarters and allow you to proceed with your plans to shift jobs to India, wouldn't you?
The idea is to get different interests competing against each other to get out of as much of your tax obligation as possible.
And once one company is successful, look for more to follow. American Greetings also received a big John Kasich gift of $93.5 million over 15 years.
Why are we giving in to corporate blackmail?
Wouldn't we create the same number of jobs if we, instead of giving in to this extortion, simply paid it out to local governments as we had been doing before the Kasich administration?
Then, we wouldn't have to lay off teachers and public employees.
Kasich's plan only encourages companies to "threaten to leave" in exchange for government handouts.
Instead of a race to the bottom, if states could work together to ban this practice of low-bid extortion, then we could reduce the practice of companies threatening to move every couple of years just to avoid their obligation to the community.
This is the wrong type of incentive to put out there for companies. It encourages them to consider moving, to play states off against each other, and to avoid their fair share of tax obligation.
If companies don't want to contribute to Ohio, perhaps we should consider calling their bluff and spending our tax dollars on public projects.