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What the Devil won't tell you

World View's return to earth shows the dangers & costs of a sucker's game

Remember those old videos of the early NASA test launches?

A Redstone rocket would shoot to the stars as a proud nation would watch the flames gush out the nozzles toward a grand national destiny. For a few majestic moments, we would prove to one and all that we finally had those no-good Commies a thing or two in the space race.

Then came a wobble …

Then a fire would flash where it shouldn't …

Then the collective groan from government engineers as the rocket broke up tumbling skyward as hellish flames gobbled it whole. 

I'm not saying Pima County's ballyhooed and bluster-inducing deal with high-altitude balloon company World View is about to be consumed by fire. I'm just saying the company is falling short of jobs projections in what may be a wobble.

Above and beyond this particular deal, the game the county played to keep World View is age-old and it's a suckers game with real costs that leads to a national amnesia about what our country could once afford.

The game: A case study

Pima County’s supervisors approved a ballsy deal with World View amid fanfare, criticism and a ginned-up lawsuit the county won. The county would build World View a headquarters and a launch pad for the balloons. The company would pay rent on the facilities and repay the county for its end, plus a guarantee of escalating its local workforce to 100 by the end of 2018, 200 by 2022 and 400 by 2032.

Three years on, there’s been a catastrophic explosion and a leadership change as World View's promise of "Jobs!" Jobs! Jobs!" has turned into "eh ... jobs ..."  The company has a staff of 87. That's 13 fewer than what was promised in the contract. Because World View refused to make public its internal growth projections, the county approved the deal after its own study predicted the company would hire pushing 400 workers by now.

That’s a problem for Pima County because, what I pointed out then, holds true now. New businesses are risky enough. New businesses in new industries are very risky. The county tied themselves to World View’s dazzle as company promoters dared the world to imagine space balloon trips to the top of the clouds. Space tourism, such as it is, was coming to Tucson and tax revenues were helping pay for it.

A lot of people groused and naysayers whinnied nays of disapproval. They were the usual suspects of county-bashers who have rallied to Republican Supervisor Ally Miller’s constant gripes and claims of "corruption." But that doesn't make them wrong about the risk.

The Goldwater Institute, a Phoenix-based conservative group, sued (with some behind-the-scenes encouragement by Miller) and lost but they made a point about  public money going to private ventures. Arizona's Constitution prohibits public money for private use with good reason. Business will always try to socialize costs and privatize gains. The economic development game is great for that.

The World View deal is different from other economic development initiatives because the company started here. We weren't chasing them to come. We were competing with Florida to get them to stay.  The competition itself is all part of the same corporate site-selection game playing community against community. Big picture: It puts more risk on the people to absolve business of social obligations.

This game is predicated on the false notion that business gives people jobs. Business hires people to do work that needs to be done to improve profits. Period. The stock market won't allow jobs to be handed out like "hugs" at Burning Man.

The World View play may turn out fine for us here in Pima County but the bigger game has cost families with kids in college upwards of $10,000 per year.

The game's cost shift

Rising college costs are directly tied to the push for lower taxes required to play the economic development game.

During the 1970s business started to move. High-tax, big-bureaucracy states socked in by snow started to lose business to low-tax, low-service states where the sun shined. 

And the games began: How do states attract business? Cut taxes. What do they have to do then? Cut spending. General fund subsidies for higher ed was replaced by tuition dollars.

The stock market flipped a switch and dividends no longer drove investment. Gambling did. Buy-low, sell-high mania began to drive the economy. Satisfying shareholders suddenly meant driving up daily share price more than long-term profit sharing. That required lower company costs and companies shopped for locations with lower taxes that provided fewer public services.

States that had operated under the notion that no one should be too broke to go to college faced a new normal. Another state would charge them bargain-basement tax rates. From the 1980s onward, states began a race to the bottom in terms of subsidizing college for everyone.

Arizona has been playing this game for years and the costs are coming due. The Arizona Republic put the cost at $4 billion through 2016. The Grand Canyon Institute pegged it at $3 billion back in 2013.

Businesses shopping for better deals put pressure on state budgets and recessions then did real damage. Business insisted upon a national beauty pageant of profit-making sexiness. So states dropped tax rates, cut spending, and put more and more social costs on the people. Tuition has been just one area where this has struck hard.

Costs were shoved back to the user in the form of tuition. In 1993, a $1,200 Pell grant bought a semester of tuition and books at the University of Arizona. Today, tuition and books cost more than 10 times that.

Arizona has cut corporate tax rates to well below the national average because business shouldn’t have to pay for college. Rather, business wouldn’t move to a state where such silliness was required. 

Some in the know might suggest here that the real driver of college expenses is runaway college costs, rather than the loss of public subsidy.

That's just a feature of the new game because the quest for federal grant dollars to replace state dollars has turned the chase for the right researchers has bid up the value and cost of landing them. You think flux capacitors and warp drives for a super-star physicist's lab come cheap?

The greater good, or not ... 

But we'd all be better off, right?

What has happened to Arizona wages during that time? Not a lot. According to the Grand Canyon Institute, Arizona's per employee wages were below the national average when the game started and have fallen off a bit. Nationally, the wealth has been directed upwards toward the top 0.1 percent. 

Meanwhile, there's a small business start-up slump that is lagging under the radar of national debate.

Yeah, we’re suckers. We're suckers for the big splashy headline about the great new factory or regional office moving in to save the local economy that will finally transform our economy into rivers of milk and lakes of honey.

Paper or plastic

Pima County opted to outplay Florida at the game to keep them here. Is Pima County building a new headquarters for an existing county business? No. Why would they do that? That company is here already, suckers!

So World View made promises and it’s falling a bit short. It’s falling way short of a county-commissioned study that predicted 200 hires by now.

Pima County Administrator Chuck Huckelberry made it plain.

"If they weren't here, they'd be paying their lease in Florida," Huckelberry said. "If you look at where they started and where they are — it's a growing economy and growing technology — the question is, 'was it worth the risk?'"

"Yes. The county taxpayer's not out a dime," he said.

On paper, sure. He's right. So long as the company remains viable in that new and growing space.

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Search engines were a growing technology but when was the last time you know someone "AltaVista-ed?" New technologies make it hard to predict winners and losers.

And if World View goes Webcrawler, then how much will they pay? Pima County taxpayers will have a balloon launch pad, an office building and  no tenant. Should that day come, the numbers look more like fabricated plastic and business have been known to fail.

Given the grief the county has taken if this deal does go bad, guys like Huckelberry will look awfully silly for an awful long time.

World View already had one leadership change as Taber McCollum and Jane Poynter got knocked down the ranks of the company after the ex-Biosphere 2 team proved better at promotion than results (I mean, who could have known?).

The new leadership has shelved space tourism for now. It is focusing on its real bread and butter: Government and commercial contracts for high-altitude instrumentation. That could be smart business. There's no telling that World View will be a proven winner at it. The company is coming back to Earth, which would be bad news if Pima County were stuck in the cloudy climes of exaggerated hopes.

I’m just saying this looks like a wobble. I’m not saying a catastrophic explosion is imminent. Er, I mean a second catastrophic explosion.

Any chance we can stop playing?

But this is the game we play and, by and large, Huckelberry plays it well. He's also good at being creative, which is a good thing until it isn't. 

We chase businesses and business puts communities over a barrel. Nothing is going to stop the economy from being mobile, agile and pretty hostile. My question is, can government just let business do what it’s going to do and focus on making the communities they govern better places to live, which would include good business environments. 

Then who comes, comes. Who goes, goes.

But the game continues for the same reason we buy lottery tickets. The next drawing could just be the one.

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have your say   

1 comment on this story

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4 comments
Mar 16, 2019, 12:52 pm
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Expand job training for high end manufacturing jobs for Honda/BMW/Tesla/Google etc. Once in place visit manufacturers and show them real commitment to provide skilled workers and forget about tax cuts. Look to the South for an example.  Prepare to fast track zoning for new manufacturing plants.

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Click image to enlarge

World View's promise of high-altitude balloon tech for Tucson is falling a bit short of projections. Is this a glitch, or is it a feature of a game long ago gone wrong?