Monday, March 28, 2011

When the law is not the law--destroying the New England fisheries

The Gloucester Times reported today that a long-standing Congressional mandate (1954) that 60% of tariffs on imported seafood were to be directed to fishing industry projects has been ignored virtually since it came into existence. Instead the monies have been "redirected" to the NOAA. How's that for gallows humor. The NOAA, which has been suffocating the local fishing industry with its everchanging regulations, has also been pocketing the money the industry needs to recapitalize and rejuvenate itself.

Oh yes, I guess I forgot one important thing. Over the past ten years, the diversion has only been $400 million. In 2009, the total tariff was $108 million. Under the law, $65 million should have been spent on the fishing industry. Instead, the total allotment was------ZERO.

But at least the NOAA has those sporty new SUV's they use to patrol Provincetown Harbor to make sure the 3 fishing boats docked in what was a thriving port aren't breaking the law by overfishing.

I wonder how our wonderful rice growers in Texas would respond to a similar "diversion." And then there's all those patriotic farmers growing corn for ethanol. I don't think they'd take this very well. But this is fishing where we seem determined to erase the last ship from our fishing ports.

Friday, March 18, 2011

Mutual Funds Still Drive the Boston Economy

Before we attack the largest industry employer in the city of Boston—the mutual funds industry—let’s remember that the tax breaks referenced in the recent decision of Fidelity to vacate its space in Marlboro were granted to all mutual fund companies. The mutual fund industry alone occupies over 35% of the Class A office market in Boston and vendors to the mutual fund industry are a major source of occupancy and employment as well. Mutual funds drive the Boston economy.

And the mutual fund industry in Boston is a proven success. We are not talking about subsidies and incentives to unproven or unstable industries. The Evergreen Solar debacle is the best example of the latter.

If we are going to provide tax breaks or subsidies at all, and I often question that wisdom, the least we can do is to make them available to all of the companies within a target industry. And we should begin by making sure we work with our successful industries first. The success of many other industries depends on the success of the core industry of a region.

Saturday, March 12, 2011

Massachusetts' Gateway Cities to Nowhere

Apparently, Massachusetts has 24 “Gateway Cities”, including Fitchburg, Pittsfield, and Springfield. As Gateways Cities, the State has spent hundreds of millions ($247 million on housing alone) to “revitalize these gateways. Which begs the question: gateways to what?

We need to accept the fact that some cities will never recover their former standing whether as industrial centers, mill towns, or fishing ports regardless of how much taxpayer money is spent attempting to do so. Over time, functions of all cities change relative to each other. Springfield was founded as an armory because British ships could not navigate up the Connecticut River. While its role as a major maker of munitions did lead to a thriving small machine tool industrial town, it has been on the decline for decades. No amount of money is going to bring Springfield back, and I emphasize back, to its past heydays. And there is really no functional objective that Springfield currently offers locationally that justifies continued subsidies.

Fitchburg was one of the nation’s leading centers of furniture production. I need say no more.

Perhaps some of the Massachusetts “Gateway Cities” have futures in a new economy. But spending millions of dollars on imaginary revitalization is an exercise in fantasy, an invitation to patronage, and an enormous waste of capital in a state whose trains don’t run on times and whose school systems are crumbling.

If we are going to put money into true growth cities, we should put it into those cities that are currently successful and thriving. This may sound counterintuitive but it is the success of these cities that will pull the train of success for the entire state.