Wednesday, January 11, 2012

Bloomberg: "I don’t like the idea of one state bribing a business to come" (except when he does it)

Mayor Mike Bloomberg loves talking up the free market, as I've written, and hasn't stopped.

Today's New York Times reports, in New Jersey Tries to Lure Fresh Direct From Queens, that there's a battle of subsidy packages to attract and retain the online grocer Fresh Direct:
New Jersey’s siren call to Fresh Direct comes only eight months after the Christie administration dangled a $200 million incentive package in front of the Hunts Point Terminal Produce Cooperative to move roughly 3,000 jobs to the New Jersey Meadowlands from the Bronx. Stephen Katzman, co-president of the co-op, told The Herald News in June that Governor Christie had called him offering “pretty much whatever it would take to get us to go there.”

That prompted Mayor Michael R. Bloomberg to accuse New Jersey of trans-Hudson bribery. “I don’t like the idea of one state bribing a business to come,” the mayor said last spring. “The trouble with that is the next state can do it, too. Anybody can get in that game, and pretty soon, it’s a race to the bottom. I don’t think anybody benefits.”

Many economists and urban planners question the wisdom of giving away tax revenues by the millions for individual companies, instead of investing in public services and transportation that would benefit all companies and citizens.
But Bloomberg was willing to commit hundreds of millions of dollars in city resources to assist Forest City Ratner in building Atlantic Yards.

One justification: it would bring new revenues--though the New York City Independent Budget Office calls it a bad deal for the city.

Who gains from new arena

What's clear, especially in retrospect, is how good a deal it was for the arena operator and, likely, the team.

This won't be simply an online grocer moving to a newer building. This is a team moving to a new building in a new media market, with many more luxury suites, an opportunity to sell naming rights and sponsorship opportunities, and a chance to reap much higher TV revenues.

And no, each state can't simply bribe a sports team to move, because major media markets have extra power and the leagues are cartels, with finite membership.

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