Gateway City #6: Fall River

FALL RIVER, strikingly outlined against the sky on a long steep hill crest across Mount Hope Bay, looks both larger than it is and very foreign.
- Massachusetts; a guide to its places and people, written and compiled by the Federal writers' project of the WPA (1937).

This post is part of an ongoing series where I visit each of the 11 original Gateway Cities  and record my thoughts on their community, economy, and civic culture. Fall River – apparently “The Scholarship City” – is where I’m headed next.

There are some people who insist that NYC has gone soft. Popularity made it lose that hard edge it had in the 70s and 80s. You just can’t get the liveliness and the authenticity in the new cleaned-up version, according to this theory.

The thought that always occurs to me when I visit Fall River is that if you miss the grit of the New York of decades past, you can find a bit of it here. If New York has undergone a “renaissance” (which depends on your perspective) then consider Fall River definitively un-renaissanced, in ways good and bad.

To be fair, I have never been to New York City, so the “NYC is soft” theory is right for all I know. I am, however, a bit skeptical of people’s distant memories, which tend to come wrapped in nostalgia. When people say eighties New York was lively they might mean “exciting, but scary, but I forgot about the scary.”

Fall River is very lively, without a doubt. In that liveliness is the contradiction that people sense in the bygone era of New York: it’s joyful yet also hopeless, invigorating yet draining, chaotic, but logical in its own manner.

Fall River as a city makes basically no sense and as such it’s the furthest logical extension of the Gateway Cities that I’ve visited so far.

A Century of Searching

The city’s history is dominated in every way by the boom and bust of the textile industry. The city was founded around mills developed by Boston and Providence magnates, going through a boom period from 1870-1920. Here’s an extended excerpt from a 1903 history of the city:

Fall River easily leads all other manufacturing centres of America in the extent of its cotton manufacture. It has more than one-seventh of all the cotton spindles in the United States. It has more than any state in the Union except Massachusetts, nearly as many as all the Southern states combined, and more than twice as many as any other city in America. Every working day more than fourteen hundred miles of cloth are made. If all the mills could be run upon one and the same piece of cloth no express train could travel fast enough to carry away the product from the looms, for more than two miles of cloth are made every working minute.

You might guess, correctly, that this is no longer the case. The city population peaked in 1920, and the total number of residents is still some 30,000 below what it was before the Great Depression.

Fall River is still searching for an economic purpose in a post-textile age, and in that search it looks like so many other places across the country that are economically dislocated. Fall River has more poverty and crime than Massachusetts as a whole. It’s had a long history of dysfunctional and corrupt politics that colors everything to this day: the city’s youngest ever mayor was recently elected after a recall election of a previous mayor over a garbage collection program, and has run into some cronyism charges of his own. I don’t know enough to make any judgments about particular local politicians, but I do know that in a political system this brittle there are strong disincentives to working together and creating the type of leadership the area needs.

A shaky political system and a century’s worth of economic disappointment couple easily with resentment at the outside world, creating the same type of pessimistic resignation that I’ve observed in other Gateway Cities. The city’s motto, probably unintentionally, reflects this: it’s as close to a literal shrug as you can get in a few words: “We’ll Try.” We’ll Try. Seriously. It’s right there on their seal at the top of this page.

The Economic Trajectory of Fall River

Things are not all bad in Fall River. What I was trying to get across in my initial NYC comparison is that there is a real energy to places that are down on their luck that is legitimately exciting. Redevelopment has its good sides, but people from Boston constantly complain that no good dive bars exist in their city anymore and they’re not all wrong.

Fall River Map
City of Fall River, Mass. 1877.
Source: Library of Congress

Fall River has a diverse immigrant community including most prominently people from Portugal and Cape Verde. I am a serious devotee of Portuguese pastries, and one of the few places you can get an authentic Pastel de Nata outside of Europe is in Fall River. This to me is one and the same as the dive bar effect: if rents were a bit more expensive, that weird coffee place I went to get pastries, where obscure Portuguese folk festivals crackled through a 90s era TV, would lose out to Starbucks, and there’d be a good deal less charm on the block.

I am hugely sympathetic to the problems of Fall River. It’s the type of place where incremental change seems possible while big change remains elusive. To be a leader there is immensely difficult when there is no obvious solution that can take the place of a million cotton spindles. I am actually being too kind: there is simply no solution that will replace the type of economic activity in the excerpt above. So the city is left struggling for answers with no resources to pursue them. Do they woo a big company, prostrating themselves to earn low-skill and low-wage jobs? Do they go all in on a casino or real estate boondoggle?

In other words, can Fall River afford not to pursue wishful thinking economic development? The answer given the need for jobs can hardly be no, but any strategy of that type will play out as it has in countless other places.

It’s not entirely fair to lay the culture of wishful thinking at the feet of Fall River local leadership. It’s a pretty endemic trait to many parts of Massachusetts, including many that have far more resources. The only reason I judged other cities, like its neighbor New Bedford, less harshly is because the latter has been slightly more successful on its path.

So a fair question would be what a good, positive strategy could realistically look like in Fall River. I don’t even close to know the answer. Fall River has a lot of the hopelessness of the struggling places in Massachusetts, with few of the assets that make Massachusetts so prosperous. Unless the people looking for the grittier alternative to glitzy New York are ready to put their money where there mouth is, it’s going to be difficult.

Reflections on Stanning

One of the best concepts I’ve discovered through Twitter is the idea of being a “stan”.

The concept originates with the Eminem song of the same name, about a fan who drives off a bridge when Eminem doesn’t answer his letters. It’s been coopted by the internet to mean a diehard, obnoxious fan.

Here’s an example of a stan in action:

STAN: I am the biggest Patriots fan there is. Tom Brady was set up. He could throw a football a hundred yards through a burning tire into the arms of a sleeping infant.

WAITER: That is truly fascinating, sir. Could I ask you again if you prefer the chicken or fish?

It’s usually applied to devotees of people (as Urban Dictionary points out, it’s also a portmanteau of stalker and fan), but once introduced to the concept I couldn’t help but see it in the way people talk about cities. In cities, too, you see people exhibit unreasonable fandom. We all know somebody who thinks you can’t really understand food until you’ve been part of the New York restaurant scene or who refuses to believe that there is meaningful life beyond the Bay Area.

These people are mostly harmless if a bit obnoxious. It’s not so bad to love your hometown or adopted hometown.

Where it gets interesting is the people who are stans for places that are traditionally hard to love. Like the fans of a beleaguered sports team, stans for an unpopular city have been been embarrassed many times but still never stop “rooting for the laundry”.

Stanhood for a low esteem city manifests itself in different ways. Unless you’re truly delusional you aren’t going to claim that Lubbock has everything Los Angeles does; maybe your obsession just means that you’re willing to make an economic sacrifice by living in your city of choice. I have a lot of respect for the people committed to improving where they are. You’ve earned the obnoxiousness, go ahead and stan if you want to.

But I’ve noticed an interesting divide in hated-upon cities. Some have a healthy, accepting culture of local supporters and others a core of true believers distrustful of outsiders.

In group one, the only ticket to insider status is being willing to give the place a chance. Because so many people are willing to denigrate your city, if you genuinely care for it, you won’t be shut out by the lifers. In my limited experience, cities like Indianapolis, Cleveland and Providence have a fairly robust culture of acceptance for newcomers. If you want to roll up your sleeves and help here, you can be one of us. And sure, you can rag on us a bit too. We’re used to it. Stanhood here is a more humble than defensive; you’ve seen the diamond in the rough and want people to appreciate it with you.

The second kind of city is distrustful of outsiders, and it is difficult to become accepted if you weren’t born and raised there. Do gooders from the outside are seen at best as transient and at worst as exploitative. Efforts to help receive a lot of raised eyebrows instead of pats on the back. A lot of medium sized cities seem to exhibit this mentality, Worcester among them. In this type of city, stans tend to be critical of intentions and highly attentive to credentials, leading to difficulties in coalition building and mutual understanding.

Whether the split comes down to culture, region, or economics, I can’t really say. It could be that neglected towns with at least some outside draw (IE, strong educational or business institutions) have come to expect the churn of people who never really connect with the city itself and grow to resent an exploitative relationship. Maybe there’s some connection to local politics: some cities disdain their distant or meddling state capitals in a way that feels similar.  

I’m interested if you’ve found other cities that fit either of these molds. Is this a generalization that works, or does every city have some of each?

In any event, if you root for an unloved city: stan on.

Stadiums, Subsidies, and other Wishful Thinking (Part 1)

Boston’s shot at the 2024 Olympics is dead and buried, but the post-mortem analysis will go on for many years. Why did the bid fail? Is it because Boston is the city of “no”? Was a sustained effort of “people power“?

Buried beneath the mutual recrimination is an important question: have voters started becoming more skeptical of the megaproject?

The way Boston 2024 was sold in Massachusetts was an exercise in the “wishful thinking” mode of economic development. The Olympics will finally let us fix our public transit, they said. That disastrous traffic circle will disappear. The more boisterous defenders insisted that this was the opportunity to prove that Boston is a real, world class city – and now that we’ve lost to LA, we just have to watch from the sidelines as the big boys eat our lunch.

I wasn’t dead set against the Boston Olympics, but seeing it sold in this way made me very skeptical of its actual impact. It seems to me that a shrinking proportion of voters and policymakers believe it’s smart to rely on the next big project as the thing that’s going to save us. I think it is possible to say that the death of Boston 2024 is part of a trend that is bigger than the Olympics and bigger than local politics.

If I’m right about this – and given the amount of wishful thinking economic development still going on, I’m not sure I am – this would be a huge change for the better. The megaproject as silver bullet to economic woes is still rife in this country.

In a broader sense, wishful thinking economic development preys upon all our human biases for simple answers to complex problems. It’s apparent in the convention center building craze, the public financing of stadiums and sports venues, and the massive incentivization of firms with public dollars. It replicates the same playbook everywhere: shaky public benefits, underestimated costs, and the public left holding the bag on big, flashy purchases. The fight for more transparency, less corruption, and more democratic decision-making is and should be a recurring theme in economic development across the world.

This matters not just for the economy, but also for public participation in democracy.  It’s why many people see economic development – in a line that I wish so badly I had written – as “the stuff of business parks, tax perks, and a long aisle of pig-lipstick.”

In this two part series, I’m going to go through some of the more routine outrages that go on in every state and city in the country.

I hope that we can look back fifty years from now on these stories like some kind of Tammany Hall period – outrageously corrupt, but definitively in the past. Step one, in my mind, is disassociating these ridiculous schemes from legitimate economic and community development.

Exhibit A: Sports Venues

I hope this isn’t news to you: the amount of public money that goes to sports teams in the US is simply shameful.

If you’re a fan of pro sports, you probably have heard about why the public needs to help the team build a new stadium. The logic is seductive, if you’re easily seduced by stupid things:

  • To be seen as a “real city” we need a world class team.
  • The younguns love sports. Without sports, they will leave and we’ll be a brain-drained backwater / We need to have sports to attract the creative class.
  • People will come to the new stadium and spend lots of money. Spillover effects!
  • A team gives something our city to rally around. A stadium is a symbol of civic pride.
  • If we don’t buy a new stadium, they’ll move to LA/Las Vegas/Seattle/London/Abu Dhabi

Spend a few minutes catching up on your local boondoggle through Field of Schemes, a site dedicated to exposing the ridiculous narratives behind public stadium subsidies.

The fact that public spending on stadiums is a real lemon is not controversial. Whenever economists want to add a mainstream press citation to their resume, they come out with another study proving what a shakedown public financing of stadiums is. Deadspin estimated that the cost of direct subsidies to 2012 is $32 billion out of local coffers, which is very conservative in many ways (for example, not counting the cost of foregone property tax, which the arenas rarely pay, or increased municipal services, like the cops paid overtime to direct traffic). The more you dig, I guarantee the angrier you’ll get.

  • 65 of these stadiums, about a third, have already lost their professional teams and/or been demolished. These ghost stadiums cost $8.8 billion, of which$6.6 billion (75 percent) was paid for by the public. Many of these included horrible outer-city 1960s and ’70s megastadiums that were largely funded with taxpayer dollars, only to be shuttered in the ’90s and early ’00s.

If you want a stem to stern examination of how bad these deals are for their cities, I’ll recommend a killer piece by Next City on the development of a new Detroit Red Wings stadium with $284.5 million in public financing. Detroit! It would be hilarious if it weren’t so heartbreaking. Certain details of the deal, such as redirecting property taxes that would otherwise go to funding Detroit schools and selling the property to developers at well below market rate – in fact, for $1 – might make Ebenezer Scrooge blush, given Detroit’s recent bankruptcy.

All in all, the Red Wings case is thoroughly modern: sold as a public service and a boon necessary for a struggling city; financed out of complex, redirected money rather than a giant novelty check cut from public coffers; done for private gain and in the name of public impact; and thoroughly invisible to a public that loves their team but has trouble sorting out the details. It’s looting carried out in broad daylight.

Local media play a huge role in explaining these issues to the public, who rarely have time to sort out where the money comes from and how this financing scheme affects them. This is exactly the sort of coverage hurt by the decline in local press outlets.

Unfortunately, while the deals are local, the system is national. Team owners have much more leverage over cities than the days when no public financing went to stadiums. There’s just more cities that want a team than there are teams. The leverage to fleece taxpayers only declines if a huge number of cities suddenly refuse to play ball.

If you want to see this problem at its logical endpoint: I wrote recently about the local scramble to shell out 9 figures for the minor league Red Sox affiliate, the PawSox (formerly/currently of Pawtucket, RI). Thankfully, most local decision makers seem at least somewhat skeptical of the PawSox pitch – but never underestimate people’s ability to sell themselves the Brooklyn Bridge.

The next time a new stadium comes up in your area, especially if you’re a sports fan, you owe it to your community to ask who pays, how, and why. Be honest.

Exhibit B: The Edifice Complex

Stadiums are unfortunately just a part of a broader suite of poor decision making and inflated claims. The “Edifice Complex” refers the desire to build grand buildings at public expense for either personal aggrandizement, or more to the point in this context, the one key needed to move the economy forward.

Let’s look at one fascinating example of this trend in action: convention centers. There may even be a convention center nearby you that is screaming for public investment. This totally ignores the changing market for conventions and the weak claims that they make.

In 2012, CityLab wrote an article examining the convention center building boom:

Over the last 20 years, convention space in the United States has increased by 50 percent; since 2005, 44 new convention spaces have been planned or constructed in this country alone. That boom hasn’t come cheap. In the last ten years, spending on convention centers has doubled to $2.4 billion annually, much of it from public coffers.

…But there’s a problem with this building bonanza, and it’s a doozy: There aren’t really enough conventions to go around. The actual number of conventions hosted in the U.S. has fallen over the last decade. Attendance at the 200 largest conventions peaked at about 5 million in the mid-1990s and has fallen steadily since then.

Like stadiums, you will hear the same tired talking points trotted out for *every* publicly funded convention center, regardless of context. The vague idea that they create “cachet” for the host community – unfalsifiable, like any good slippery claim – is ubiquitous, for example.

Convention centers are only one type of white elephant in the Edifice Complex. Other possibilities include casinos, luxury hotels, or ridiculous highway expansions. The common theme is that costs will be underestimated, benefits overestimated, and common human biases like the sunk cost fallacy or appeals to regional pride will be exploited.

Often the Silver Bullet is a cash handout dressed up like an infrastructure project. I don’t really need to pile on Detroit any more (they already have a basket full of image problems and its issues aren’t out of line with what happens in other cities) but Governing recently reported on a story that shows how far the madness can go, and the city happens to be Detroit. Detroit’s port for cruise ships cost taxpayers $22 million and has achieved considerably less than that in economic output. In fact, it has received just one cruise ship in 2015, and when that ship returned the passengers were not allowed to disembark because Customs said the facilities were not able to process cruise vessels or passengers.

Detroit only serves to prove the simple fact that being out of money is not a limit to these type of schemes; it is sometimes, in fact, a prerequisite. To quote the Governing article:

Elective politics rarely attracts small egos, so it’s only natural for officials to want to do big things. But good government is rarely sexy. Sometimes it requires resisting the siren song of projects that rely on patently unrealistic economic assumptions. That’s particularly true when those who can least afford it — such as the taxpayers of a suffering region — are picking up the tab.

These dynamics aren’t unique to Detroit: here’s some similar stories from Miami, Seattle, and DC. I’ll have more on how desperation creates ideal conditions for looting of public coffers next time.

There’s another element that I have to leave out of the Edifice Complex for this series: the ridiculous way we overbuild highways in this country. If you’re interested in the topic you’ve got to check out the excellent Aaron Renn on the Illiana Expressway and I-64 in Louisville. They suffer from the same optimistic projections, blindness to reality, and dependence on government support. In ten years, when traffic is just as standstill or tolls aren’t getting their projected return but the local area has been entirely covered by overpasses, the folks in charge are already on to the next project, with no time to talk about yesterday’s news.

How Did We Get Here?

Almost everything I’ve talked about in this post is a direct result of manipulation about what the term “economic benefits” means. The typical project is justified on the basis of nebulous “economic effects” which have little to do with how good an investment a project is. For example, even if Detroit could prove it had directly caused $44 million in private spending on cruise ships through the purchase of a new port, this does not mean that the port was necessarily a good investment. They have not doubled their initial investment of $22 million, although it’s often framed that way. Two questions at the very least have to be asked and measured to determine the quality of the investment: how much actual tax revenue did the project generate, and would the spending have happened without the subsidy?  This should ideally take the form of rigorous accounting, but even basic addition is lacking from most public projects. Benefit calculation usually takes the form of a wink and a promise from the developers themselves.

It’s depressing, but these facts are something people have to understand. The 21st century demands scientific and computer literacy. I propose that people need to become more economically literate as well. More outrage to come in part two.

Gateway City #4: Holyoke

In 1848 a $75,000 dam was completed, and on the same day it was swept away by the terrific pressure, incorrectly calculated, of the water behind it. The story is said to have been graphically told in a series of telegrams directed to the Boston office:
10 A.M. Gates just closed: water filling behind dam.
12 A.M. Dam leaking badly.
2 P.M. Stones of bulkhead giving way to pressure.
3:20 P.M. Your old dam's gone to hell by way of Willimansett.
- Massachusetts; a guide to its places and people, written and compiled by the Federal writers' project of the WPA (1937).

This post is part of an ongoing series where I visit each of the 11 original Gateway Cities  and record my thoughts on their community, economy, and civic culture. Our fourth stop is in Holyoke.

In philosophy there’s a classic paradox called the Ship of Theseus. The story goes that Theseus rowed his boat around Ancient Greece slaying minotaurs and such. After his retirement, the Athenians maintained Theseus’s ship as a trophy in the harbor. They replaced planks as they rotted or wore out and eventually every single plank and scrap of wood on the ship was different from the one Theseus used. If nothing physical remained, Plutarch asked, could the Athenians legitimately call this the same ship? The question points us towards an important philosophical concept: what makes a thing a thing – where does “ship-ness” reside if not the wood that constitutes the ship?

If you were looking for an equivalent thought experiment among cities, Holyoke offers a reasonable parallel. The populations and industries that drove Holyoke a century ago have been nearly as thoroughly replaced as the wood on Theseus’s ship.

Of course, it’s nearly impossible to replace a city entirely. Cities share a physical location and a history with their past selves; residents, industries, and physical features remain. Cities naturally change and evolve over their existence, so there’s no equivalent to the ship sitting in the harbor, preserved and unused. Still, it’s difficult to imagine that there has been just one Holyoke, rather than a multitude of variously booming and struggling Holyokes that happen to inhabit the same physical space.

What did the Holyoke of the 1950s do to prepare for the Holyoke of today, a place that bears little resemblance?

Holyoke(s) through History

Holyoke’s mythology is also worthy of Ancient Greece. One of the first planned industrial communities in the United States, the town was arranged along a rectangular grid and powered by cheap, plentiful hydroelectric power from the Connecticut River. The power source brought textile and machine manufacturing, but most importantly the paper mills which would come to define the region. From the late 1800s to mid-1900s, Holyoke was the largest paper producing site in the world. Predictably, Holyoke calls itself “the Paper City” – a classic Industrial Capital nickname.

This history has affected the region’s demographic makeup substantially. Whereas most of the first generation of immigrants attracted by the mills were Irish and French Canadian and the second generation Eastern European, Holyoke now has the most substantial Puerto Rican population in New England, 44.7% of the total population.

Alas, the demographics in Holyoke aren’t the only thing that has changed in the last century. Today, the paper mills look mostly like this:

Holyoke Mills
Source: Google Maps street view

and you’re much more likely to see the “Paper City” applied to local breweries, delis, and fitness centers. The decline of manufacturing in the United States hit Holyoke even harder than many other Gateway Cities. The main streets of Holyoke struggle to fill vacant storefronts, and the poverty rate of some downtown Census Tracts exceeds 50%.

But like any of the cities I’ve already covered, all is not doom and gloom. Each of the Gateways tends to have an asset that outsiders do not associate with the “struggling” city (see for example New Bedford’s charming downtown, the number of high quality colleges in Worcester, or MassMutual’s headquarters in Springfield) and Holyoke is no exception: it is unlike any other city in the Northeast for the quantity and low price of its green energy, a direct result of its industrially planned past.

The hydropower there attracted the attention of the world class Massachusetts universities, who in the mid 2000s were looking for a site to establish a high performance computing center. Locating in Holyoke had the added benefit of powering their investment with clean energy, and thus the Massachusetts Green High Performance Computing Center (MGHPCC) was born.

MGHPCC is a remarkable facility. Setting aside the astounding fact that five universities collaborated on the project and share the resource, the computers in the building are capable of dealing with a mountain of data; some of the calculations for the Large Hadron Collider in Switzerland are done here.

A computing center on its own represents very few jobs for people from Holyoke, but it’s taken as a symbol of what can be for this much-maligned city. While nobody can claim that this is a silver bullet, this represents an interesting modern opportunity for Holyoke that other cities cannot replicate.

In addition to hydro power and the Computing Center, there are a number of assets that make Holyoke difficult to write off. The Mt. Tom State Reservation and its gorgeous vistas make up the tip of the middle finger formed by the city’s borders. Holyoke is minutes away from some of the nation’s best colleges in Northampton and Amherst, although proximity rarely equals connectivity. Holyoke is apparently famous (I haven’t been) for its St. Patrick’s Day festivities and Puerto Rican festival.

Local leadership seems much more collaborative, innovative and hands-on than in other struggling places. The current mayor was 22 years old when elected on a platform of supporting the creative and innovation economy. A bit difficult to accuse someone like that of being in the old boy’s network, a problem in many greater rust belt cities with an ossified political caste.

In my unscientific examination, the metros of Western Mass are much more collaborative and regionally focused than their counterparts to the east. They are much more likely to celebrate one another’s success: it seems people here know that a victory for Chicopee or Springfield (or even Connecticut!) is also a victory for Holyoke, rather than a zero sum game. In other regions of the state, the idea of cooperating with the city down the street is inconceivable.

This type of bitter competition and disconnect is no longer the way economies grow. In this instance Holyoke’s future is undeniably tied to that of Springfield, MA, a struggling but larger city with a more diverse set of industries. Although this cooperative tendency is often spurred by a perceived lack of attention from Boston, in my opinion it’s still quite healthy.

Long Term Success – a Luxury?

Holyoke offers a stark contrast to Haverhill. While Haverhill has some issues, it’s reasonably well positioned for the future. Holyoke has many urban problems of the bigger Northeastern cities with little of the financial firepower to deal with them. The state recently voted to place Holyoke schools in receivership, something that has been done at a district level only in Lawrence and represents a last resort for improving the schools. If you Google Holyoke, you will find dozens of stories describing the depth of its poverty and dysfunction, and a number of “turnaround” and “things are beginning to look up” stories.

Holyoke_1881_wb
Holyoke in 1881.
Source: Library of Congress

Against this backdrop, what could long term success look like? All of the Gateways have to work from small, incremental victories, which can sometimes make the situation seem like bailing out a ship that is constantly springing new leaks. Even as Holyoke expands its economic capacity and leadership, the state takeover of the school district is a big blow. It’s a messy process, one constantly besieged by setbacks.

At a glance, Holyoke’s successes can also make you feel like economic development is a type of chaos theory. Holyoke was only able to secure the MGHPCC because of generations of investment and impeccable planning that took place more than 150 years ago (not to mention catastrophic failures – see opening quote). No one could have even conceived of a high power computing center at the time. Can cities actually think about what will be useful 50, 100, 200 years from now? Should they? In the face of massive current challenges, it’s tempting to throw up one’s hands and assume that the winds of fate will push us where they want.

But this is a bit too glib. Post industrial cities all have strange assets that don’t fit neatly onto the 21st economy. It takes a high level of ingenuity and political leadership to make those assets – and even characteristics like river access and industrial history that were once viewed as drawbacks – into unique benefits that drive an increase in growth and quality of life.

This job is somewhat like trying to repair a bicycle while riding on it.

In the best of circumstances, it’s difficult to focus on any future more remote than the next several years. Holyoke is preparing for an unpredictable future like the rest of us. More than most of the US, though, it has less of an ability to meet those circumstances as they change.

The good news is that the fiercely loyal want their home to improve, even when the odds look impossible. People like that will still be rooting for Holyoke in a hundred years, and we ought to make their job a little easier if we can.

Film Tax Credits and Political Theater

Massachusetts Governor Charlie Baker recently floated a proposal to cut the state’s film tax credit (FTC) in order to pay for an increase in the state earned income tax credit (EITC). The former subsidizes movie companies to make films, television shows and commercials in the state; it costs about $80 million a year, and in 2012 fully two thirds of that spending went out of the state. The EITC’s proposed expansion, on the other hand, would put tens of millions  of dollars directly into the pockets of the working poor. Eliminating the FTC would cover most but not all of the EITC expansion.

Some state lawmakers are saying it’s a “cute” trick to link the two, but that the Governor is cruelly overlooking the value of the film tax credit. The “local lighting technicians and hairdressers who work on movies would be the real losers if the governor got his way” according to a politician quoted in a recent Boston Globe article. Seems appropriately dramatic for a discussion about state-subsidized films.

Some background: the EITC is almost universally hailed as an effective means to a) boost the spending power of those who need it most; b) improve the economy, as working poor are more likely to spend the money they receive; and c) encourage work. In an era where apple pie is partisan, the EITC is actually supported by everyone. It’s almost not fun to defend the EITC: it’s too easy.

I want to spend some time instead on the film tax credit, which is significantly less easy to love.

Somewhere between 35 and 44 states offer some type of incentive for film; the sources disagree (I think) because the tax credits are structured differently and pay for different things. The broader point is that it ought to be a red flag if 70% of states offer a tax credit aiming to lure in the same businesses. Almost all of these states have adopted such credits since the 2000s, a time before which movies appear to have been produced.

According to the Massachusetts Department of Revenue, it takes more than $100,000 to develop one Massachusetts job through the credit for one year. The report takes a fairly generous approach, assuming for example “that all feature films applying for the tax credits were induced to film in Massachusetts due to those credits.” Which is, as they recognize, “a generous assumption considering that some feature films were required to shoot in Massachusetts, at least in part, for authenticity purposes.” Of all the states that have analyzed their Film Tax Credits, only Massachusetts took the dramatic step of refusing to count TV series and films whose filming was already underway before the tax credits were enacted.

There are many different ways to slice the question of the FTC’s impact: how much “economic activity” is generated; the return on each dollar spent; how many jobs are “created”; the proportion of spending going to people within the state. None of them looks great for the FTC, but the problem is that supporters will take the one metric that puts them in the best light and run with it. It just can’t stand up to scrutiny.

You will often see quotes in news stories like “proponents point to the $342 bazillion in total spending the tax credit generates per year” without any kind of context or analysis of the opportunity cost of that spending. The “spending per job” metric I outlined above isn’t really the best way to determine economic impact either, it just happens to make some intuitive sense without going into counterfactual scenarios of economic activity.

There’s also a lot of vague insistence that the Mass Dept. of Revenue failed to account for something important and thus doesn’t capture the FTC’s true impact. Defenders insist that there is also a huge multiplier effect that creates spin-off jobs throughout the Commonwealth. Filming in Massachusetts creates “good publicity” that leads to tourism, they say (never mind that The Departed is not exactly an advertisement for the type of tourism Boston is looking to promote).

One defender argued that Sandra Bullock said nice things about Massachusetts on Regis and Kelly after filming the 2008 film The Proposal here – the best publicity, apparently, that money can buy. Actually, for the current price tag, we could deploy an army of 80 celebrities, paying each of them a million dollars to say “Massachusetts is nice, everyone should visit” on every talk show they go on.

The tourism defense is at best questionable. After nearly 10 years, the burden of proof should be on the credit’s defenders to show that even a single person has visited Massachusetts because Sandra Bullock told them to.

No, there’s no intrinsic reason to link the two tax credits, but Massachusetts is in a budget shortfall, and this plan is a great opportunity to take a bad use of money and turn it into a good use of money. It is cute. It’s shrewd politics. And it would be a shame if it didn’t work.