Mercatus Center Study: JobsOhio is Bad Policy

Targeted benefits from state “job-creation” agencies like JobsOhio misallocate resources and lead to cronyism, according to a Mercatus Center working paper released in May.

“We argue that these costs, which are often longer-term and not readily observable at the time the targeted benefits are granted, may very well outweigh any possible short-term economic benefits,” authors Christopher J. Coyne and Lotta Moberg wrote.

Coyne is associate director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at Mercatus, and Moberg is a George Mason University PhD candidate in economics.

“Surprisingly many states do not evaluate their benefits programs consistently, and most empirical studies on tax incentives find that they have little or no effect on employment or the economy as a whole,” Coyne and Moberg found.

JobsOhio – created with broad legislative support by Republican Governor John Kasich in 2011 — has even less transparency than the Ohio Department of Development, which it replaced. Gov. Kasich has attacked critics of this lack of transparency as “nihilists” who “are gonna have to answer to a much higher power than me” over their opposition.

“One thing missing from most studies on the effects of targeted benefits is a consideration of the unintended and unseen economic and institutional effects of these policies,” Coyne and Moberg wrote.

“The focus is typically on measuring the effects that show up in aggregate measures, such as changes in employment and economic growth. Such studies thus tend to ignore the longer-run—and often unseen—negative effects on both resource allocation and political institutions.”

After investigating the outcomes of targeted benefit programs across the country, Coyne and Moberg detailed evidence that programs like JobsOhio result in cronyism and misallocation of resources.

“Policies that favor some people or companies over others are also vulnerable to distorted incentives. Those who can benefit from the government’s incentive schemes will engage in rent-seeking in order to shape policies to benefit their own narrow interests,” they explained.

“When such rent-seeking becomes prevalent, and firms can succeed by winning favorable status from the public sector, a system of cronyism develops whereby firms habitually serve political interests instead of satisfying private consumers, and whereby political competition replaces market competition.”

“This incentivizes people to redirect their efforts from productive, positive-sum activities to unproductive and even negative-sum activities,” they concluded.

Responding to a Media Trackers inquiry, Coyne listed several questions raised by JobsOhio and state targeted benefit programs in general.

“How does government know how to ‘create’ jobs and business relative to the market? What special knowledge do government officials have regarding what types of businesses and jobs should exist?”

He added, “And if they do have access to some oracle that reveals this information why not extend this same logic to having them centrally plan and operate the entire state’s economy?”

“At what cost are jobs ‘created’? No one can deny that government can ‘create’ jobs if by create we mean spend other people’s money to employ people,” Coyne said. “But that isn’t the relevant issue from an economic standpoint.”

“The relevant issue is: at what cost?  If it costs $200,000 to ‘create’ a job that generates $100,000 in value is that worth it? Further, how would the $200,000 in resources have been used if the government hadn’t decided to use them to ‘create’ a certain job?”

We noted that many Ohio politicians tout themselves as “pro-business” and convince grassroots conservatives that this is equivalent to supporting free markets.

“One interesting thing about this research project is that in the process of writing the piece I realized that this is a topic where both the right and left can, and do, find common ground,” Coyne replied.

“The reason is that targeted benefit policies undermine free markets (an issue near and dear to many on the right) but also tend to favor businesses that have political connections and resources to lobby at the expense of taxpayers and businesses that don’t have those connections and resources (an issues near and dear to many on the left).”

“This is precisely why I think it is important to continually highlight the distinction you made between being pro business and pro market,” Coyne said. “Targeted benefits are consistent with the former, but not the latter.”

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Ohio Democrat Thinks He’s Running Against Koch Brothers

Ohio Democrat Ed FitzGerald’s campaign for governor demonstrates his party’s increasing reliance on a few narrow “progressive” themes: FitzGerald is running on a pro-abortion, pro-union, anti-Koch brothers platform.

In the past week alone, 5 FitzGerald campaign emails have slammed Charles and David Koch, prominent donors to limited-government groups who are reviled by leftists nationwide.

“This is what it looks like when the Kochs buy Ohio,” warned FitzGerald campaign manager Nick Buis in a June 25 message titled, “They bought Kasich.”

“It’s time to send a message to the Koch Brothers: You don’t own Ohio, and you sure as hell won’t own Ed FitzGerald when he’s Governor,” Buis wrote after asserting that a $12,155 donation from David Koch this spring is what prompted Republican Gov. John Kasich to sign “the job-killing SB 310.”

Senate Bill 310 (SB 310) put a two-year freeze on “green energy” mandates passed in 2008 under Democrat Governor Ted Strickland. Conservatives sought a repeal of the mandates, but Republican leadership instead proposed a freeze and Kasich demanded that the freeze be reduced to only two years.

A June 26 Friends of FitzGerald-Neuhardt email sent in fringe-left U.S. Sen. Sherrod Brown’s name was titled, “Ed vs. Koch brothers’ agenda.”

“Ed’s opponent, John Kasich, has made the Koch brothers very happy during his time in office,” Brown wrote.

“There’s no doubt the Koch brothers, Sheldon Adelson, and other anti-worker forces are targeting Ohio,” warned Buis in a June 29 email hearkening back to Big Labor’s $40 million smear campaign to kill government union reform in 2011.

Harris v. Quinn was brought by the National Right to Work Legal Defense Foundation — an extreme anti-union group funded by none other than anti-union billionaire Charles Koch and his wealthy friends,” FitzGerald wailed in a July 1 message.

“Even Kansas, the Koch brothers’ home state, hasn’t sold out to them like Kasich has,” Buis wrote in another message about SB 310 sent today.

Promoting FitzGerald’s plan to increase taxpayer spending on alternative energy, Buis added, “the Koch brothers and other special interests will try to hold Ohio back, and they’ll attack Ed’s plan to do it.”

Ohio’s economy has fared much better under Kasich than under Strickland, putting FitzGerald in a tight spot on the perennially important issue of jobs.

Combined with Kasich’s spirited support for the Obamcare Medicaid expansion and his refusal to endorse SB 310 until it was watered down to a brief freeze, this has forced FitzGerald to stretch to the left end of the spectrum to differentiate himself from the incumbent.

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Jon Stainbrook, Opponents Split Lucas County GOP

Lucas County Republican Party (LCRP) members await the Ohio GOP Central Committee’s decision on whether Jon Stainbrook or David Kissinger will be recognized as the local party chairman.

Stainbrook, an ally of Republican Gov. John Kasich and Ohio GOP Chairman Matt Borges, won reelection as LCRP chair at a tumultuous June 11 meeting stacked with his hand-picked central committee members.

But Stainbrook’s critics on the committee — some of whom have posted video of the meeting where they claim they were systematically silenced and abused — walked out and held their own meeting the following week.

The split over LCRP leadership follows an ugly primary season culminating in an investigation and Stainbrook’s removal from the Lucas County Board of Elections by Secretary of State Jon Husted, a fellow Republican, early last month.

“Be advised, consistent with my letter of June 5, 2014, I will not let the Board of Elections slip backward into the dysfunction that has brought us here today,” Husted wrote in a June 24 letter rejecting two Stainbrook appointments to the board.

Stainbrook’s critics now assert that a quorum of LCRP Central Committee members elected David Kissinger as party chairman on June 18. Kissinger notified Husted the same day.

An undated letter from Borges “officially recognizing the Lucas County Republican Party that was organized at the Wednesday, June 11, 2014 meeting as the official County Party of Lucas County” does not appear to fulfill requirements set forth in state law.

Ohio Revised Code 3517.05 requires the Ohio GOP State Central Committee to hold a meeting to “determine and certify which committee shall be recognized as the rightful county central or executive committee” within 30 days of conflicting local parties’ officer lists being certified by the board of elections.

“It is clear that Mr. Borges erred in notifying you that the Stainbrook committee was the duly elected leadership of the LCRP,” Kissinger opined in a letter to Husted, adding that Borges “overreached his authority” by doing so.

Party leaders in Columbus typically try to avoid the appearance of intervention in local disputes. However, this spring Borges and the Ohio GOP sent mailers supporting Stainbrook and close ally Meghan Gallagher in their campaigns for the state party’s central committee.

The Ohio GOP promoted Stainbrook and Gallagher although Lisa McGowan, a Republican candidate for Lucas County Domestic Relations Court judge, told 1370 WSPD that LCRP made primary endorsements in a meeting where Stainbrook openly flouted Robert’s Rules of Order.

McGowan also asserted that the Lucas County Board of Elections refused to provide her with a list of LCRP’s executive committee members, illegally putting her at a disadvantage even before Stainbrook’s rigged endorsement meeting.

In March, Gallagher was replaced as chair of the Lucas County Board of Elections. Husted described a “culture of dysfunction that has plagued the Lucas County Board of Elections” in his post-primary investigation of the board.

John McAvoy, a leader of Toledo Tea Party and Northwest Ohio Conservative Coalition, noticed in April that nearly 300 LCRP Central Committee candidates’ petitions were circulated not by the candidates themselves, but by friends of Stainbrook.

McAvoy and other local Republican activists have been cataloging Stainbrook’s self-dealing for years.

In 2012, Stainbrook allies worked to put Sean Binkley on the ballot in Stainbrook’s Ohio GOP Central Committee race in order to siphon votes from incumbent Jonathan Binkley.

LCRP – chaired by Stainbrook — paid for mailers and signs promoting Stainbrook’s 2012 state central committee candidacy.

While climbing the ranks in the Lucas County Republican Party after the Tom Noe “Coingate” scandal less than a decade ago, Stainbrook was critical of tactics he has since embraced.

“If they don’t like you, they take you off the mailing list. They didn’t invite me to meetings, they took me off the mailing list,” Stainbrook told the Toledo Blade in 2008. “The same thing happened under Bernadette Noe.”

“Mr. Stainbrook, who has written free-lance entertainment stories for The Blade, worked on campaigns for Bob Dole, Bob Taft, Mike DeWine, George Voinovich, and Democratic presidential candidate John Kerry,” the Blade reported in 2006.

Democrat control of Lucas County hasn’t changed much since then, and neither has the accuracy of the 2006 Blade story’s title: “GOP chairmanship is Stainbrook’s goal.”

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Jon Stainbrook, Opponents Split Lucas County GOP

Lucas County Republican Party (LCRP) members await the Ohio GOP Central Committee’s decision on whether Jon Stainbrook or David Kissinger will be recognized as the local party chairman.

Stainbrook, an ally of Republican Gov. John Kasich and Ohio GOP Chairman Matt Borges, won reelection as LCRP chair at a tumultuous June 11 meeting stacked with his hand-picked central committee members.

But Stainbrook’s critics on the committee — some of whom have posted video of the meeting where they claim they were systematically silenced and abused — walked out and held their own meeting the following week.

The split over LCRP leadership follows an ugly primary season culminating in an investigation and Stainbrook’s removal from the Lucas County Board of Elections by Secretary of State Jon Husted, a fellow Republican, early last month.

“Be advised, consistent with my letter of June 5, 2014, I will not let the Board of Elections slip backward into the dysfunction that has brought us here today,” Husted wrote in a June 24 letter rejecting two Stainbrook appointments to the board.

Stainbrook’s critics now assert that a quorum of LCRP Central Committee members elected David Kissinger as party chairman on June 18. Kissinger notified Husted the same day.

An undated letter from Borges “officially recognizing the Lucas County Republican Party that was organized at the Wednesday, June 11, 2014 meeting as the official County Party of Lucas County” does not appear to fulfill requirements set forth in state law.

Ohio Revised Code 3517.05 requires the Ohio GOP State Central Committee to hold a meeting to “determine and certify which committee shall be recognized as the rightful county central or executive committee” within 30 days of conflicting local parties’ officer lists being certified by the board of elections.

“It is clear that Mr. Borges erred in notifying you that the Stainbrook committee was the duly elected leadership of the LCRP,” Kissinger opined in a letter to Husted, adding that Borges “overreached his authority” by doing so.

Party leaders in Columbus typically try to avoid the appearance of intervention in local disputes. However, this spring Borges and the Ohio GOP sent mailers supporting Stainbrook and close ally Meghan Gallagher in their campaigns for the state party’s central committee.

The Ohio GOP promoted Stainbrook and Gallagher although Lisa McGowan, a Republican candidate for Lucas County Domestic Relations Court judge, told 1370 WSPD that LCRP made primary endorsements in a meeting where Stainbrook openly flouted Robert’s Rules of Order.

McGowan also asserted that the Lucas County Board of Elections refused to provide her with a list of LCRP’s executive committee members, illegally putting her at a disadvantage even before Stainbrook’s rigged endorsement meeting.

In March, Gallagher was replaced as chair of the Lucas County Board of Elections. Husted described a “culture of dysfunction that has plagued the Lucas County Board of Elections” in his post-primary investigation of the board.

John McAvoy, a leader of Toledo Tea Party and Northwest Ohio Conservative Coalition, noticed in April that nearly 300 LCRP Central Committee candidates’ petitions were circulated not by the candidates themselves, but by friends of Stainbrook.

McAvoy and other local Republican activists have been cataloging Stainbrook’s self-dealing for years.

In 2012, Stainbrook allies worked to put Sean Binkley on the ballot in Stainbrook’s Ohio GOP Central Committee race in order to siphon votes from incumbent Jonathan Binkley.

LCRP – chaired by Stainbrook — paid for mailers and signs promoting Stainbrook’s 2012 state central committee candidacy.

While climbing the ranks in the Lucas County Republican Party after the Tom Noe “Coingate” scandal less than a decade ago, Stainbrook was critical of tactics he has since embraced.

“If they don’t like you, they take you off the mailing list. They didn’t invite me to meetings, they took me off the mailing list,” Stainbrook told the Toledo Blade in 2008. “The same thing happened under Bernadette Noe.”

“Mr. Stainbrook, who has written free-lance entertainment stories for The Blade, worked on campaigns for Bob Dole, Bob Taft, Mike DeWine, George Voinovich, and Democratic presidential candidate John Kerry,” the Blade reported in 2006.

Democrat control of Lucas County hasn’t changed much since then, and neither has the accuracy of the 2006 Blade story’s title: “GOP chairmanship is Stainbrook’s goal.”

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