dirty little secrets

Politics are dirty, but not the way people think politics are dirty: politics are dirtier, in ways most people can’t imagine. There’s a great wealth of very interesting things happening right under our nose, but we think we need a telescope to check out what’s going on, “…in a galaxy, far, far away…” rather than just backing up a few steps, and looking straight ahead, unaided by optical accoutrements.

Where I live, who is in our local Republican Party? Nobody knows. Well, that’s an exaggeration of course, but no one in our blue-collar world could tell you who the chairman of the county Republican Party is, or what an economic development agency is. That’s just the way the “powers that be” like it, too. The “powers that be” are all Republican. They’re rich, they’re powerful, they’re smart, and they’re anonymous – well, they were anonymous – until I became involved in things.

They really like it when people are too bored or uninterested in what they do; it just plays right into their hands and into their plans.

How did I create a rift in the local Republican Party? Before I tell you any more, I just want to say, it is a lot of fun having a major impact on people’s lives. Before I tell you what I did, you need just a little bit of background first. I’ll provide as little as I can so hopefully you're not bored to death with petty details, while making sure you know enough to understand what I’ve done.

I worked for an economic development agency in a nearby city, when I was in my 20s. Here in Ohio, economic development agencies are quasi-governmental entities that are supposed to bring industry into their city or county, by simply marketing their respective city or county, just as any product or service would be marketed. They’re “quasi-governmental” entities, because they get a portion of their operating funds from a variety of government agencies (in the form of annual grants) and a portion from annual membership dues ("private sources"). In Ohio, as long as an economic development agency gets 50% or more of its operating expenses from membership dues (private sources), the economic development agency isn’t subject to sunshine laws, which means they don’t have to tell anybody anything about what they do.

Who pays membership fees to belong to an economic development agency? Here in my town, large corporations pay large sums of money in annual dues. Now that we’ve established who pays dues, it begs the next question: why pay the dues? Furthermore, why pay big dues? What is it? Just a bunch of old men going through a midlife crisis, hoping to use agency funds to finance extravagant golf outings, to impress the beer girl on the golf course enough to get in her pants? If only it were that simple.

They pay large dues to distribute campaign contributions to local politicians. (I don’t know about where you live, but have you ever noticed that when they call a snow emergency, and they tell you you’ll be arrested on the spot if you’re caught driving on the roads, yet you can pass 15 cops on the way to work (which isn’t called off) and none of the cops so much as pull you over?) Well, around here, the local politicians don’t want to rock the boat with the local economic development agency, and the local officials know that if a factory is closed down, it can’t make money. That’s why things are, the way they are. It doesn’t stop there.

Politics are dirty, but not the way people think politics are dirty: it’s dirtier, in ways most people can’t imagine. You see, where I live our local economic development agency has been granted “tax abatement negotiating authority” by our mayor. What is tax abatement negotiating authority? That’s when you get to decide which companies pay local real estate taxes, and which companies don’t. (Around here, local real estate taxes are a much bigger expense for a company, than federal taxes!) Wouldn’t you know, the local economic development agency just granted Wal-Mart a 30 year tax abatement for opening a second store on the other side of town! Wal-Mart doesn't have to pay real estate taxes for 30 years, as an incentive to locate another store here. Unbelievable? You betch’ya! True? You betch’ya!

The local developer gets to sell the prospective company his land at higher than fair market value – or at the very least: the prospective company is guaranteed to buy the developer’s land – rather than the land of some nobody, even if the "nobody's" land is cheaper, more plentiful, located at a higher elevation (making it less likely to flood) with better drainage, and in a better location! How's that possible? The developer can have overpasses on federal highways moved to better suit his location. All the "powers that be" have to do, is tell the federal government, "It'll spur economic development." In turn, the federal government can't bend over backward fast enough to provide federal grants to finance the entire cost of moving the overpass on the federal highway, to better suit the local developer's location. This way, the politicians in Washington who represent our district, can tell the electorate: "Look how much we've done to create jobs for our district by re-routing overpasses so Wal-Mart will feel more comfortable locating here! Look at all the jobs we've created, not only in the construction of the new overpass, but all the Wal-Mart jobs too."

The local developer is buddies with the economic development agency, because he can (and does) donate - or sell at a ridiculously low price - land &/or buildings to the local economic development agency, so the agency can sell the land &/or buildings at fair market value, and donate the proceeds to the legal defense fund of whoever they wish; local multi-national conglomerates included. (Plus, the developer gets to write off the fair market value of the property he donated on his federal taxes; not the transaction value, but the fair market value!) Pretty slick, huh?

But wait, it gets deeper…uh, I mean better. You see, they use this tax abatement negotiating authority to keep good paying factories out of our town. How does that work? Well, since the “powers that be,” get to decide who pays real estate taxes and who doesn’t, if a good paying factory wants to locate here, they aren’t offered a tax abatement, because the local “powers that be” (the multi-national conglomerates who fund our local Republican Party, who're also dues paying members of the economic development agency) know that a good paying company will only go where they don’t have to pay real estate taxes for a long time. This prevents an environment of wage competition, and fosters an environment of reverse wage competition.

Why is wage competition so bad? It means the large, multi-national conglomerates who've always been here (annual dues-paying members of the economic development agency), would have to raise their wages to compete with the new company's wage package, or lose their employees. Neither scenario is acceptable to them. What the "powers that be" want, is an environment of reverse wage competition. Reverse wage competition leads to outsourcing; outsourcing from within.

You may be thinking: with the price of gas and diesel the way it is, is it cost effective to outsource products to other countries and transport those products to the “ultimate customer” in North America? No – it’s not cost effective. The high price of gas is actually saving our butts! That doesn’t mean that it’s not cost effective to outsource, however.

How can that be? Multi-national conglomerates who have operations here, who’ve traditionally paid well, outsource their operations within their own factories, to a “scab” company that pays much less and doesn’t offer health insurance. Then, the big multi-national conglomerates and the “scab” companies, split the difference in operating costs. In order to pull this off, you need an environment of reverse wage competition.

What is reverse wage competition? It’s an environment where you have a handful of factories who’ve traditionally paid very well - but no longer feel that paying well is necessary to keep good employees, because they can fix it, so good employees will be "takin' what they're givin' 'cause they're workin' for a livin'," as the old song goes. They think they can accomplish this by putting a "lock" on the local labor market, by making sure only low-paying companies locate here. They do this through their membership in the local economic development agency, by using the agency's tax abatement negotiating authority to determine who pays real estate taxes and who doesn’t. They act as a gate-keeper to industry thinking of moving in. It's the classic scenario of the fox watching the henhouse. Nobody around here knows or cares, because it's such a dry, boring and technical subject, that it can't possibly compete with stories about whose boob popped out of her dress at the grammys, and how long she waved at shocked onlookers before she noticed.

Members of the economic development agency, who will heretofore be referred to as "Member Companies," conduct “wage surveys” on the new factories they were responsible for bringing in. Then, Member Companies "wonder" why they’re the only ones who pay well, when no one else in town does. This leads to the justification of scab companies and outsourcing; outsourcing from within. This is a slick way to get around the high cost transporting goods between the US, Canada, and the third-world countries where these goods are made. We've always thought of outsourcing as a competition between the wages of US and Canadian workers, and the the "wages" of workers in third-world countries, but they've redefined it as a competition between US and Canadian workers - and US and Canadian workers - thereby removing the impediment of having to pay huge transportation costs associated with the high price of diesel and gasoline.

Example: where I work, they did a wage survey on local companies who employ fork-lift drivers. They found out that no one pays fork-lift drivers $16/hour with benefits like we do. Our warehouse is in a separate building, and it employes nothing but fork-lift drivers. My company outsourced the warehouse to a scab company, forcing the 40 warehouse employees to "bump" to the main plant, and their presence in turn, forced 40 layoffs of the least senior employees.

This is all very dry, boring and on the surface: complex. Because of that, no one around here knows what the local economic development agency is called, what they do, or even what their purpose is. That is, until I came along. That’s all changed. I’ve heard people say that I better watch myself, or I may wind up in a state of…not being alive. I don’t think that’ll ever happen to me, but just in case, I tell everyone I can about this, so motive can be established in a trial, if you know what I mean. There is a lot of money at stake, but I’ve never been threatened – yet; although, nothing would surprise me. There are million$ at stake here, and I’m exposing their little financial shell games to the general public, and the local newspaper is even getting on board with what I’m saying.

It’s crazy, but it’s fun. I hope this wasn’t too boring. I’m blowing the lid off this thing by being actively involved in the local political scene, and talking to bunches of people, and writing as much as I possibly can. I've created quite a "cult following" on my ideas, and it's catching on slowly, but surely. Local politics can be just as exciting as national, if you know where to look. You have a much better chance of making an impact locally, than you do nationally. It’s fun!