Last week, Senator Shelby from Alabama spoke out about government subsidies for manufacturing in the US. He is definitely against and thinks that subsidizing manufacturing is French.
The CEO from Compuware writes to the Senator to remind him of the subsidies his state provided for Mercedes Benz:
I am sure you were adamantly against the State of Alabama offering lucrative incentives (in essence, subsidies) to Mercedes Benz in the early 1990s to lure the German automobile manufacturer to the State.
As it turned out, Alabama offered a stunning $253 million incentive package to Mercedes. Additionally, the State also offered to train the workers, clear and improve the site, upgrade utilities, and buy 2,500 Mercedes Benz vehicles. All told, it is estimated that the incentive package totaled anywhere from $153,000 to $220,000 per created job. On top of all this, the State gave the foreign automaker a large parcel of land worth between $250 and $300 million, which was coincidentally how much the company expected to invest in building the plant.
And David Cay Johnston chimes in with Jane Hamsher over at FDL:
The current Detroit bailout debate has the Washington source-dependent press corps reporting that the Michiganders are seeking favors, but not the Alabama/South Carolina/Tennessee/etc. crowd, ignoring the huge state subsidies to foreign-owned auto plants, the implicit subsidy in federal law that makes union organizing almost impossible and the advantage that new plants have over older ones. I get sooooo frustrated at the awfulness of so much DC coverage…..which could be cured by actually reading the voluminous public record, resulting in less reliance on access to sources.
I’m not a big fan of subsidies, but what we don’t need in the middle of this discussion are legislators condemning subsidies for companies not in his state, while his state handed over almost $500M to Mercedes Benz of all companies.