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Commentary

Do Sweatshops Belong in a Free Market?

This article originally appeared at C4SS.org on March 18, 2011. It was the first in a series, the fallout from which led me to end my brief flirtation with “market anarchism.” There’s no room for genuine discussion in an echo chamber, and arguments over intellectual purity get boring pretty quickly. They’re still probably over at C4SS and Strike-the-root, churning out articles from the ideological vending machine.

Libertarians and market-anarchists often cite the non-aggression principle (no force, no fraud) when summarizing their philosophy, so I am perplexed when I hear support for sweatshops in conversations with individuals who self-identify as libertarians or market anarchists. In fact, sweatshops, those citadels of cheap labor associated with laissez-faire capitalism and industrialization, perpetuate both force and fraud against the people employed there, so they are incompatible with a free or libertarian society.

By supporting this form of economic exploitation, many libertarians and market anarchists both undermine their philosophy and alienate potential supporters among the working class.

Sweatshops are generally considered to be factories or workshops in which employees, often children, work over nine to ten hours a day for wages that barely cover basic necessities. The working conditions at these factories or workshops are often considered to be hazardous or unsafe. Sweatshops do not provide their employees any benefits, such as health insurance or worker’s compensation, and employees do not enjoy any form of job security. Today, sweatshops can be found all over the world, but they are most common in developing nations, such as India, China, and Mexico.

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Commentary

Those Troublesome TIFs

Published October 2, 2013 at the Rock River Times

In “Trouble with TIFs,” I discussed Tax Increment Financing (TIF), and how TIF districts deprive local governments and school districts of revenue. I also talked about how several studies have shown the unfavorable results of using TIF districts to address blight. In most cases a blighted area was no better off after TIF than it was before, and in some cases it was worse.

There is no doubt that when taken as a whole, Rockford’s experiment with Tax Increment Financing has been a failure. City leaders, however, continue to create new TIF districts and bet on their ability to stimulate growth, despite sobering evidence to the contrary. Not only have TIF districts failed to spur widespread development and raise property values, they threaten to drown our city in a sea of red ink.

In 2010, the consolidated balance for Rockford’s 30 TIF districts was $1.9 million in the red. That deficit was projected to increase to $4.1 million in 2022, before the trend would turn positive. Less than three years later, the consolidated balance for Rockford’s 32 TIF districts was $2.76 million.

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Commentary

Rockford Rewards Failure in Response to Stimulus Fund Scandal

Published September 22, 2013 at the Rockford Register Star

Earlier this month, Rockford City Administrator James Ryan released a memo with his recommendations for how the City should respond to a U.S. Health and Human Services Office of Inspector General’s audit. The audit covered roughly $599,000 in federal stimulus funds Rockford received in 2009. In part, Ryan recommended returning nearly $300,000 in funds that were improperly spent.

Ryan’s memo outlines a clear failure (whether intentional or not) to follow stimulus fund guidelines on the part of Rockford Human Services Department staff. This failure may constitute, at the very least, a neglect of duties.

George Davis, Executive Director of the Rockford Human Services Department, first became aware that the Office of Inspector General was looking into Rockford’s use of federal stimulus funds in the fall of 2011.  He told City Administrator James Ryan, “Given our general accounting practices and Department fiscal procedures I don’t expect that we will have any significant issues.”

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Commentary

Questions Raised by Stimulus Funds Memo

Published September 18, 2013 at the Rock River Times

After weeks of delay, the City of Rockford finally released the results of its internal review of the U.S. Health and Human Services Office of Inspector General’s audit, which covered roughly $599,000 in federal stimulus funds spent in 2009 and 2010. This memo, written by Rockford City Administrator James Ryan, raises several alarming questions about the possibility of wrongdoing by City staff and its grant recipients. There are, in fact, at least two instances where further investigation may be warranted.

The first demonstrates a clear failure (whether intentional or not) to follow stimulus fund guidelines on the part of Rockford Human Services Department staff, and may constitute, at the very least, a neglect of duties.

George Davis, Executive Director of the Rockford Human Services Department, first became aware that the Office of Inspector General was looking into Rockford’s use of federal stimulus funds in the fall of 2011. He told City Administrator James Ryan, “Given our general accounting practices and Department fiscal procedures I don’t expect that we will have any significant issues.”

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Commentary

Trouble with TIFs

Published September 4, 2013 at the Rock River Times

Rockford’s 32 Tax Increment Finance (TIF) districts cost taxpayers $2.75 million in 2012, according to a recent report by Finance Director Chris Black. That deficit was projected to increase to $11.38 million by 2023, before the trend reverses. This alarming news has led to the creation of a committee to look into the financial status of each TIF district. As long as this committee is impartial and objective, it could represent a positive step toward curbing Rockford’s TIF addiction.

What is a Tax Increment Finance district? In short, TIF districts are designed to help blighted areas by diverting public revenue toward redevelopment and improvement in those areas. The property tax allocated to various government entities within a designated district is “frozen” at the point the district is created. Any future increase in property tax revenue is captured in a fund and used to finance public infrastructure or reimburse private developers.

In theory, improvements spurred by the use of TIF will raise property values, which in turn will generate more money for the fund. This is money that would otherwise have gone to other taxing bodies, such as a county government or school district. This effectively deprives them of that revenue for the life of the TIF district. They continue to receive the same share of property taxes they received when the district was created.

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Commentary

Big Business Payoffs Bring Few Results

Published August 21, 2013 at the Rock River Times

On the third anniversary of the Wanxiang solar panel factory opening south of the Rockford airport, Channel 23 News began its story with a sobering fact. “It’s been nearly three years since a solar panel manufacturer opened its doors in the Forest City, a facility that was supposed to bring hundreds of jobs.” In reality, they reported, the plant has only 13 employees. After the segment, newscaster Tina Stein turned to her partner and remarked, “Quite a difference from what was originally promised.”

In exchange for receiving at least $1.2 million dollars in tax increment financing (TIF) funds, $4 million in state grants, 10 acres of land (worth $650,000), and guaranteed government contracts, Wanxiang was supposed to employ 60 people in its first phase alone. “This is the perfect example of how the city and county came together to create jobs,” Winnebago County Chairman Scott Christiansen said in August 2010. Today, the solar panel manufacturing center is barely operational.

Wanxiang Group is China’s second-largest privately held company, with revenues in the billions of dollars annually. Its founder, Lu Guanqiu, is the 33rd richest person in China, with a net worth of more than $1.87 billion. Did Wanxiang really need a few million dollars in public funds to open a factory in Winnebago County?

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Commentary

Federal Audit Exposes Stimulus Fund Abuse

Published August 7, 2013 at the Rock River Times

Congress passed the American Recovery and Reinvestment Act of 2009 in order to use Federal funds to stimulate the US economy, which had tumbled into severe recession. That February, the US unemployment rate hit 8.3 percent. The unemployment rate in Rockford was 14.1 percent in January 2009 and peaked at 20.3 percent in January 2010.

The Federal stimulus package provided $1 billion to the Community Services Black Grant Program for two years, ending on September 30, 2010. The stated purpose of this fund was to reduce poverty, revitalize low-income communities, and help low-income Americans. This would be done by providing services addressing employment education, better use of available income, housing, nutrition, and health.

The State of Illinois awarded Rockford’s Human Services Department $1,062,800 out of this fund. The Office of Inspector General of the US Health and Human Services Department later conducted an audit of how 56 percent (roughly $599,000) of that amount was spent in Rockford and determined that a hair more than one third of the audited funds were unallowable under the Recovery Act. A further $141,796 was deemed “potentially unallowable.” So the audit determined that fully 58 percent of the funds they examined were either unallowable or potentially unallowable.