In Blow To The Show Me Institute, Another Business Decides to Create Jobs in Downtown St. Louis

Tim Logan at the Post-Dispatch reported on the decision of Stifel Financial Group to purchase the downtown office building that houses their corporate headquarters. Much of the subsequent analysis has focused on the fact that this is a setback for the "ballpark village" concept the Cardinals have been pushing (since the group was previously thought to be interested in building a new office building as part of the village), but I think there's another noteworthy feature of the decision. Namely, in spite of the fact that Rex Sinquefield's Show Me Institute repeatedly claims that St. Louis's tiny earnings tax of 1% acts as a major disincentive for businesses to locate in the city, Stifel has decided to remain in the City of St. Louis and add approximately 225 jobs over the next three years.

So the region apparently can add jobs and residents while still generating revenue for vital public services! Who would have thunk it?

Despite Best Efforts of the Show Me Institute, St. Louis Will Add Thousands of Jobs

Rex Sinquefield's Show Me Institute has been vigorously pushing against a tax credit bill that would pave the way for an international cargo hub in the St. Louis region expected to generate thousands of jobs and billions of dollars in economic activity. In the past week, SMI helped push the narrative that the guy who "literally wrote the book on the Aerotropolis concept" was opposed to building the hub in St. Louis. However, a blog post by Frank DeGraaf at NextSTL effectively demolished this argument:

In the Nicklaus column [author] Lindsay is quoted as saying: "Chinese carriers will come until the subsidies run out, then they look again at their balance sheets and pull out.” This is not at all how the tax credits will work. The Chinese are not receiving any subsidies. They are willing to come to St. Louis on their own dime. What they want from us is an investment in warehouses to accommodate freight forwarders and logistics companies in order to build the critical mass needed to establish a network around the hub. Freight forwarders don’t like to build their own warehouses. The strategy is to encourage the building of state-of-the-art facilities and give a tax credit on goods exported from Lambert.

And as the RCGA's Dick Fleming said (as quoted by the St. Louis American):

But Lindsay admitted to KMOX’s Mark Reardon that he’d never been to St. Louis, and he showed no signs that he had read or understood the proposed Missouri legislation. Nor did he take into account that Lambert has a ‘mega customer’ – China – for their cargo hub...

Lindsay appeared not to understand that the core incentive does not even get triggered until AFTER the facilities are built, the cargo flows and the jobs are here. That also means that as the incentives produce results, the State would be able to add to them and produce even more benefit.

So, just for the record, the Show Me Institute is now on the record against Metrolink, against the earnings tax that generates nearly 1/3 of the city's revenue, and against a bill that would help create 12,000 to 15,000 jobs in the St. Louis region. One of their recent publications worried that the proposal would give St. Louis leaders too much "power." In fact, the Show Me Institute has even teamed up with the coffin-carrying, effigy-burning, Hitler referencing St. Louis tea party to push their agendas. With actions like these, it's hard for me to take seriously SMI's claims that they are dispassionate analysts objectively evaluating the data rather than extreme partisans on an ideological crusade.

Show Me Institute Op-Ed Completely Misrepresents Argument

R.W. Hafer, Research Scholar for the Show-Me Institute, wrote an absolutely embarrassingly bad op-ed that completely misrepresented the people he was arguing against earlier today. Hafer framed his argument as examining, "extreme claims on both sides of tax issues." His example of the Tea Party rhetoric around Proposition A was amazingly devoid of content. Despite numerous examples of blatant falsehoods used by the Tea Party in the debate, the only thing Hafer had to say was, "I seriously doubt that there is evidence to support such hyperbole." Um, actually, there's quite a bit of evidence that showed the hyperbole was completely false, but that's not really the point of this particular post.

Hafer's truly shameful argument is when he is trying to compare the false rhetoric of the tea party with what he calls the "extreme" arguments of Saint Louis University economists Lisa Gladsen ad Jack Strauss. Hafer writes the following:

Writing in The Kansas City Star, Strauss and his co-author argue that earnings taxes have no negative affect on economic growth. Does this mean that cities like St. Louis could increase the tax without limit and not face negative repercussions? That is absurd, but it is consistent with Strauss' finding.

So Hafer's argument is that Gladsen and Strauss's argument is "extreme" because it is consistent with the absurd statement that we can increase taxes indefinitely without any effect. But all anyone has to do is look at the original article to see just how ridiculous Hafer's claim is. The article doesn't say taxes have no effect; it says that we can rank what issues are important and the cost of doing business is relatively low on these rankings. Strauss and Gladsen specifically discuss the 1 percent earnings tax, not a hypothetical "without limit" tax increase. Here is the exact text:

There is abundant evidence that shows a business location is determined by the following, in order of importance: (1) skilled workforce, (2) limited bureaucracy, (3) infrastructure, (4) quality of life factors (crime and climate) and (5) cost of doing business (housing, utilities and taxes). It is unlikely that a 1 percent earnings tax would encourage a local firm to move, just as it is unlikely that a current resident would move to another city for a 1 percent pay raise. There are just too many other costs and intangible factors involved in the decision to relocate.

Hafer's misrepresentation is not acceptable from an academic. The Beacon really needs to do more to make sure that their Op-Ed writers are at least accurately characterizing the positions they are arguing against.

Show Me Hypocrisy, Part 2

The irony of the Show Me Institute moving to St. Louis City while claiming that the earnings tax drives businesses away from St. Louis City was noted on this blog, in the RFT, on the Platform, on Political Fix, and at urbanSTL. And all after an insightful tweet by Patricia Bynes!

One of the common responses I've seen from the Right on these blog posts is that most of the SMI employees already live in St. Louis so already have to pay the earnings tax. Hence, the argument goes, there's nothing ironic about them moving the business to the city since they already have to pay the same amount of taxes. But actually, it seems to me that this is even more ironic! Check out this quote from the Show Me Institute: "By adopting an earnings tax, a city gives businesses and residents an incentive to locate production outside the city." The original point now just applies to the individuals. If the earnings tax is so horrible, then why would almost all of the employees of the Show Me Institute choose to live in the city? Obviously, because the benefits of living in the city outweigh the small cost of the earnings tax. The Show Me Institute's attempts to demonize the earnings tax is undermined by not only the institution's location, but also by the choices of its employees!

Show Me Institute Moves to City Despite Claiming that Taxes Prevent Businesses from Moving to City!

The right-wing think tank Show Me Institute has been claiming that the earnings tax that generates crucial revenue for the City of St. Louis drives businesses away from the city. In fact, the institute's gazillionare financier Rex Sinquefield is funding a ballot initiative to put the earning's tax in jeopardy.

Ironically enough, however, the institute has decided to move to the City of St. Louis! I guess there must be other considerations that make it worth it for the institution to be located in the city, despite the earnings tax. Fancy that.

(h/t to @Patricialicious 's insightful tweet).

KMOX Fails to Identify Conservative Activist

As I was doing research for my earlier post on John Burns and James O'Keefe's gulag hoax , I noticed another interesting story that relates to some previous writing. It turns out Kevin Kileen, the KMOX reporter involved in some questionable journalism practices, also covered the Wash U gulag. At the end of his article, he wrote a couple paragraphs purportedly gauging student opinion of the event:

But some students accused the demonstrators of trying to slam the Obama Administration as it pushes for nationalized health care.

Others felt the message was edgy , but worthy of consideration. "I mean it's out there and it's really out of the box," said graduate student Katlin Hartsell, "But I think it's good that it really gets people thinking about what the actual implications of what socialism and communism mean."

Killeen makes it sound as if Hartsell is just a random student evaluating the event. But she's not. According to her blog, she's a member of YAL, the student group that put the event on. The right-wing think tank Show Me Institute's intern Christine Harbin wrote that she, Hartsell, and another intern went to the event to "talk with students about Liberty." Hartsell herself wrote the following:

I was at the event in my capacity as an intern for the Show-Me Institute

But if Hartsell was at the event specifically to spread the gospel for a right-wing think tank, shouldn't Killeen identify her as doing so? And is this really a fair way to gauge student opinion on campus? The reality is that the display was very poorly received on campus, so Killeen's presenting it as "some people thought this and others thought not-this," is both inaccurate and based on inadequate journalistic practices.