Andanh.com

From the political notebook:

• It is sad to see state Rep. Michele Reagan, R-Scottsdale, champion such shoddy thinking as underlies her so-called "economic stimulus" legislation.

Take the emotional heart of the package: tax incentives to lure solar-equipment manufacturers to Arizona.

A case can be made that solar energy has the potential to transform Arizona's energy mix. However, a case cannot be honestly made that incentives to lure equipment manufacturers will have a noticeable effect on Arizona's economic trajectory.

According to the Solar Energy Industries Association, equipment manufacturers added 6,000 jobs last year nationally.

Good for them.

But Arizona has a workforce of around 3 million. If Arizona had gotten all the job growth from the industry last year, it would have accounted for just two-tenths of 1 percent of overall employment.

If the Legislature wants to give away the tax store to solar-equipment manufacturers as a point of pride - to become the "Saudis of solar" as Gov. Janet Napolitano puts it - so be it. Just don't pretend it's an economic stimulus.

Even less defensible is the sales-tax abatement for a downtown Phoenix entertainment district. It is well established in the economics literature that entertainment subsidies mostly just push spending from place to place within a market. They don't create anything new, except to the extent that they attract out-of-state trips that otherwise wouldn't occur.

Yet even the big-ticket attractions for out-of-state trips, such as the Super Bowl, don't have much of a noticeable effect on the state's overall economy.

There is still an underappreciation of just how big Arizona's economy has become. Arizona's gross domestic product is now nearly $250 billion. If Arizona were a country, it would have the 26th-largest economy in the world.

You can only alter the trajectory of an economy that big with broad-based tax and regulatory policies. The industrial policy favoritism Reagan is peddling is politics, not economics.


• The metaphor of becoming the "Saudis of solar" is quite inapt anyway. For Saudi Arabia, oil is an export commodity. The oil is extracted there to be used elsewhere.

Arizona has some natural advantages regarding the production of solar energy. But solar energy isn't something that's easily exported, and certainly it cannot be exported globally like oil. It's mostly intended to be consumed where it is produced.

Arizona may also have a natural advantage when it comes to solar-energy research. However, we have no natural advantage when it comes to manufacturing solar equipment.

If Arizona wants to get big in solar-equipment manufacturing, we're really aspiring to be the "Halliburton of solar." But somehow, I don't think Napolitano will be using that.


• Barack Obama's decision to eschew public financing of his general-election campaign is quite revealing.

Doing so is thought to give Obama a big financial advantage in the general election. The speculation is that he can raise $200 million, compared with the $85 million that McCain will have using public financing.

That Obama has such fund-raising ability is impressive, as is the breadth of his fund-raising base. He's not raising it just or even mostly from fat cats.

However, Obama has been a big advocate of public financing of campaigns as part of his New Politics agenda.

So, the first time his New Politics conflicted with his political self-interest, self-interest won.


• We're supposed to be all a-fret over Arizona tomatoes being packaged in Mexico before being reshipped to the United States. That supposedly requires a rush into a poorly designed state guest-worker program that won't work so that the packaging and the Mexicans doing it can come to the United States.

Let's see.

The evidence is that low-skilled workers are a net economic drain in the U.S. Growing Mexico's economy is in the U.S.'s best interest. In fact, some of those fretting about the tomaters say it is so important to the U.S. that we should launch a Marshall Plan to boost the Mexican economy.

So, what's the problem with Mexicans doing this job in Mexico?


• The pooh-bahs of downtown Phoenix have decided to abandon the "Copper Square" branding name. They promise to come up with another one that reflects downtown's place as "Arizona's cosmopolitan heart."

Here's a suggestion. Don't.

Branding can be an important marketing tool, and places acquire identities. But there is little evidence that campaigns to manufacture one for a broad geographical area actually work. For every one that has modest success, a thousand are utter failures.

(column for 6.22.08)