Where’s the Evidence That the China Hub Makes Financial Sense?
In August 2010, Mike Jones, chairman of the Midwest China Hub Commission, told the St. Louis Post-Dispatch that a key study that would make the “business case” for the China Hub idea was halfway done.
I spent some time looking for that study, or any discussion of its results. Finally, about to give up, I emailed the Midwest China Hub Commission to ask whether the study Jones had promised was available.
Here is the response I received:
The study you refer to is still underway but very close to completion. The St. Louis RCGA is spearheading the impact analysis with possible completion and release of findings to come at the end of next month or June. The findings of the analysis will be made public at that time.
So, despite statements from legislators and special interests that subsidizing freight traffic is a good idea for Missouri, no study has been published that backs up those statements.
Right now, state legislators, local politicians, and special interest groups are in a rush to award $480 million in state subsidies that they say would further the China Hub dream. But the legislative session ends in mid-May, so the promised study won’t be done in time for legislators to consider the results before awarding almost half a billion dollars in subsidies.
There’s a lot that I don’t understand about this tangle of subsidies, but this is perhaps the most mystifying. Legislators who say that they want to keep Missouri fiscally responsible are now pushing to award almost half a billion dollars without any formal attempt to weigh the costs and benefits of the proposal.
From Sen. Eric Schmitt:
This is new. This is new investment. This is new economic activity that we just don’t have. When you have zero flights a week and we want to move forward and actually create this kind of international trade hub, which is what it is, that’s activity that we don’t have now.
What evidence is there to substantiate Schmitt’s statements? Has any analysis been done demonstrating that the award of tax credits would result in increased freight traffic to Saint Louis?
From Rhonda Hamm-Niebruegge, director of airports at Lambert-Saint Louis International Airport and Ed Monser, president of Emerson:
[The Aertropolis subsidy bill] has the support of organized labor because of the job impact it would bring to Missouri and support from rural legislators because of the opportunity to export Missouri beef and pork, as well as other agriculture products, to countries not currently buying these commodities.
But what evidence is there to prove that this project and related incentives would result in new jobs? What study has been done that demonstrates that China would import Missouri agricultural products if the state spent $420 million to subsidize the construction and operation of cargo warehouses?
If there were an award for unsubstantiated, overblown commentary, it would go to Rep. Caleb Jones, who told CBS:
It’s going to create demand for all of Missouri and our products and goods. Folks from my district are going to be able to load up cattle and drive it to St. louis and have it in China the next day.
What evidence is there showing that this project and package of incentives will “create demand for all of Missouri”? How do Jones’ constituents know that there’s a market for their cattle in China? Instead, isn’t there a chance the constituents of the 117th district will have to pay roughly $80 each, which is what this bill will cost every Missourian — and then receive no benefit?
The aerotropolis tax credit bill does not have to be passed this year. After all, there’s no firm commitment from China, the legislation contains hidden costs, and no study has been produced demonstrating that this proposal makes financial sense.
What’s the rush?