How Journalists Hype Corporate Subsidy Failures
The press turns fairy tales into facts.
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Pluribus News, a publication focused on covering state-level policy issues, recently published a piece entitled “Data centers drive economic development, but at what cost?”
The content of the article is fine as far as it goes, but the headline is atrocious: There’s actually very little evidence that data centers “drive” economic development, at least under any normal definition of the word. Data centers create few jobs and come with a host of downsides — like the fact that they’re ugly and noisy — that make broader, sustainable economic development in a community less likely.
There’s a reason the only thing that really crops up around data centers is more data centers. Yet lawmakers across the country continue to subsidize their construction, directly driving public dollars to Big Tech based on the false narrative that they’ll be useful economic development tools.
This highlights a persistent problem that helps perpetuate bad corporate subsidy deals: Media hype. Headlines consistently tout illusory benefits from these deals, making it seem as if promises that will likely be broken are, in fact, ironclad economic gains, and that the very questionable benefits of certain economic development projects or programs are actually guaranteed.
This kind of coverage, in a very literal, direct way, allows politicians to amass political capital from policy failures. The media is aiding and abetting dismal outcomes for people and the entrenchment of politicians beholden to large, corporate actors that are siphoning resources away from the public.
A recent report from the Mackinac Center in Michigan drove home the problem. As James Hohman, the author, found, “Front page news stories in Michigan’s largest newspaper from 2000 to 2020 announced the creation of a total of 123,060 new jobs [from corporate subsidy deals]. State reports show these deals created just 10,889 jobs in the end, a success rate of just 9%. Only one in 11 of the announced jobs in these front page stories ever came to fruition.”
“Because the headline stories treat these announcements as a fait accompli, politicians can use them to produce ‘a victory for Michigan’s battered economy,” as one reporter put it,” Hohman noted. “Governors can claim victory regardless of whether the company does what it promises it will do.”
Indeed, political science research shows the benefits from corporate subsidy programs accrue to incumbent politicians in the form of votes, not in actual economic improvements to the lives of residents. The headlines are the point, and journalists are playing along. The subsequent failure of those projects to deliver receives scant attention, if it receives any attention at all.
On the one hand, as a former journalist myself, I am extremely frustrated that it took a think tank to uncover this disparity between promised jobs in headlines and actual jobs, rather than journalists themselves, part of whose job description is ensuring that public actors are being fair, honest stewards of public resources.
At the same time — again, as a former journalist myself! — I am extremely sympathetic to the reality that modern journalism, especially at large, legacy media organizations, is mostly based on cranking out content that can quickly garner clicks, not spending a lot of time on investigations that produce far fewer words and individual pieces and may ruffle feathers in the local business community. The money that used to sustain local journalism has been redirected into the maw of Big Tech, and the incentives are all bad for the folks left behind.
It’s very easy, to that end, to take a press release about an economic development project and turn it into a quick, positive-sounding story for the community, which is what media management often wants.
Still, the practical implications of this dynamic are dire. For example, Michigan’s lame-duck Democratic legislature is about to approve $10 billion in new corporate subsidies, despite the mountain of evidence that the state’s wave of subsidy spending in recent decades has done it not a whit of good. “It’s mind blowing,” said Michigan State Rep. Dylan Wegela, one of the few consistent critics of the state’s corporate subsidy spending.
“Michigan lawmakers tried to come out ahead by writing big checks to big companies. Their deals have failed to live up to their own expectations. That they’re talking about even more demonstrates that they’ve learned no lessons from decades of broken promises,” Hohman, the author of the Mackinac Center report, told me.
It could be, though, that lawmakers have learned the lesson all too well: Approving these programs wins them headlines and political capital regardless of the outcome, so why not do it again?
None of which is to say that there isn’t great journalism being done on corporate subsidy issues. The Detroit News, for example, has some excellent stories on the abuse of non-disclosure agreements signed by members of the Michigan legislature in order to access details about economic development projects. That’s more the exception, though, certainly not the rule.
I don’t have a great solution to this problem: It’s some combination of breaking up Big Tech’s power over media markets, having advocates like myself do a better job of making corporate subsidies political painful rather than useful, and local residents organizing for better uses of public money.
And that’s a lot! But at a minimum we can point out when news outlets are being useful props in the drive to throw ever more public money into the coffers of dominant corporations, and perhaps cajole some reporters and editors to do better in the short term.
NEW REPORTS ON CONSUMER AND WORKER PROTECTIONS: I teamed up with folks from the Consumer Federation of America to release a report last week detailing 10 corporate power-related rules and guidance from the Federal Trade Commission and Consumer Financial Protection Bureau that state legislators can pass into law. Check it out here.
I also joined a bunch of great organizations to put out this report on how and why state legislators should lock in some of the important worker protections proposed and implemented by the Biden Administration. Read it here.
SIMPLY STATED: Here are links to a few stories that caught my eye this week.
A new piece in the Duke Law Journal argues that corporate subsidies are an unfair method of business competition that should fall under federal regulation.
Similarly, a new piece in the Yale Law Journal explains why wage theft should be considered not just a labor law violation, but also an unfair method of business competition.
A D.C. judge ordered the rideshare corporation Empower to shut down after it repeatedly ignored a new law requiring rideshare firms to register with the city.
The D.C. attorney general sued Amazon for charging residents of the poorest neighborhoods for Prime benefits they were not receiving and then lying to customers about it.
An Indiana hospital system has temporarily withdrawn plans to acquire a competing hospital after the deal was criticized by the Federal Trade Commission.
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— Pat Garofalo