Tag Archives: Litebox

No Lessons Learned from Litebox

Remember the embarrassing Litebox episode? The City and State were offering incentives to “entrepreneurs” who turned out to be little more than con men. The President had a string of liens and unpaid bills, and people knowledgable about the industry said the business plan displayed a lack of understanding of the manufacturing process.

At the time the Lightbox fiasco was uncovered, critics noted that a cursory Google search would have uncovered the problems.

Fast forward to Cricket.

Mayor Ballard is obviously enamored with the idea that Indianapolis will be a Cricket venue–so enamored, in fact, that he prefers to fund Cricket fields rather than the additional police the city so desperately needs. He has ignored bipartisan concerns of the City-County Council, and is moving forward, with an announcement that Indianapolis will host the next three national Cricket Championships.

So what does a cursory Google search tell us about the USA Cricket Association and support for cricket generally? Well, the USACA has no scheduled domestic tournaments for 2013 and has not held a 50-over national championship since 2010. Despite Ballard’s rosy predictions of large turnouts,

“Poor spectator turnout for domestic events has been a routine problem for tournaments staged in Lauderhill, Florida at the $70 million Central Broward Regional Park. After opening in 2008, USACA held their Men’s 50-over National Championship at the 5000 seat stadium in Florida in 2009 and 2010, during which not more than a few dozen people attended. Roughly the same amount of spectators turned out this March for the 2013 ICC Americas Division One Twenty20 tournament, which USA won 8-0 to clinch a spot at the 2013 ICC World Twenty20 Qualifier. None of the matches were broadcast on TV or radio.

“Not one of those events puts anybody in the stands,” said Lauderhill Mayor Richard J Kaplan in an interview with ESPNcricinfo in April. “It doesn’t sell one ticket. I don’t need a multi-million dollar stadium with 5000 permanent seats to sit there with nobody using it.”

Other information readily available through a Google search includes lawsuits against the USACA by California and other regional members, and sanctions from the International body.

Now, maybe all of these problems have been resolved. Maybe they haven’t. I’d feel a whole lot better if I thought anyone in the Administration had taken the time to investigate.

Or even just Google.

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Questions

I get tired of beating the same dead horse, but the Star’s story this morning about the Litebox episode–a piece of real reporting that is becoming increasingly rare–raises additional questions.

The story makes vividly clear how slapdash the City’s vetting process has been, and how politically motivated the decision to announce “job creation.” But the story makes a bigger point, albeit implicitly, about the entire policy of “buying” jobs for one’s area by offering financial incentives to companies that will promise to move or expand.

The obvious arguments against such efforts are familiar: it puts government in the position of helping some businesses but not others that may be their competitors, which troubles those of us who believe in real markets; and it is a zero-sum game overall, since the company that moves its company from Ohio to Indiana is not creating more jobs–it is simply moving jobs from one place to another.

But the Litebox fiasco pointed up a problem I hadn’t previously considered. Even if competent people are running these programs–clearly not the case here–they are unlikely to know enough about the technologies and economic realities of very different industries to make truly informed decisions. This may not have been the case when local officials were competing to attract an automobile factory, but the same technological and cultural changes that increasingly challenge tech businesspeople and that make investment decisions risky even for savvy and knowledgable investors make it virtually impossible for government officials to accurately gauge the viability of tech business deals.

When you add in the inevitable politics involved–the huge pressures to score political points, to look like you are delivering on your campaign promises–it’s no wonder that the jobs don’t materialize. As the Star pointed out, even companies with sound performance records and none of the red flags that accompanied the Litebox proposal have more often than not failed to deliver on their promises.

It’s time to rethink these incentives. Even in competent administrations, as currently structured, they are bad public policy.

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WTF?

Excuse the title of this post, but I just read the lead story in the Indianapolis Star about Litebox–the company that was showered with praise and promises of tax breaks just yesterday by both Mayor Ballard and Governor Daniels.

In my post yesterday, I questioned whether the obviously strange owner had been adequately vetted. Today’s news makes it abundantly clear that the answer is no. In fact, today’s story makes it clear that the company and its proprietor had not been vetted at all.

What sort of process awards tax incentives to a man who not only has no history of entrepreneurial or business success, but who also has multiple unpaid tax liens and judgements against him in his home state? As a policy matter, I have qualms about the practice of “helping” businesses financially in order to lure them to one’s city. But if we are going to play that game–and it is a game–the least we can do is insure that the businesses favored by state and local government are real, and that they pay their bills. If the rationale for these programs is job creation, the least we can do is ensure that the companies that benefit are capable of producing jobs.

This fiasco is a good example of why I keep harping on the issue of competence.

Didn’t anyone bother to check on this charlatan? Or were they so anxious to announce “jobs” that they didn’t bother?

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