The $300 million in cargo hub tax credits being considered by the lege for Aerotropolis will likely pay for itself in ten years. That’s according to a study by the state economic development agency.
Do you suppose the people who performed that study took into account the arguments presented by a letter writer in the same issue of the Post?
Ignorance is bliss, but there are some inconvenient truths that aren’t being put out there regarding the “aerotropolis” project. Air cargo is the most expensive form of freight transport in the history of mankind.
As the Chinese pseudo-economy deflates over the next six months, no amount of crazy Chinese spending (like the $300 billion high-speed rail that most of the country can’t afford to use) not one dime will find its way for expedited air cargo.
Air transport is used as a last resort for just-in-time inventory mistakes on behalf of the supply-chain planners, most typically for uses in automotive production or other just-in-time manufacturing. Key to this fact is that there is no need or time for a warehouse (the antithesis of air transport). Any warehouse that is put in this environment will be only for the company putting it there to get a free ride on the government subsidies, resulting in a market imbalance for the rest of the warehouse owners in this area.
Comparing St. Louis to Indianapolis or Cincinnati also comes up woefully short because of the massive Fed Ex and UPS hubs in those cities – better for a just-in-time deployment from a hand-off of cargo from a Chinese plane.
Some additional inconvenient truths:
The automotive plants that were the source of a lot of air cargo transport are gone from the Midwest, including Fenton.
The U.S. companies that are the market for air transport have very lean supply chains that make the use of air transport unnecessary.
The Chinese would love to handle a lot of air cargo and have it flow into some huge “aerotropolis” such as what our political leaders are being stoked to deliver. The problem: There’s no market.
There are a lot of unknowns on this project, but some inconvenient truths indicate this project will be an “aeroflopolis” if and when it passes. Everyone will be long since reelected by then, and the public’s short-term memory will be in full effect.
John Cusumano • Webster Groves
I don’t feel qualified to rule, between the two opinions, on who got it right, but let’s not forget what the Post-Dispatch article almost did forget. Not until the final paragraph does this huge tidbit get mentioned:
Meanwhile, senior citizen advocates continue to marshal opposition to a piece of the bill that would end a $57 million-per-year tax credit for elderly and disabled people who rent their homes. That provides the bulk of the plan’s more than $1 billion in projected savings over a decade.
If there’s any doubt the tax credits will pay for themselves–or even if there isn’t–it’s immoral to build the project on the backs of the poor. I don’t care if it does–or in this case, might create jobs.
Besides, both Rep. Jeanette Mott Oxford and Rex Sinquefield agree that Aerotropolis is cronyism on the sly. Any time those polar opposites agree on something, I take note! Here’s how the Show Me Institute sums it up:
The bill requires that warehouses qualifying for those incentives must be built on 100 contiguous acres of land or in specially designated areas. There does not seem to be any practical reason for the “100 acre” requirement contained within the Aerotropolis tax credit bill. The requirement seems to serve only to restrict who could draw upon such tax credits, narrowing the field to a small pool of large-scale developers. Such a strange requirement is not unexpected, but it is an unfortunate example of the cronyism that can flourish almost hidden in the details of a lengthy bill.
Furthermore, although Aerotropolis proponents cite increased international trade as the reason to create hundreds of millions in subsidies, the bill would allow warehouse owners that do not process any international cargo to draw upon the tax credits.
What we have is a project with an uncertain outcome taking money from the poor and giving it to political cronies. Yet Nixon, Slay, and Dooley are asking, ‘what’s not to like?’ The answer is: ‘lots’.