The Facebook Data Center Story: Is it really a “Big Win” for New Mexico?

September 22nd, 2016 · 3 Comments · corporate welfare, economy, journalism

By Arthur Alpert

As a citizen who has read the Albuquerque Journal’s reporting and editorializing on Facebook’s decision to build a data center in Los Lunas, I am skeptical. I suspect New Mexico’s embrace of that deal will end badly. But it’s a complex arrangement and there are some unanswered questions, so I’ll try to keep an open mind.

As a critic of journalism, however, I’ve absolutely no doubt that the Albuquerque Journal is selling the deal and promoting its prime booster, Governor Martinez.

This example of the Journals’ preference for politics over journalism should be seen in context, but let’s start with the big Thursday, Sept. 15 story and differentiate what the reporters did from the editors’ handiwork.

Did I write “big?” That’s too small a word. An editor or editors decided the story was worth a show, so the Page One layout was as lovely as it was extensive. A bold, celebratory headline ran at the very top:

“It’s official Facebook breaks ground in NM next month”.

Underneath and dominating the page, was a big color photograph of a pretty, blue sky and below, a small color rendering of the proposed plant. The pictures rested on the first few paragraphs of Marie C. Baca’s main story and Dan Boyd’s sidebar as well as a small summary box under the rubric “Los Lunas Project”, that included several facts (and one assertion).

The song-and-dance consumed four of the page’s five columns from the top of the page to below the fold.

As usual, the headlines were noteworthy. Over Marie C. Baca’s straight news account, they wrote, “Data center in Los Lunas is expected to bring more businesses to state”.

Oh? Interesting that the editor should opt for that rubric, given that it wasn’t in the reporter’s lead or her first six paragraphs. But what do reporters know, anyway?

Still it’s a key issue, so why the passive voice? Why not say who expects it to spur additional business? I don’t know why. The editor probably based it on Jon Barela’s statement of confidence about seven paragraphs down. Barela, the Economic Development secretary, is hardly a disinterested party.

In fact, from what I’ve read, there’s not only no consensus that data centers of this kind inspire economic activity but the burden of expert opinion is they don’t. More on that below.

First, however, let’s see what else the headline writer might have highlighted.

 

How about the breathtakingly tiny number of permanent jobs the state is buying with its millions in subsidies? Baca had that information in paragraph three.

Or the size of the subsidy, found in paragraph five in the jump on A2?

The headline writer also passed on referencing the fascinating PNM angle – Facebook wants renewable energy – about 16 graphs down. Also rejected for attention were Utah’s reservations about both the project’s water requirements and the big dollar investment (18 graphs in).

Of course, none of these headline decisions was made for a political reason.

The rubric over Dan Boyd’s excellent sidebar was even more effective advertising for the project:

“Governor calls data center in Los Lunas a ‘big win’ for state”.

Yes, she did that. And yes, Boyd dutifully reported it. But to his credit and from the very top, he described a complex reality. His lead, for example, reminded readers New Mexico “missed out” on a Tesla battery factory two years ago. Some readers may have remembered Tesla projected 6500 permanent jobs. Facebook promises 30 to 50.

And Boyd’s second graph noted one group had “concerns about generous state subsidies and tax breaks used to lure Facebook to the state.”

He was referring, we learn in paragraph 10 in the A3 jump, to the “Albuquerque-based Rio Grande Foundation.” Paul Gessing, its president, “expressed wariness over the incentive package Facebook is getting.”

“I don’t see this (project) as some sort of game-changer,” Gessing told the daily, adding it’s unclear the project will benefit the surrounding area. “I’m not going to break out the champagne bottles.”

Wow! This is Paul Gessing, the Journal’s hero, its go-to guy on everything.  Yet a reader would have to read all the way to A3 to learn what he said. And the headline writer failed to pick up on anything he said. Nor was his disenchantment reflected in a pull-quote. There were no pull-quotes. I mention that not just because they’re kind to the eyes, breaking up walls of words, but also because they can grab readers.

Tangent Alert! While Boyd correctly identified the Rio Grande Foundation as Albuquerque-based, readers might have profited more from knowing it’s an arm of the Koch brothers’ political network.

Tangent Alert 2!  Once again the Albuquerque Journal surveyed expert opinion ranging – if “ranging” is the word – from the political right to the political far right.)

Returning to our analysis, Gessing’s lack of enthusiasm for the state’s deal probably found sympathetic ears among economic development experts (see below) as well as critics of corporate welfare on the political left.

After all, Facebook topped $2 billion in quarterly profits for the second quarter this year, only six months after crossing the billion-dollar mark for the first time. (Deepa Seetharaman, Wall Street Journal July 27.) That made it the fourth most valuable listed company in the US.

So where was the other sidebar? The piece that asks why the State of New Mexico, facing a $589 million budgetary shortfall, is investing millions in tax subsidies and tax breaks for 50 permanent jobs (and hundreds of construction jobs), I mean.

Rhetorical question.

Of course, the Governor and the Journal may be correct in proclaiming the Facebook center will spur economic development. But, Lord, need I say this? That’s for the Journal to say in an editorial (as it did Sunday). Newspapers do not editorialize in their news columns, not since William Randolph Hearst, anyway. Newspapers adduce evidence and provide context to help readers make informed decisions.

Well, real newspapers do.

Moving right along, Boyd’s fine sidebar certainly began the job. And were the Journal editors editors, not political commissars, they would have assembled lots more information on the project by now. For example, Boyd reported a big discrepancy on the Facebook plant’s water requirements. What’s the answer? And where’s the water coming from?

Also, to return to the Journal’s headline assertion, will the Facebook plant spur economic development or not?

I did some Googling and came up with reports and analyses suggesting it won’t.

Iowa has lots of data centers, two Microsofts (a third coming) two Facebooks, two Googles and a smattering of smaller plants, but fewer than 300 jobs in all, writes Dave Swenson (“Data Centers Do Not Make Iowa a High Tech State,” July 25).

“Once up and running, data centers have very lean connections to the rest of Iowa’s economy, as well,” he continues. “Yes, they will buy gargantuan amounts of electricity, but they will require precious little else. They will neither tap into nor stimulate technology sectors in the state. They are big, remote, and super-secure hot boxes that have, literally, hardly anything to do with the rest of Iowa.”

Swenson, a professor at Iowa State who’s studied the economic impact of technical facilities, told KOAT’s Matt Howerton:

“At the price you’re paying for it, it’s a net loss to the regional economy,” Swenson said. “Your taxpayers will never be paid back, and all you’re doing is enriching Facebook investors.”

A NY Times piece by Quentin Hardy Aug. 26 was headlined  “Cloud Computing Brings Sprawling Centers, but Few Jobs, to Small Towns” included this discouraging paragraph:

“As small as the staffs at these mammoth facilities are, companies say, perhaps a third of the company jobs will eventually be filled by robots.”

Robots!

Case Study: Server Farms”, on goodjobsfirst.org, a subsidy-tracking website, quotes one John Rath of Rath Consulting:

“Attracting data centers to cities and states is big business. Cities go all out to offer whatever they can to companies that will bring this type of business to their area. Internet companies have received unprecedented incentives and tax breaks to locate their data centers throughout the U.S.

So intense is the competition, that subsidy offerings frequently exceed any projected wages or taxes. Moreover, these are some of the most profitable growth companies in the country, ones with billions in profits that have no need for the millions that hard-strapped communities are shelling out.”

Mike Rogoway’s readable and neutral piece in the Oregonian (Portland) Oct.12 2015 was headlined “Rural Towns Farm More Servers, Fewer Crops”.

I couldn’t find articles arguing that data centers do spur local economies, but my surfing skills are poor. I’m sure they exist.

Let’s say, though, the state’s Facebook deal is a fait accompli. Here’s a job for a newspaper, asking if New Mexico will monitor the subsidies to see if they help or hurt. Wanna bet the Journal declines that task?

There’s more to say on this subject, most crucially how the Journal’s selling of the Facebook project was predictable given its record on business news and the protection of the Governor.

Another time.

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3 Comments so far ↓

  • Diane Denish

    thanks Arthur for saying what so many are thinking. Intel, now disappearing, was a far better example of economic development, real jobs, high paying, promoting technology and education as opposed to 30-50 security jobs “guarding” the sprawling data center.

  • Emanuele Corso

    Good reporting as always about yet another distraction by the Governor. She is using the death penalty business in the same way.

  • Roland Penttila

    I’m suspicious of large companies searching for political support and tax incentives. It almost seems that being selected means that you were the dumbest state in the running for the facility. It’s almost like an acknowledgment of that just by getting the nod. Sad. But, Trump will make America great…and New Mexico will rise with the tide. Right?

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