La Jolla–based Scripps Research Institute lapped up fat subsidies — almost $600 million in various incentives — to open this Scripps Florida facility.
  • La Jolla–based Scripps Research Institute lapped up fat subsidies — almost $600 million in various incentives — to open this Scripps Florida facility.
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When subsidizing businesses to move to an area, paying $100,000 per job is generally considered quite high. But in wooing biotech-research facilities and companies, Florida has been paying much more than $1 million — repeat, far more than $1 million — per job. With the state and its municipalities in bad fiscal shape, some officials are screaming “No more!”

The big push began in 2003, when then-Governor Jeb Bush seduced La Jolla’s Scripps Research Institute with almost $600 million in various kinds of incentives, both from the state and from Palm Beach County. The facility, which opened in 2009, now has 400 employees. Do the math: far, far more than $1 million per employee. By 2014, Scripps boasts that it will have 550 employees —still more than $1 million per job.

Before long, two more San Diego biotech research tanks lapped up fat subsidies to put branches in Florida. Sanford-Burnham Medical Research Institute raked in $310 million to set up shop at Lake Nona in Orlando. It opened in 2009 and now has 191 employees —again, far, far more than $1 million per job. The institute says that it will have 300 employees in five years. But they will still be costing Florida more than $1 million per job.

Also in 2009, the Torrey Pines Institute for Molecular Studies opened in Port St. Lucie. Subsidy: $86.5 million. Employees today: 87. Surprise! A hair under $1 million per employee.

During the past several months, Florida legislators battled over a budget deficit of around $3.6 billion. The 2011–2012 budget was finally resolved early this month through steep cuts to such spending as education. During the debate, solons pointed to those past biotech subsidies. Senator Gwen Margolis of North Miami Beach said that the state was shoveling out $1.5 billion in biotech subsidies (to San Diego imports plus institutions from elsewhere) to create 1100 jobs. That’s far over $1 million per job. “It doesn’t seem like it panned out too well,” she growled.

“Are we absolutely sure we’re getting a good return on investment for all the things we are doing?” asked Senator Don Gaetz of Niceville. Palm Beach County Commission chairman Burt Aaronson doubted that he and his fellow commissioners would have approved the Scripps deal “if we knew any of this [the economic downturn and fiscal squeeze] was coming.”

Even Eric Ushkowitz, director of bioOrlando, a unit of the Metro Orlando Economic Development Commission, conceded to the New York Times, “We can’t spend another billion dollars to recruit research institutes.”

Not surprisingly, those biotech institutes are shifting the argument away from promised jobs. Scripps says that the state is investing in innovation and discovery. When biotech companies nurtured at Scripps start producing drugs, there will be a gush of royalty monies coming Palm Beach County’s way, says Scripps. Sanford-Burnham says that in only two years of operations, its scientists have produced 55 papers and 21 invention disclosures and brought in 155 contracts and $45 million in grants. (Torrey Pines didn’t respond to my questions.)

Early this month, the University of Florida put out a news release gloating that the number of biotech companies in the state had surged 21 percent since 2008, while the biotech industry over the same period nationwide had lost 15 to 25 percent of its publicly held companies. Biotech investment soared 37 percent to $158 million last year in Florida, while it was flat across the country.

“The biotechnology industry has weakened across the U.S.” while flourishing in Florida, exulted the university. But didn’t these data make Florida just a little bit queasy? The state has plunked $1.5 billion into biotech subsidies, but around the country, the industry is showing weakness. Won’t that make it harder for the whopping subsidies to pay off? How will Florida attract more research institutes, companies, and scientists if the industry itself is flagging? Alas, the university didn’t respond to my questions.

The Biotechnology Industry Organization is holding its international convention June 27 to 30 in Washington, D.C. The subjects to be discussed aren’t reassuring. Biotech companies face “a more uncertain future in the current business environment,” says the accounting firm Ernst & Young, which follows the industry and will lead off the session. Biotech companies operate in a “capital-constrained, risk-averse, high-scrutiny environment.” Hmm.

On March 16, John Craighead, director for investor relations and business development of the Biotechnology Industry Organization, said tersely that the stock market’s valuation of biotech stocks “stinks.”

The biotech hubs such as San Diego, San Francisco, and Boston — along with parvenus such as Florida — all hope that the 21st Century belongs to biotech, as predicted long ago. After decades of yearly losses, the United States biotech industry collectively made profits for the first time in 2009. Venture capital is very tight now but could loosen up. The initial public offering market could once again get hot. The Food and Drug Administration could be less tight-assed about approving new drugs. Maybe health will return to the industry.

But why the subsidies? What’s wrong with free-market capitalism? In the 2005 book The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation, author Greg LeRoy showed that the promise of good jobs and higher tax revenues in exchange for massive subsidies is false. Such payments just fuel bidding wars between states and localities. When a company or research institution wants to set up shop in a new location, it opens up a sack and invites states and cities to drop in money.

What happens? Tax receipts for the winning bidder drop precipitously. Services erode and education, in particular, suffers. The company that took the subsidy has a difficult time recruiting new employees and getting its own employees to transfer to the new location. (As noted above, Florida is already cutting education to help maintain its biotech subsidies.)

The subsidy game is similar to the pro sports racket. And the phony economic claims are the same. For example, the recipient of largesse touts “new jobs” being created, rather like Padres ballpark promoters boasting of all the hamburger-flipper and hot-dog-sales jobs that would be magically formed. But the jobs were only moving from Qualcomm Stadium. It’s the same with Florida’s research institutes. How many employees are simply moving from another job in the area? And how many research jobs are simply being stolen from another place? Say, San Diego.

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Comments

Javajoe25 May 25, 2011 @ 1:35 p.m.

Great article, as always, Don;

This business of which city can lure which industries by providing tax breaks and other incentives that take away from education and other services is really getting old! It's the same thing with other countries who pulled industries out of the US with the promise of cheap labor and lax health and safety laws. It is one big race to the bottom. Everyone looks ahead with no regard for the mess they've left behind.

Just like what is happening here in SD with the city constantly trying to outsource good paying jobs--usually held by long term union members who maintain the standard of living that makes the city such a nice place to live--to low-paying outfits with no vested interest in the good of the city or the living standards of their employees. It's another race to the bottom with no regard to the larger picture.

And what about the investment San Diego may have made in some in these research institutions that are now sliding down to Florida? Do you know if any tax incentives or grants of land or other benefits were extended to these institutions in order to get them to set up here in the first place? I've always thought they set up here primarily to be near the universities that provide their brain power. I guess it can be easily emailed to Florida while Scripps and others squat on bargain real estate and poor San Diego can deal with the consequences, wondering where the good paying jobs went, along with the payroll taxes we used to receive. And you say it's not yet time to raise the barricades?

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Don Bauder May 25, 2011 @ 2:15 p.m.

I don't know if Scripps et al got subsidies in their initial location in San Diego. Scripps and Sanford-Burnham have been in San Diego for a number of years -- starting before the big subsidy movement really got into full gear. My guess, though, is that all three have received some kind subsidies through the years. But San Diego wouldn't have given the kinds of incentives they got from Florida if there had been competitive bidding. Best, Don Bauder

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SurfPuppy619 May 25, 2011 @ 10:14 p.m.

Just like what is happening here in SD with the city constantly trying to outsource good paying jobs--usually held by long term union members who maintain the standard of living that makes the city such a nice place to live--to low-paying outfits with no vested interest in the good of the city or the living standards of their employees

Yes, good paying jobs that are compensated FAR ABOVE a free market rate, paid for on the backs of the poor who earn 1/10th of what a city employee comps in a year.

Yes-Great deal-for the city employee/trough feeder, bad deal for everyone else.

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Don Bauder May 26, 2011 @ 5:49 a.m.

Both you and JavaJoe have a point. Yes, many City workers take home far more than they deserve, and far more than they would get in the private sector, and their retirements are excessively generous. But JavaJoe has a point: outsourcing has a spotty record. It doesn't work in corrupt cities in which big political donors historically get the fat contracts. San Diego is one such city. Best, Don Bauder

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SurfPuppy619 May 26, 2011 @ 10:04 a.m.

But JavaJoe has a point: outsourcing has a spotty record.

Agree 100%, but when public sector compensation threatens the solvency of the muni there is no other choice.

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Don Bauder May 26, 2011 @ 11:55 a.m.

Disagree, because outsourcing can wind up costing more than paying employees. Best, Don Bauder

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Twister May 25, 2011 @ 6:54 p.m.

A leech is not a capitalist.

A leech is not a capitalist.

A leech is not a capitalist.

A leech is not a capitalist.

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Don Bauder May 25, 2011 @ 8:20 p.m.

Yeah. Yeah. Yeah. Yeah. Best, Don Bauder

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Javajoe25 May 26, 2011 @ 11:16 a.m.

Let's be honest; you can't live here on low pay.

San Diego is a beautiful place, but it is no bargain. House prices, even with the recession, are still high in comparison to other places, and rents are even worse because they did not drop anywhere near as much as the house prices did. What is everyone supposed to do? Work here and live in TJ?

The college kids who take the low paying jobs don't mind because they live six in a three bedroom apartment. But for a family, a higher paying job with good benefits is a necessity, and outsourcing just reduces the possibility of being able to earn that level of pay with benefits. Everyone complains about those high earner union members, but no one seems to have an answer when asked how does one live in San Diego with a low paying job?

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Don Bauder May 26, 2011 @ 11:57 a.m.

No question. San Diego household incomes are only moderately above the national average but housing prices are far above the average. Best, Don Bauder

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Twister May 26, 2011 @ 2:15 p.m.

Outsourcing at the local level is VERY different from outsourcing across the pond or south of the "border."

Across the pond, it is all about slavery, wage- and otherwise. Leechery!

Right here in "River City," it's about sucking the suckers (taxpayers) dry, doing a shell game that "lowers costs" to the taxpayer by sucking the staffing and budgets out of government service so the suckers of the suckers can perform the shell game of passing out contracts to their "supporters" at higher cost, but since it comes out of a different pocket, the illusion is complete.

Generalizations can ALWAYS be made to appear to be true by cherry-picking cases, but such generalizations are always lies--the trick is to distinguish whether it's a big lie or just insufficient information. SPECIFICS are required, and the analysis must be COMPREHENSIVE, if one is to determine the true mass, direction, and velocity.

In other words, outsourcing local government work always costs more (the published price is the bait, the deception) more, and the quality is always inferior.

And you cannot expect people to perform up to expectations unless the necessary resources are available, on time, on budget. Consultants and contractors have no motivation beyond the expecation of "winning" the next contract.

Hope is not a strategy. Really!

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Don Bauder May 27, 2011 @ 6:01 a.m.

Often, the private sector company to whom a job is outsourced gets its profit by lowering the quality of the product or service provided. Thus, the outsourcing winds up costing more than if the job had been kept inhouse -- even when employees are overpaid. Best, Don Bauder

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Twister May 26, 2011 @ 2:25 p.m.

JavaJoe, you speak words of clear wisdom, but you don't go far enough. Many people HAVE TO live here for various reasons, and the lowest income people have to cut out nourishment, health care, and other essentials just to make their slumlords rich.

There's something deep in the gut that cries injustice, INJUSTICE, I N J U S T I C E--unless you have nothing inside and everything on the outside. Sociopath, psychopath, a-hole, call them what you will. BS, BS, BS, BS!

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Don Bauder May 27, 2011 @ 6:06 a.m.

The correct word is, indeed, injustice. The most instructive thing one can do is to look at all the redevelopment money spent downtown, where the gleaming new buildings are proof that there is no need for the money there. Then go out to the neighborhoods and see the conditions there. The money does not go where it is needed. It goes where the plutocracy wants it to go -- into its own pocket. Best, Don Bauder

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Twister May 27, 2011 @ 6:15 p.m.

The poor endure--until the end.

The rich stench--until the end.

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Don Bauder May 27, 2011 @ 10:32 p.m.

That wisdom belongs on a bumper sticker. Best, Don Bauder

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Don Bauder May 28, 2011 @ 8:54 p.m.

Those bumper stickers will sell like hotcakes. Best, Don Bauder

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hibob May 28, 2011 @ 2:08 p.m.

Don, I remember your coverage of the TSRI Florida deal back when it was first in the works. Back then you pointed out:

"Florida and Palm Beach County have anted up the $569 million on Scripps' guarantee that its new Florida research center will hire 545 people in seven years. That's about one million dollars per job. Astounding. But, says Governor Jeb Bush, biotech companies springing up and relocating to the area will create 50,000 industry jobs in 15 years."

"In October, when Bush pitched the legislature for a fat Scripps subsidy, the governor's office sent out a news release saying that the projection of future jobs was based on the fact that 80 percent of San Diego biotechs "are within a three-mile radius of the Scripps facility in La Jolla." The news release didn't mention that the University of California at San Diego, Salk Institute, Burnham Institute, and other science centers are located in the same area. In fact, only 40 San Diego biotechs supposedly owe their existence to Scripps, and it isn't clear how many are still in operation."

"According to the Ft. Lauderdale Sun-Sentinel, the Bush team's economic model foresees 173 new biotech companies arising or arriving in the 14th year. But in Massachusetts, one of three top biotech areas, only 5 to 20 companies are added each year. Hmmm."

Are there any estimates so far on how many jobs have been created outside of the research campuses but are still due to those campuses?

Are there any estimates on the cost per subsidized Padres ballpark job? Even better, cost per living-wage ballpark job?

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Don Bauder May 28, 2011 @ 9 p.m.

It appears that there has not been much in the way of ancillary jobs -- that is, jobs at biotech companies that were nurtured at Scripps Florida or the two other biotech research centers that have roots in San Diego. Lots of talk but no hard numbers. There should be some hard numbers on the jobs created at Petco, except the numbers I have seen were quite disingenuous -- another case of claiming a job was new when in fact it just transferred over from the Q. Best, Don Bauder

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viewer May 28, 2011 @ 6:34 p.m.

Just another situation, via an article, in which "Florida" is the TRENDSETTER.

WHY IS >FLORIDA< THE LEADER OF SO MUCH NEGATIVE NEWS, IN THE UNITED STATES.< ????

Ever Monitor This???

Florida & California share the same: But Florida not have earthquakes; as California tornados only been seen through certain areas of the state. But FLORIDA has full command, when it comes to SCAMMERS. As California has command of immigrants; be it illegal & legal.

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Don Bauder May 28, 2011 @ 9:02 p.m.

The three big scam havens in the U.S. are South Florida, Southern California and Las Vegas. Best, Don Bauder

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Twister May 29, 2011 @ 11:37 a.m.

Speaking of scams, at the risk of being deleted, I want to revive this topic (even important topics decline with time rather than are resolved--an ironic situation in this case, eh?)--both with respect to the principle of "spinning" (aka "Lying like a dog." --No offense to dogs, who just lie around . . .) by commission and omission (aka "managed news") and with respect to the life-threatening and environmental degradation specifics of Fukujima. That is, it is the responsibility of all of us, not just real journalists like Bauder, to afflict the liars and comfort/alert the afflicted/affected.

"Response to Founder, 7:52 p.m. May 17: I've been in the media nearly 50 years and it always puzzles me when extremely important stories, such as the one you cite, drop out sight and are not covered. The Japanese disaster should be providing news for another year, but it's being ignored. Best, Don Bauder

"By dbauder 9:51 p.m., May 17, 2011"

There are all kinds of ways to distort the "news" by "wordcraft" (e.g., "insurgents" and "rioting" when people hit the streets for their rights and to depose dictators). If we can't get the offenders and their goons into a real court (say, in Salem MA?), we should hold a Kangaroo Court on them, right here in River City. Or across the country, in the streets, if necessary.

A particularly curious form of this "skill" is that various numbers are given with respect to "radiation levels" and "safe distances," but the dispersal of particles is dismissed by comforting maps of downwind plumes "of radiation" without any mention of the nature of the phenomenon, how it is measured, or what the various "concentrations" (the solution to pollution is dilution?) actually mean.

Now, if I understand correctly (not being a nuclear physicist--where is Richard Feynman when we really need him?), cesium has a fairly short half-life, but that tends to be the measurement mentioned. U-235 and plutonium, for example, are a far, far different story. Even at very low concentrations (on the order of ppb--or ppt, even) what really happens if Don snorts a single particle of one of those, clear over in Colorado where the air is "fresh?" What happens when one person or other creature, or ten, or 300 or so get ripped to pieces by one or more tornadoes, large or small? These days "it" has to do more than bleed to "lead," it has to bleed BIG TIME.

Do you see why this might not be the digression it appears to be? Is it blatant manipulation of the news?

Twister

"Agitate, agitate, agitate!" --Frederick Douglass

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Don Bauder May 29, 2011 @ 4:52 p.m.

The media have a Little Mary Sunshine bias. One reason is usually-subtle pressure from top management in response to pressure from advertisers. Another is the desire of reporters, editors, broadcasters, etc. to keep their jobs; they know that their job will be at stake if they scare people with the truth about the Japanese disaster and things never get that bad (or the apocalypse takes longer to develop.) But these media folks will never get in trouble for saying that the outlook is positive. If there is a disaster, people forget what was said. Best, Don Bauder

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Twister May 29, 2011 @ 6:27 p.m.

As always, Don, you speak the truth to the mediocre, who are, by definition, at the apex of the distribution. But the truth has long been unpopular, again by definition.

There are two kinds of professional. One puts the work first; the other puts the buck first. There is a special name for the latter, more accurate than "professional."

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Don Bauder May 30, 2011 @ 7:32 a.m.

Another way of looking at it -- in the media and other businesses and government -- is that some people are fixated on the product and others on the process. Those that fixate on the process are far more likely to rise in the organization; they are playing politics every minute of every day. Those that concentrate on the product actually are responsible for the organization's success, but aren't likely to rise in the hierarchy. How often do you see a big producer in a company rise to the top? Very seldom. The big producers engender envy among employees, and hence become unpopular -- not suited for top management, according to those who made the top ranks by politicking. Best, Don Bauder

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Don Bauder May 30, 2011 @ 3:27 p.m.

The scum gets to the surface and normally stays there. Best, Don Bauder

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lenny June 2, 2011 @ 12:15 p.m.

Florida has terminal cancer called BP Oil Spill Syndrome. Good riddance and they will get what they deserve. They will reminisce about San Diego's beaches as they sit on oily sand treating strange skin blemishes coughing up blood.

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Don Bauder June 2, 2011 @ 10:54 p.m.

But maybe the oil will kill off the alligators that eat golfers in Florida. Best, Don Bauder

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Twister June 3, 2011 @ 5:41 p.m.

We'll just have to start farming alligators right here in river city (think of how shifting all the public money spent on golfers being shifted to keep libraries and recreation centers open--hell, even gold-plating them), selling any surplus gators to Florida!

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Don Bauder June 4, 2011 @ 10:07 p.m.

Libraries and rec centers will get short shrift -- guaranteed. Best, Don Bauder

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Twister June 5, 2011 @ 5:20 p.m.

What I mean is, take a look at the ALLOCATION patterns--budget-wide.

The streets, for example, used to get early treatment before the winter rains (which seep underground, soften the compacted earth base, and thus cause potholes).

Weeds grow in the cracks, furthering the problem--they used to be zapped before a veritable lawn of devil grass uprooted even more asphalt.

This leads to potholes--street degradation, which leads to expensive "resurfacing" contracts (which are inadequate, as "reflection" cracks quickly form, leading to even more expensive street replacement contracts).

The question is, is this pattern of practice just a sign of incompetence, an inevitable result of reallocation of street maintenance funds, or yet another symptom of a growing pattern of real conspiracy? "Browned out" fire stations and police service, rec centers, libraries, etc.--are they just guns held to taxpayers heads to get protection money to cover up for pension and ballpark severance (pi) of taxpayers from their savings accounts in the name of more regressive taxation? I see a cartoon showing Moor_s' (pi) goons whacking John Q. Public with baseball bats . . .

De-funding of street maintenance, libraries, fire, police, and recreation centers are just a symptoms--the list goes on. What is the underlying (pi) disease?

Follow the money?

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Don Bauder June 5, 2011 @ 7:24 p.m.

The fact that maintenance is ignored while infrastructure is rotting is not a matter of incompetence. It is a matter of thievery. The money is being diverted to projects such as a ballpark and subsidized condos, shopping centers, and hotels that should have been constructed with private funds. Now the mayor wants to help the Chargers get a subsidy that at the very least will be $600 million to $700 million. So maintenance and infrastructure will continue to be ignored while libraries and rec centers are closed. The redevelopment money gets steered downtown and the rest of the City gets screwed. Best, Don Bauder

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Twister June 13, 2011 @ 2:08 p.m.

We don't need no snow-removal--or DO we?

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Don Bauder June 13, 2011 @ 8:32 p.m.

Climate change is progressing so slowly that I don't think any of us have to worry about snow blizzards in San Diego in our lifetimes. Best, Don Bauder

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Twister June 15, 2011 @ 5:46 p.m.

That may be true for the actual climate, but the rhetorical atmosphere is smothering us . . .

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Don Bauder June 15, 2011 @ 9:57 p.m.

You mean you believe that snow jobs are emanating from politicians' oral cavities? This must be something new. Best, Don Bauder

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Twister June 18, 2011 @ 2:54 p.m.

Phlem, flam, flimsy digression; there must be flecks of gold in here somewhere . . .

'Tis not that snow jobs are anything new, nor has there been anything new about how suckers get sucked. What's new is that the Sorcerer's Apprentice hath waved the Master's wand and the I-net is multiplying exponentially. The rising tide swamps all boats.

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Don Bauder June 19, 2011 @ 9:46 a.m.

The problem is that the rising tide has been lifting all yachts while sinking all rowboats. Best, Don Bauder

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