Monday, December 3, 2012

The Extortion Business Grows As Local Governments Pay Bribes To Industry

This article describes the sum zero game in which businesses extort tax breaks and subsidies from state and local governments in return for locating their business or retaining their business in their tax jurisdiction.  There is no way to stop state and local governments from engaging in this competition for jobs.  As long as a few do it, they all must do it.  Texas and other sun-belt states are the leaders in the sum zero game.  The auto industry is the major industrial player in the game, but other industries have caught onto the game.  The only way to stop it, is for the national government to prohibit it. 

State and local governments are the patsies in the game.  Local politicians are no match for the real estate staffs employed by major corporations.  They can't even measure the effectiveness of their huge investments when they manage to win one of the competitions with other localities.  The business managers say that they owe it to their shareholders to play the game.  Local politicians may enhance their prospects in the next election, by bragging about their success in playing the extortion game, but the lost tax revenues hurt their ability to provide necessary public services like education.  They don't really know what they win longer term by beating one of their competitors.

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