Cities Don't Have To Offer Huge Subsidies To Companies Like Apple and Amazon (theguardian.com)

Greg LeRoy and Maryann Feldman from The Guardian discuss some alternative strategies for cities that want large tech companies like Amazon and Apple to invest locally but don't want to offer huge subsidies. They advise against using "old economy" incentives for "new economy" firms, which are more susceptible to disruption, because it can be costly and counterproductive. Unfortunately, many politicians continue to mismatch incentives "especially because some tech companies have become very aggressive about demanding big tax breaks," reports The Guardian. From the report: Here are two proven alternative strategies. The first could be called "back to basics." A regional government inventories existing small- and medium-sized firms, the backbone of many local communities. Typically family-owned and located in micropolitan and rural areas, these firms are often neglected by policymakers and shortchanged by incentive programs. A regional government asks: which industry sectors are we already comparatively good at? Which of those sectors have the best futures? How can our public systems help those promising firms grow? Do they need export assistance? Customized training? Technology diffusion? More engineering-school graduates? There are some simple fixes that could go a long way.

The second alternative takes this same approach and applies it to very young companies and to emerging technologies with more speculative prospects. This was North Carolina's successful strategy from the 1950s until the mid-1990s. Making no big bets on any one company, the state invested in all levels of education, created its community college system and upgraded the state universities. It also focused on highway upgrades and other infrastructure investments. [...] Austin, Texas, currently the hottest tech-led economy in the U.S., provides a model: there, local entrepreneurs became local champions, creating early incubators, reinvesting their gains and working with local government.

Comments

IMHO, it should be illegal

[Snotnose]

It should be illegal for cites and states to offer special advantages to anyone. You make a level playing field. Companies want to play in your sandbox, that's all good. Companies decide your sandbox has the wrong kind of sand and go elsewhere, that's good. Don't like it? Change the rules for everyone, not just $megaCorp. Do it in open sunlight, not in the dead of night with special rules that only apply to $megaCorp tomorrow.

You've got a mom and pop store run by the grandkids of the founders. They play by a set of rules. Some $megaCorp comes in, they want tax breaks that apply only to them. How is that fair to mom&pop?

You might be able to negotiate with mom&pop. They probably have an advantage as they know the market and their customers, where you know how to raise money and get elected. Now it's time to negotiate with $megaCorp. You think that's a level playing field? You're a hayseed from a community college going against someone who not only went to an elite university, but ended up graduating in the upper 50% of their class. You spend your time getting re-elected. They spend their time figuring out tax laws, local laws, and various jurisdictions. You don't stand a fucking chance.

Re:IMHO, it should be illegal

[Daemonik]

Mom & Pop invest their profits back into the local community and tax base.
MegaCorp just pockets the money in an offshore bank and demands more subsidies while the CEO calls his workers parasites for wanting a living wage.

Even mom&pop: because now they have more customers that can spent their money at them.

Unless Mom & Pop were put out of business by the MegaCorp, or if they were lucky enough to sell their products to MegaCorp, MegaCorp has told them to offshore in China.

It's a race to the bottom

[Kjella]

If it's cheap for your city to do, it's probably cheap for some other city to do too. Then they will do a little more. Then you will have to do a bit more than that again. It's like an auction, you don't win until all the other bidders quit. Whatever incentives you offer they'll just recalculate it in $$$ and pick the highest bidder.