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They're largely just desperate. The report here doesn't separately address local subsidies vs. state subsidies, but even with natural constraints on site select

They're largely just desperate. The report here doesn't separately address local subsidies vs. state subsidies, but even with natural constraints on site selection, by the report's own reckoning the competition is often between different states, or about foregoing a project until a later time, by which point circumstances could be different in infrastructure, tech, and politics. In this view, money spent now to ensure a successful deal, which may have eventually happened anyway, is a worthwhile boost even if the costs are never recouped. It sounds bizarre, but deals like this send a signal to other businesses that the state is "open for business", which is both a substantial psychological boost and a signal that generous incentive packages may be on the table, but this doesn't always mean that taxpayers get taken for a ride. Smaller businesses have less negotiating power. That's where a "business-friendly" jurisdiction recoups some of the costs of subsidies.

acqq 8y ago
> Smaller businesses have less negotiating power. That's where a "business-friendly" jurisdiction recoups some of the costs of subsidies. And I can’t see that as positive. Take taxpayers money, gift it to the richest companies, then try to recoup a part of losses from the small players. As the society we shoild somehow strive for being able to correct such cases.
- AnthonyMouse 8y ago
  The problem is that governments still haven't figured out that 5% of a thousand is more than 35% of a hundred. What keeps happening is that you have an area which has a successful economy because it has a climate open to entrepreneurship. Then it becomes trendy to hate businesses and not worry about regulatory burdens or high tax rates because businesses are currently doing well. Then the new regulatory burdens and taxes harm the local economy, especially small businesses, and the local politicians become desperate to show a turnaround. But you get more jobs faster to get them all from bribing a huge corporation to swoop in than to actually clean up your regulatory environment and wait a decade for small businesses to recover, so that's what they do. Then the huge corporations are still making huge profits, so you still get calls for more regulations and more taxes, even though that's exactly what's killing your small businesses and making you dependent on huge corporations to begin with. You have to break the cycle in the beginning. Once you're already on the back foot, the huge corporations have the leverage because your choices are to give them whatever they want (and one of the things they want is for you to be more dependent on them), or to suffer short-term government budget cuts as you lower taxes to save your small businesses but then have to wait for the lag time between when you reduce the taxes and when the local businesses come back. Assuming you're not already in the death spiral of economic decline leading to crumbling infrastructure leading to economic decline.

acqq 8y ago

> Smaller businesses have less negotiating power. That's where a "business-friendly" jurisdiction recoups some of the costs of subsidies. And I can’t see that as positive. Take taxpayers money, gift it to the richest companies, then try to recoup a part of losses from the small players. As the society we shoild somehow strive for being able to correct such cases.

AnthonyMouse 8y ago
The problem is that governments still haven't figured out that 5% of a thousand is more than 35% of a hundred. What keeps happening is that you have an area which has a successful economy because it has a climate open to entrepreneurship. Then it becomes trendy to hate businesses and not worry about regulatory burdens or high tax rates because businesses are currently doing well. Then the new regulatory burdens and taxes harm the local economy, especially small businesses, and the local politicians become desperate to show a turnaround. But you get more jobs faster to get them all from bribing a huge corporation to swoop in than to actually clean up your regulatory environment and wait a decade for small businesses to recover, so that's what they do. Then the huge corporations are still making huge profits, so you still get calls for more regulations and more taxes, even though that's exactly what's killing your small businesses and making you dependent on huge corporations to begin with. You have to break the cycle in the beginning. Once you're already on the back foot, the huge corporations have the leverage because your choices are to give them whatever they want (and one of the things they want is for you to be more dependent on them), or to suffer short-term government budget cuts as you lower taxes to save your small businesses but then have to wait for the lag time between when you reduce the taxes and when the local businesses come back. Assuming you're not already in the death spiral of economic decline leading to crumbling infrastructure leading to economic decline.