This really isn’t about New York. The problem is the race-to-the-bottom communities engage in when heaping tax subsidies on companies that would create jobs no

This really isn’t about New York. The problem is the race-to-the-bottom communities engage in when heaping tax subsidies on companies that would create jobs no matter what. For public finance, it is one of the purest examples of a prisoner’s dilemma one could think of. And just as in that thought experiment, it is entirely obvious how to get to an outcome that is better for everyone: cooperation. Other economies have done so successfully: The EU limits direct subsidies to individual companies, shifting competition to areas that benefit all companies and citizens as well, such as education, safety, public transit, reasearch, or even low taxes, as long as they apply not just to those that are large and mobile. The results speak for themselves: Ireland has become a knowledge economy powerhouse, not primarily with their illegal subsidies to Apple, but with lower taxes across the board, plus some rather good universities and the English language. Eastern Europe has managed to attract manufacturing, especially automotive. Over the last 20 years, they have experienced a massive economic rally. Meanwhile, old economies like Germany aren’t exactly hurting, either. There used to be an argument against that seemingly made sense, namely that subsidies may be the only tool poorer communities have to attract investment and catch up. But if anything, this debacle has exposed that argument as hollow: it wasn’t Detroit or Kentucky winning HQ2, it was New York. Financial competition seems to favor the already rich, to everyone’s surprise. The trouble seems to be a sort of fetishisation of market mechanisms: citizens favoring tax competition makes about as much sense as a union disbanding because “this really isn’t fair to McDonalds”. Focusing on New York shifts the debate onto a side issue, namely that economic indicators do not always perfectly correlate with quality of life. Because NY would have seen a benefit in the former, without a doubt. But the impact would have been distributed somewhat unequally amongst the population. That’s a debate to be had, and one where a clear answer eludes me. But it’s tangential to the unique features of this incident, namely the reality-show competition and massive subsidies.