Vulture Capitalism or How Much Should I Give You to Bleed Me?

As a local official in challenging economic times, economic development is the word of the day and the recruitment of businesses to ones town to set up job, start to hire and pay income and property taxes is at the top of every municipality's "to do" list.  How ever what doesn't get discussed is the price paid by municipalities and states as they offer incentives to attract businesses both large and small. Fortunately, (hopefully) Pulitzer prize winning journalist to be, Louise Story

has been investigating those exact questions. Her three day series on state and local economic policies digs into the nation wide race to the bottom disguised as economic development. Louise Story's journalism is exposing the grating truth that US corporations are taking billions of dollars in tax breaks, cash incentives and property from local and state governments in hopes that they will make it rain for the local coffers. Every area of business takes these "supports" The NYTimes, states

 states, counties and cities are giving up more than $80 billion each year
 to  companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains.

This money comes out of the public coffers and is meant to boister the economic foundations of these communities by creating jobs. However, this "economic development" comes at a steep price.

The Times analysis shows that Texas awards more incentives, over $19 billion a year, than any other state. Alaska, West Virginia and Nebraska give up the most per resident.

For many communities, the payouts add up to a substantial chunk of their overall spending, the analysis found. Oklahoma and West Virginia give up amounts equal to about one-third of their budgets, and Maine allocates nearly a fifth.

In a sense the relationship between municipalities and corporations takes on a distinctly
asymmetrical character.  No longer the mythical equal partnership between the public and private sectors, the outsized power of corporate bodies versus the at times vulnerable and plaintive nature of public bodies dominates the public will for its self interest.  In these negotiations, it is like David vs. Goliath but without the support of a caring deity.

A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States. 

The tragedy of this circumstance is the real need and desire for municipal bodies to create, attract and keep jobs for its citizens, which in turn, bolster their tax bases in order to provide the revenue which the public bodies can then use to create the circumstances/conditions in which people choose to live. The irony of course, is that these incentives, tax breaks, and other mechanisms are doing the job the private sector is (as described by conservative thinkers) supposed to be doing.  Representative bodies in essence become the job creators, through legal bribery and payoffs while the private sector gets a leg up through public support for ultimately private ends. Corporate entitlements for all!

They dictate their terms, and we’re not really in a position to question their deal terms,” Sarah Eckhardt, a commissioner in Travis County, Tex., said of companies she has dealt with recently, including Apple and Hewlett-Packard. “We don’t have the sophistication or the resources to negotiate with a company that has the wherewithal the size of a country. We are just no match in negotiating with that.

 The struggle to pull out of the near collapse of the US economy has its short term and necessary goals but if long term economic stability and real social development are to take place, than what must be considered is the reigning in of the gargantuan nature of corporate power over public bodies. The effect of a corporation's presence or absence on a city, county or state's ability to govern effectively on behalf of its citizens, underscores the growing weakness of governmental bodies as extensions of popular will,  in a society founded on the primacy of the popular will in governance. But then again some argue this society is founded upon the primacy of private property as the primary element in ones participation in governance. The resolution of that quandary as it pertains to corporate and governmental relations, will explicate the past and define the future of this nation.

Update: In Michigan, we are seeing the extreme example of municipal submission to corporations as the state which is the living heart of the power that was once organized labour is on the verge of passing a "Right to Work" law.  Tax breaks, incentives, loans and grants are no longer enough for Vulture Capitalists, now we must return to the direct depressing of labour itself.