Even while construction continues on expanding the Amazon.com campus in downtown Seattle, the company is looking to build a second national headquarters, prompting a rush of cities hoping to land the $5 billion project.
Did you, as a kid, get everything you asked for on your Christmas wish list?
Of course not. But that didn’t stop you from listing every desire that had popped up in your brain the preceding 11 months, on the theory that “it never hurts to ask.”
Do companies like Amazon expect to get everything on their wish lists for new manufacturing plants or megaheadquarters?
Of course not. But that doesn’t stop them from asking, on the theory that companies in search of subsidies, incentives and other goodies won’t know what states, counties and cities will cough up until they’re given the opportunity to do so.
Experience suggests they have a better shot at wrangling more of what’s on their wish lists than you had with your parents. And as long as the pattern holds, why not keep asking – and adding to the list? Especially when the governmental entities expected to hand over the money sprinkle their speeches not with the standard parental brushoff of “we’ll see” but with phrases such as “whatever it takes.”
Do those companies really need — much less deserve — to be given what they’re asking for? And should governments indulge those companies’ desires?
Now a set of interesting questions gets recirculated every time an attractive economic-development project comes along. You’ve been hearing them a lot recently, not just because of the mad scramble for Amazon’s second headquarters, but also for projects such as the giant Tesla battery project under construction in Nevada and Wisconsin’s $3 billion bid for a Foxconn electronics manufacturing plant.
Washington’s various subsidies for Boeing have kept phalanxes of trade lawyers and lobbyists busy for years defending them against complaints from Airbus (no slouch itself in garnering financial incentives, including those that landed Alabama an Airbus plant.)
And if you thought the competition for the last few Boeing projects was expensive and bruising, just wait until the bidding opens for the assembly location for its next airplane model.
It’s easy to understand why companies ask for incentives. Who doesn’t like free stuff – or at least stuff someone else is paying for? Free land, free buildings, free training programs, new roads and utility infrastructure, years-long tax abatements – sure, why not? What else you got?
Governments and economic-development authorities can muster plenty of reasons for doing what they do, starting with the thirst for jobs.
Maybe it’s not so evident here, but the recession didn’t so much end as sputter out in are parts of the country. The economic devastation left in its wake, for individuals, families and communities, was deep and permanent.
For those regions, cash-strapped though they might be, they really need jobs, and if cobbling together a huge incentives package is what it takes to get them, that’s what they’ll come up with.
The second major argument in favor of subsidies and incentives is that they will pay for themselves over time in the form of increased tax revenue generated by the target company and its employees, as well as from the businesses supported by the ripple effects of landing a big new employer.
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