Wednesday, February 12, 2014


Corporate addicts look for the biggest fix.

Why corporate welfare doesn’t boost employment
Politicians love giving money to companies to create jobs, but the benefits are fleeting, at best

... Desperate to create new jobs at any cost, governments across North America have been offering an array of subsidies, tax breaks, and even free land and buildings, to companies willing to invest—even companies that are already posting record profits. The competition has only become more cutthroat since the global financial crisis put job creation and economic growth top of mind among voters. Yet research suggests the benefits of corporate welfare are, at best, fleeting and rarely successful in attracting high-skilled, high-paying jobs. Politicians may score points with voters when they cut the ribbon on a new plant, but many economists argue such incentives only serve to destroy competition, distort labour markets and inflict long-term damage on the economy. ...

Governments have become so aggressive in pursuit of jobs that subsidies often amount to hundreds of thousands of dollars per worker. The Chicago think tank Good Jobs First estimates that state and local governments shell out $70 billion a year in subsidies, including the record-breaking $8.7 billion in tax breaks Washington state offered Boeing last fall to keep production of its 777x jets in the state—a bidding war so fierce that competitor Missouri promised to rebuild a highway and expropriate a golf course if the company agreed to move. ...

Today, some U.S. states offer more than what companies themselves are willing to put in. That has put pressure on Canadian provinces to up the ante, even though provinces typically shoulder more burden for the cost of health care and social programs than their American counterparts. It has led to a string of high-profile job losses in Canada, as U.S. companies have closed doors there in search of more generous offers back home. ...

In the 21st century, the really BIG welfare queens are huge corporations. They remind me of banana republics in the 1960s that used to threaten the U.S. government with "You give us more foreign id right now ... or we go COMMUNIST!"

Nothing has really changed, except it's multi-nationals now doing the threatening. They're a lot like banana republics, except their GDP is much bigger.


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