Nov 13, 2018

Big companies are pushing governments around

The Tees Valley Combined Authority in the north east of England "Threw the kitchen sink at Ineos", in the words of its mayor, to persuade the company to locate a new car plant on the site of a local former steelworks. "We offered to clean the site then give them the land for free, to build the factory, a £20m cash grant, a £100m capital allowance to offset against their corporation tax every year, massively reduced electricity rates, cash to train local workers, and a generous tax credit for research investment," the mayor told the local paper. You could argue it is rational for companies to play cities and countries off against each other to extract financial sweeteners: their first duty is to their shareholders after all. In the US, Amazon has just demonstrated the imbalance of power between companies and governments with characteristically brazen efficiency. As well as Amazon's demands for good roads, public transport and educated locals, the document explained that the size of "Incentives" from state and local governments would be "Significant factors in the decision-making process".

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