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The case against courting companies

Texas Governor Rick Perry (pictured above) is looking to attract companies away from California with promises of low taxes and fewer regulations.

South Dakota's governor is trying to lure businesses from Minnesota. Texas Governor Rick Perry is trying to charm businesses from California. And this week, New York Governor Andrew Cuomo is looking at new tax incentives to attract companies to his state.

The question is, who doesn't want their government to bring in new business? Marketplace Senior Economics Correspondent Chris Farrell joins Morning Report host David Brancaccio to discuss.

About the author

Chris Farrell is the economics editor of Marketplace Money.
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Questioning the practice of how companies play one state off against another with promises of jobs in exchange for tax incentives is the least we can do. Often, a state will provide a pass on required infrastructure development, or even subsidize construction; then, after a couple of years, a company will shut down, lay everyone off, and write the whole thing off as a tax deduction under accelerated depreciation allowance, or employ some other accounting advantage in order to pass on, shift, or rationalize expenses. (Research IBM in south Sacramento.) Also, there's money (investment) to be made in the initial construction of these ventures in the capital markets. A cynic would charge that the whole concept might be seen as a fraudulent venture amounting to little more than government-financed capitalism, or socialism for the rich. What we really need are WHOLLY owned public industries, of the sort that might threaten the owners of private industry with real jobs, wages, and productivity. No one seems to be talking about that, though.

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