I'm going to state up front that until Congress legislates them out of existence the incentives that governments now routinely dangle in front of businesses in an effort to locate their operations in their state/county/municipality those inducements are a necessary evil.  I'm not going to sit here and say that my local/state reps are wrong for playing the incentive game because if they didn't play then we wouldn't be in the game at all. Still, I don't like the rules of the game at all and that's why when I saw this article from David Cay Johnston come across my feed reader I was most interested in reading it.

Johnston is reading a book called Investment Incentives and the Global Competition for Capital, a book that looks at what governments around the world are giving away in incentives, and he believes that the authors' estimate of $70 billion/year in giveaways by state and local governments in America is on the low side. Oh, and the Canadians and Europeans are doing a much better job minimizing the costs of these projects.  From the article:

"Estimating aggregate state and local subsidies in America is a difficult proposition because of the lack of transparency at all subnational levels of government," Thomas writes.

Thomas estimates American state and local government giveaways to business have grown to $70 billion per year. I am confident that his estimate is on the low side, for reasons that will become apparent.

While competition to give money to companies is a worldwide problem, the problem is much worse in the United States, Thomas shows. He estimates that American state and local subsidies to relocate existing businesses are six times the location subsidies in the 15 original EU members.

And here's Johnston's take on what's going on here in America:

But what takes the breath away is the increasing size of the welfare given big businesses as governments compete to shower gifts on companies with capital to invest, even when it means hardly any new jobs.

Back in 1967 I got onto the front page of my local weekly with my first exposé, which dealt with tens of thousands of dollars going to a building contractor that had bid low and charged high for a new county courthouse. Thomas showed that today's state and local welfare for businesses requires mechanized shovels to scoop up the cash, compared with spoons for the giveaway I wrote about 44 years ago.

Many investment incentives cover 30 to 45 percent of a factory's cost, Thomas showed. He said that the biggest recent American incentive had a net present cost of $734.3 million. That paid a fifth of the cost of a ThyssenKrupp steel mill that opened this year near Mobile, Ala. It turns out stainless and high carbon steel.

He gives our fair state of North Carolina a little attention in his pillorying of server farm deals which he points out generate very few jobs:

Then there are the North Carolina subsidy deals for Dell and Google, whose motto is "Don't be evil." Tar Heel state officials will not say what the total cost is, nor will the companies. They claim that letting loose the electricity discount figures would involve proprietary secrets.

Oh, please. Anyone in the server farm business can just look at the dimensions of the building and come up with a rough calculation of how much power it will use. Are North Carolinians dumber than Forrest Gump, or will they demand a full accounting?

It is curious how the government collects and discloses finely detailed data on how much tax money goes to the disabled, the poor, and the elderly, and to educate the young, but when it comes to welfare for big business, it just cannot seem to find the resources to gather and analyze the costs.

Strange, too, that many of these obscured, but gigantic gifts come through the good offices of politicians who pose as champions of the taxpayer and enemies of welfare, or at least of welfare for those who actually need it.

Here's the coup de grace for those of us who thought that perhaps Dell closed the 4-year old Winston-Salem plant because of a decline in the popularity of desktops:

Thomas tells how Dell moved a factory from Ireland to Poland in 2009 and then months later closed a four-year-old factory built in large part with North Carolina tax dollars. The Irish taxpayers gave €53.5 million to Dell, while North Carolina gave as much as $242 million. But when the Poles offered €54 million more, it was enough to get Dell to move about 1,900 jobs to Lodz. 

There's no mention of the claw back provisions that led to the city getting back a bunch of dollars (not all of them mind you), but it's still informative to see how we might be getting played.

Last point: I think the reason that NC appears so often in the article is that our state is being quite aggressive in pursuing businesses in an effort to replace the hundreds of thousands of manufacturing jobs its traditional manufacturing base has bled over the last 20 years.  And as I said at the beginning I think this is a necessary evil in the current environment, but that doesn't make it a smart way to govern in the long haul.