The Atlantic Cities ran an interesting piece today about corporate relocation battles. The short of it is that states compete with one another to bring in specific corporations by giving away huge sums of public money. Right now, Ohio and Illinois are fighting over the Sears corporate headquarters, with both states offering around $400 million of public money to the corporation. Incentives like these amount to around $50 billion a year in state and local spending.Companies have been playing this Labor Arbitrage game for a long time, with the emphasis on paying very low wages overseas, and counting on relatively cheap fuel and zero tariffs to make shipping easy. Maybe they're starting to see that they're causing themselves to have some real problems because of it. Or maybe they just see that it's time to apply the Principles of Arbitrage here at home in a bigger way.
Unions are on the ropes, so one angle is to propose opening a plant in the Rust Belt (eg), but make sure everybody knows the company simply can't afford to pay union wages, so "If you want a job, you'll have to work for shit - that's the only way - after all, we've got lots of people in Cambodia doing this work right now for 16 cents an hour; you wanna bitch about us doing you a favor at 8-and-a-quarter?"
I think we can look forward to a lot of really shitty things happening as States and Counties and Cities continue to hack away at every government expense trying to find ways to buy those jobs.
Welcome to Pottersville.
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