States need to stop trying to buy investments

This tale of Wisconsin’s giant subsidy for Foxconn should be a cautionary tale to state governments who try to buy investments from corporations by throwing money at them, but it won’t; in fact it’s only the latest story of a state government being taken for a ride by the private sector. You can’t really blame Foxconn (nor you can really blame Amazon for its whole “HQ2” spectacle) – as long as local and regional governments are willing to play this game, any smart company will take what’s on offer. Which is lots of money for very loose commitments.

One way to compete for investment, of course, would be to have a good supply of well educated workers and a high standard of living with great public services that make people want to live in your state or city.

Kansas City is the poster child for this, with companies hopping back and forth between Kansas and Missouri to get more tax breaks, resulting in net economic benefit to the metro area that straddles the state line of exactly zero, all while shelling out money that could be used for other things. (Like the aforementioned public services.)

It’s especially ludicrous that NYC or northern Virginia would feel any need to pay Amazon to locate there, in big cities that are strategically important to the company with tons of people eager for those jobs already there and tons more who’d love to move to those places.

Stop playing this stupid game, governments. No matter how it turns out, you lose.

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