How Far Should Communities Go To Subsidize Companies?

Tax breaks, cheap energy, and investments in infrastructure are among the subsidies often requested of local communities by companies searching for locations for their operations. Edward Alden asks what companies owe in return.
September 27, 2012, 2pm PDT | Jonathan Nettler | @nettsj
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Recent high-profile news reports of companies such as Boeing and Microsoft reneging on promises and generally behaving badly towards the communities they sought special treatment from have highlighted the "growing power imbalance between corporations and governments." In the first of a series of posts on the topic, Alden asks if anything can be done to change this imbalance.

"The Harvard Business School's Competitiveness Project earlier this year made an appeal for enlightened corporate behavior, encouraging companies to invest in the 'commons' – by expanding training, working with local suppliers, and lobbying governments for'"business-wide improvements' rather than special interest advantages. While these goals are laudable, and there are plenty of examples of such responsible corporate action, they are unlikely to move the needle very far."

"Instead," suggests Alden, "governments are going to have to rediscover their sources of leverage." 

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Published on Tuesday, September 25, 2012 in Renewing America
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