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States Pitted Against One Another

Published 10/04/09 Craig Harrington with Eamonn Fingleton - Print Article
E-mail - editor@economyincisis.org

 

Editor's note: This series originally ran in June. The following is the fifth interview in a six part series with economist Eamonn Fingleton.

In America the “free trade” system not only pits us against the rest of the world in competition, it also pits individual states against one another domestically.  Whether states are trying to package incentives to attract insourced facilities or help foreign companies invest in assets, in-fighting between states creates a vicious “race to the bottom.” 

      

Fingleton believes that these rivalries are destructive for several reasons.  First of all, they creates situations where taxpayer money is used to build facilities for overseas profit.  Second, they help foreign investors gobble up assets, companies, and long-term profits from American holders.  Also, the infighting signals to the rest of the world that the United States has no national coordination in international commerce.  The rugged individualism which helped make America great is essentially out of control, as states “slit each others throats” chasing after short-term gains. 

Click here for Part 1 in this series.

Click here for Part 2 in this series.

Click here for Part 3 in this series.

Click here for Part 4 in this series.

Download the full interview on iTunes.

Eamonn Fingleton is the author of In the Jaws of the Dragon: America’s Fate in the Coming Era of Chinese Hegemony. A former editor for the Financial Times and Forbes, he has written on East Asian and global issues for the The Atlantic Magazine, The New York Times, The Washington Post, and The Harvard Business Review.

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Unless the above article is already copyrighted, this article is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License, EIC grants permission to use this article in whole or in part provided attribution is given, preferably in the form of a link back to EconomyInCrisis.org.

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Article Comments From Readers

guest says "Neighboring cities pitted against eachother" on 07/03/09
In addition, some businesses pit adjacent cities against each other trying to squeeze cities for the largest tax break.

Big losers are property taxpayers and the schools, since businesses are often given huge property tax breaks.

In effect, individual property tax payers are subsidizing business property tax breaks.

guest says "NCR" on 07/03/09
Background
The fast-moving, top-secret deal to extract NCR Corp. from its 125-year residency in Dayton, Ohio, and bring the Fortune 500 company to Georgia involved closed-door governor-to-CEO meetings, a new law authorizing millions in tax breaks and matter-of-fact presentations on the attributes of Hope Scholarships.

It coalesced in hundreds of telephone calls, dozens of meetings and at least one five-star dinner and polite business chatter at Atlanta’s Bacchanalia restaurant.

Looks like the Ohio Economic Development people were sleep at the wheel. We know, we tried to get some traction on improving exports to South Africa but there were no support. We know a few morons at ODOD. So, this is not surprising.

guest says "NCR Corporation." on 07/03/09
NCR Corporation,long located in Dayton Ohio is moving to Atlanta Georgia and they used stimulus money to do it.

biguru says "race to the bottom" on 07/02/09
Whether states are trying to package incentives to attract insourced facilities or help foreign companies invest in assets, in-fighting between states creates a vicious “race to the bottom.”

Whether it is democrats or republicans, they are basically anti-U.S. business. Otherwise why would you want to bring in foreign auto companies to establish beach head to compete with your own? Asian countries would never do that, and if they are forced to accommodate an U.S. company due to pressure from our government, then they would limit the production to be sold in their country. The only time it would be different is when they need the technology that they do not have until they get the technology through osmosis.

The amount of pension funds in the U.S. is staggering. It is about $8 Trillion dollars as of 2007 and perhaps slight less than that today. Do we really need foreign investment and ownership to compete with domestic producers in a market glut?

U.S. has a large number of gypsy companies that move from state to state looking for tax rebates and state investment and when those benefits are over, they move to another state. Since there is no federal program to oversee that, they literally get away across the state line. It is amazing we lasted this long.