Reining in the Competition for Capital

摘要

governments offer all kinds of incentives (tax reductions, mainly, but there are other types) to firms in order to induce location in their jurisdictions. As the title indicates, the general theme of these essays is that there is entirely too much of it going on. The essays can be divided roughly into two types. The first set are concerned with the consequences (largely seen as negative) of the competition for capital and how those came about. Both the introductory essay by Ann Markusen and Katherine Nesse, and the second, by Kenneth Thomas, highlight the increasing ability of firms to attain leverage in the bargaining process. Capital is mobile, and increasingly so, in part because of the changing physical nature of that capital. Both chapters also emphasize the "market for investment" (as Thomas calls it) and the increased role of "location brokers" who facilitate deals between firms and localities. These brokers are seen as a device that allows firms to implicitly share information and increase their market power, to the detriment of localities. Thomas also argues that other local policy initiatives, like antipollution laws, will increase firm bargaining power, though it would seem that such actions drive firms away, which is the point of such legislation, and would in any case, increase the bargaining power of locations that do not enact such laws. Peter Fisher puts capital competition in the context of what he sees as a larger movement that benefits conservative ideology. He points to the generalized fall in corporate taxation, and broader political movements to cut government spending, lower taxes, and limit redistribution. It seems to be his concern that localized capital competition is merely a stalking horse for those other goals.