It hasn't been a Goodyear for NC taxpayers
Sorry for my regular readers, I have been bogged down with work and traveling so I was hoping to get back to the blog sooner.
I've been following the row between Governor Mike Easley and the legislature in response to a proposed $40 million dollar incentive to keep the Goodyear tire plant in Fayetteville. Being somewhat conservative ideologically (as most people are) in regards to opposing unnecessary incentives for private entities, I support the Governor's refusal to paying Goodyear, especially without a promise to maintain jobs at the plant. Some Republicans in the legislature have also come out against the proposal, but yet the legislature is considering overriding his veto.
In a letter to the legislature last week, Governor Easley wrote:
'"It would set a dangerous precedent for North Carolina's economic development policy. The state needs to ensure that your incentives result in more investment and employment, not providing cash grants for companies that will cut jobs."
Incentives are used to draw new investment into areas where economic development is needed. Controversial high cost incentive packages have recently been passed to bring both Dell and Google to North Carolina. But we must remember the privileged position of capital: national and international companies are not tied to any specific geographic locale, thus they have the upper hand in negotiations with political jurisdictions because of their mobility. They can move their operations to whatever location provides them the best deal. This can be done around the United States, but often the temptation to move to foreign markets is a temptation that can't be resisted.
When going overseas, the intent is to avoid unionized labor, environmental regulations or requirements to provide benefits or healthcare insurance in an effort to maximize profits for investors. This is what Schnaiberg, Weinberg & Gould (Local Environmental Struggles: Citizen Activism in the Treadmill of Production, 1996) referred to as the "low road to economic development". Eventually, the company is "hollowed out", meaning they close most or all of their domestic capacity and simply purchase goods from foreign production entities, slapping their name on it and calling it theirs.
Instead of adapting their business model or producing innovative new products to spur growth and preserve well paying jobs ("the high road to economic development") they threaten jurisdictions with plant closures, causing a local economic and political crisis. Politicians, self interested in their own reelection, often cave to the demands of these entities, whatever their ideological principles. But what would this $40 million package provide now that would prevent us from facing the same situation 10 years from now, when the proposed measures expire? Will we have to provide $60 million then? $80 million? Goodyear will certainly be emboldened to continue to increase its demands untill the state is no longer able to meet them....so in effect we are only buying time.
I've been following the row between Governor Mike Easley and the legislature in response to a proposed $40 million dollar incentive to keep the Goodyear tire plant in Fayetteville. Being somewhat conservative ideologically (as most people are) in regards to opposing unnecessary incentives for private entities, I support the Governor's refusal to paying Goodyear, especially without a promise to maintain jobs at the plant. Some Republicans in the legislature have also come out against the proposal, but yet the legislature is considering overriding his veto.
In a letter to the legislature last week, Governor Easley wrote:
'"It would set a dangerous precedent for North Carolina's economic development policy. The state needs to ensure that your incentives result in more investment and employment, not providing cash grants for companies that will cut jobs."
Incentives are used to draw new investment into areas where economic development is needed. Controversial high cost incentive packages have recently been passed to bring both Dell and Google to North Carolina. But we must remember the privileged position of capital: national and international companies are not tied to any specific geographic locale, thus they have the upper hand in negotiations with political jurisdictions because of their mobility. They can move their operations to whatever location provides them the best deal. This can be done around the United States, but often the temptation to move to foreign markets is a temptation that can't be resisted.
When going overseas, the intent is to avoid unionized labor, environmental regulations or requirements to provide benefits or healthcare insurance in an effort to maximize profits for investors. This is what Schnaiberg, Weinberg & Gould (Local Environmental Struggles: Citizen Activism in the Treadmill of Production, 1996) referred to as the "low road to economic development". Eventually, the company is "hollowed out", meaning they close most or all of their domestic capacity and simply purchase goods from foreign production entities, slapping their name on it and calling it theirs.
Instead of adapting their business model or producing innovative new products to spur growth and preserve well paying jobs ("the high road to economic development") they threaten jurisdictions with plant closures, causing a local economic and political crisis. Politicians, self interested in their own reelection, often cave to the demands of these entities, whatever their ideological principles. But what would this $40 million package provide now that would prevent us from facing the same situation 10 years from now, when the proposed measures expire? Will we have to provide $60 million then? $80 million? Goodyear will certainly be emboldened to continue to increase its demands untill the state is no longer able to meet them....so in effect we are only buying time.