Brian Highsmith, a Harvard Law School academic fellow, discusses how corporate power affects local democracy, factors in tech company site selection, pros and cons of incentivizing big tech companies, historical response to location incentives, and his upcoming article on regulating location incentives in a conversation with the host.
Corporate location incentives impact local democracy and budgetary challenges.
Factors influencing corporate location decisions include workforce availability, infrastructure, and costs.
State and local governments use policies to attract economic activity, but long-term viability raises concerns.
Deep dives
Overview of Brian Heisman's Research Interests and Background
Brian Heisman, an academic fellow at Harvard Law School, discusses his broad research focus on the political economy of state and local governance. His work delves into the impact of corporate power on local democracy, particularly in financially strained local governments. Drawing from experiences in consumer law and economic policymaking, Heisman explores the structural influences on local democracy and budgetary challenges faced by governments.
Factors Influencing Corporate Location Decisions
Heisman explains the considerations that influence corporate location decisions, citing Amazon's HQ2 search as an example. Factors such as workforce availability, infrastructural needs, and costs of business operations play key roles in site selection. The preferences of large firms differ based on the nature of investment, market dynamics, and geographical constraints, shaping the location incentives sought by corporations.
State and Local Responses to Corporate Location Incentives
In response to corporations seeking to establish operations in their jurisdictions, state and local governments deploy various policies and tools to attract or foster economic activity. Heisman's focus is on corporate location incentives offered by subnational governments, including financial and regulatory perks negotiated with specific companies. These deals, often termed mega deals, typically require special legislation and aim to stimulate economic growth.
Efficacy and Efficiency of Corporate Location Incentives
Heisman examines the effectiveness and efficiency of corporate location incentives in promoting economic growth and allocation of business activity. While these incentives aim to enhance competitiveness, studies reveal that promised benefits often do not materialize at the national level, leading to concerns about resource allocation. Although such deals may offer short-term gains locally, they may lack long-term economic viability, often benefiting large, structurally dominant firms disproportionately.
Historical Context and Policy Implications of Location Incentives
Heisman contextualizes corporate location incentives within the historical backdrop of US antitrust laws and inter-jurisdictional competition. Drawing parallels from the 19th-century railroad era, he underscores the need for regulatory interventions to address unfair competition practices and prevent economic vulnerabilities. He suggests that federal regulators such as the FTC could enhance supervision and data collection to monitor and regulate location incentives, aligning them with broader competition policy objectives.
This episode is hosted by Andrew Jennings, associate professor of law at Emory University, and was edited by Brynn Radak, a law student at Emory University.
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