Wednesday, July 25, 2007


I am the lead plaintiff in a suit filed today against the state of North Carolina. Represented by NC Institute for Constitutional Law, the real moving force.

Some background on the GOOGLE package.

Just as Google has pushed the boundaries of its Internet business, it plays the real estate game aggressively. Beginning with an anonymous approach in late 2005, the company elicited a stream of promises from local and state officials in North Carolina, all frantic to lure a major tech company, even before they knew which one. During months of negotiations over Google's shifting requirements, the company never failed to remind those officials that it could go elsewhere. In the end, the North Carolinians agreed to a package of tax breaks, infrastructure upgrades, and other goodies valued at $212 million over 30 years, or more than $1million for each of the 210 jobs Google said it eventually hoped to create in Lenoir.

Had a press conference today, and some press even showed up. We'll see what happens.

Some early ink here and here and here.

My own view, summarized briefly:

This statement is Michael Munger’s alone, and does not necessarily represent the views of the other plaintiffs, or the views of the NCICL.

I. Why is this public payoff to GOOGLE the wrong thing for NC?

1. No public purpose. Private economic benefits to GOOGLE, and private political benefits to North Carolina’s elected officials. Nothing here for the businesses and taxpayers of NC. Government shouldn’t be in this business. It violates our constitutional principles, and violates a long tradition of separation of business and political activities. GOOGLE is being used as free political advertising for politicians, and taxpayers are being used as unwilling subsidizers of GOOGLE’s stock price.

2. Equal protection. You can’t single out a business for bad treatment, and tax them extra to benefit everyone else. But then you can’t tax everyone else just to benefit one business.

3. These programs don’t work. It’s a waste of money. Few jobs are created, at enormous cost. The cost to taxpayers will be double the “salary” of the “new” workers. And, more generally, businesses don’t make location decisions based on these kinds of subsidies. It’s just a pure political payoff.

II. Why do businesses make location decisions, over the long haul?

My work in economics and politics has convinced me that businesses make location decisions on three factors: (a) transportation system, (b) education system, and (c) the burden of taxes and regulation in the state. North Carolina is a wonderful place for business. We have good roads, a very solid primary and secondary education system, and our burden of taxes and regulations are better than that of many other states. People are moving to North Carolina from all over the nation, in fact all over the world.

Let’s let businesses focus on what is good about North Carolina, ALL of North Carolina, and not make political payoffs to a few high-visibility companies that aren’t going to produce many new jobs anyway.

I'll be writing about this pretty often, in the weeks to come.

And, welcome back Angus!!!!!