> If the local government is subsidizing them, then if they move to a different place, they lose the subsidy.
No. What if they have operations in multiple locations? They could locate the bulk of their operations elsewhere, and only maintain the minimum presence in the jurisdiction of the local government to collect the subsidy.
With cheap electricity, they're incentivized to locate as much of their operations (that would benefit form the electricity price) as possible.
>>>>>>> If government-directed job creation is the desired goal, why not just hand the preferred companies cash? That would be a lot more transparent and targeted than subsidizing utilities Venezuela-style.
>>>>> Money is fungible. Whether they're saving it by having cheaper electricity or getting cut a check is irrelevant.
> Tie the subsidy to electricity consumption. This really isn't hard.
So you're conceding the point that there are important differences between "having cheaper electricity or getting cut a check," then? What you suggest is nearly indistinguishable from just having lower-priced electricity. The only difference is some extra paperwork and administration to get the lower price.
> So you're conceding the point that there are important differences between "having cheaper electricity or getting cut a check," then?
No.
> What you suggest is nearly indistinguishable from just having lower-priced electricity. The only difference is some extra paperwork and administration to get the lower price.
Nearly indistinguishable, except along the criteria in question. If you price electricity below market, you get free riders like the Bitcoin miners. They're certainly not the only ones either, just the biggest. If you instead subsidize the thing you actually want then you will get more of that thing, without the free rider problem. If you want to subsidize job creation, then do that, don't just have cheap electricity and then whine when people take you up on it.
More like, they'll threaten to leave, and the local government will be pressured into continuing the subsidy to keep them. Or the new location will give more money. All while they don't do what they originally were supposed to be doing to get the subsidy in the first place.
And your solution is what? To ban bitcoin mining? That sounds quite a bit more complicated. Not to mention that it solves the problem in the specific case and not the general case, like mine.
No. What if they have operations in multiple locations? They could locate the bulk of their operations elsewhere, and only maintain the minimum presence in the jurisdiction of the local government to collect the subsidy.
With cheap electricity, they're incentivized to locate as much of their operations (that would benefit form the electricity price) as possible.