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by gruez 40 days ago
>But then the reality sets in. The massive property and corporate income tax breaks and subsidies and land use variances that were all negotiated as part of the deal come to roost. The jobs aren't upwardly mobile jobs. The income tax revenue isn't enough to offset all the other breaks.

Then it sounds like the issue is subsidized datacenters, and the solution is simple: don't subsidize them.

2 comments

Almost nothing this scale can be built without subsidies because in the U.S. no company is willing to actually buy anything on their own. Wal-Mart forces local municipalities to pay for the buildings to be built through subsidies and taxation delays. Amazon does the same with their warehouses, distribution centers, and Whole Foods. NFL and NBA stadiums as well. Either the locals pay for the "privilege" of having their money vacuumed out of the area or these places don't get built. And as many city and county level politicians are very poorly versed in terms of macroeconomics they fail to understand that the addition of those two hundred jobs will cost the area two to three times as much as the employees will make because they can't collect taxes from an entity that is increasing wear on the roads, increasing load on the electrical and water infrastructure, and creating new external costs in the form of garbage disposal or light and noise pollution.

These datacenters are like that, but taken even further because they're attached to an industry used to ridiculous tax breaks or lack of taxation in the first place, constant investor capital, and continuous rapid growth. Software production and digital infrastructure have grown up in a wildly different environment from traditional retail and shipping logistics, but they're taking the most successful (and harmful) expansion tactics from retail and shipping.

Unless you can kill subsidies outright for anything connected to a national or international entity and provide enough specifics to prevent them from hiding behind shell companies then it's a losing battle to say "don't subsidize them." They'll either force you to pay for them or they'll move somewhere that will, and those with a poor understanding of the situation will complain for years that everyone lost out on a "big opportunity" by refusing to pay for their own predation. That complaining can echo into local politics for years afterwards and affect the outcome of various policies, either by denials out of spite or misplaced regret over the previous big project, or by politicians being voted out because of their opposition to a Wal-Mart or such being built via extensive subsidies and an agreement to collect no taxes for ten years.

Amazon HQ2 is an excellent example. Even though I live in the DMV, I found it ridiculous that Amazon selected Crystal City in which to build. Not even actual DC! What sense did it make to not select NYC, outside of a sweetheart tax break package that Amazon famously made cities compete over like some kind of perverse reality TV show?

Maybe the solution is a federal ban on local tax breaks for anything not classified as a small business. Of course, such a thing would be impossible. But we really need to end this asymmetric warfare between sophisticated, global scale corporations and the comparatively podunk municipalities those corporations easily fleece on these deals.

Maybe a major city like NYC has enough sophistication built into their local politicians due to just their shear scale to be able to handle this sort of negotiation. That's a really big "Maybe". But other major cities like DC (even though AHQ2 didn't even land in DC, DC has it's own fair share of being duped) have proven they don't have that and time and time again they get taken for a ride. We need to level the playing field for local politicians, many of which are basically just the high-end middle class/low-end upper class middle-management type career people who don't have anywhere near the background support and army of lawyers that a major corporation brings to the battlefield. They're in it for either the backend deals they can make with local real estate developers or some quaint notion of "doing their part," either way they aren't part of a global scale Hydra beast with more money than God to be able to handle these cases.

>Almost nothing this scale can be built without subsidies because in the U.S. no company is willing to actually buy anything on their own [...]

All this feels like a heuristic (ie. large projects are bad because subsidies) taken too far. If the actual thing that's bad are the subsidies, then all your objections and talking points should be around that, rather than side claims about electricity costs or greedy tech giants. Otherwise you might actually be losing out on the good datacenters are a net benefit for the county's finances, as others have mentioned in this thread. It's like swearing off credit cards because "interest rates are sky high" and "they need to charge high interest rates because it's an unsecured loan". All of that's true, but it's also true that if you avoid the interest rates, credit cards are quite good thanks to cashback and purchase protections. By taking a generic "credit cards are bad" stance you lose out on the benefits of credit cards.

You're arguing against "the trade-offs make the deal untenable" with good examples of how by just stating "but the trade-offs make the deal tenable." You're not actually adding anything to the argument.
Easier said than done. They don't let me in on those meetings.