Recent research from the UK suggests that such policies constitute hand-outs, rather than effective means to shape firms’ investment decisions.
By Matthew Watson, Professor of Political Economy and ESRC Professorial Fellow, University of Warwick, UK. An earlier version of this post appeared on the Speri Comment blog in November 2014. Permission to re-post is very gratefully acknowledged.
It is now more than a generation since British politicians first discovered how the image of globally footloose firms might be used to make the case for establishing a business-friendly environment. Whatever the commitments given at the time that hard-won social rights would not be bargained away on the altar of competitiveness demands, tax cuts for firms that might otherwise threaten to relocate overseas still had to be paid for somehow. That, after all, is the logic of the ‘race-to-the-bottom’ dynamics unleashed by an increasingly globalised economy.
Our inaugural blog explained how we’re dedicated to unpacking “competitiveness” as it applies to countries, not companies.
Once you start looking out for these c-words, ‘competitive,’ ‘compete,’ ‘competition,’ you will find them everywhere to talk about states and whole countries (and even whole regional blocks, like Europe). These words are used to close down debate.
“Well, we must do this, in order to stay ‘competitive,’ ” a politician says.
And people sigh, hang their heads, and move on. They feel powerless.
Yves Smith of Naked Capitalism calls this concern with so-called competitiveness “a not very good yet widely accepted excuse for crushing labour.” And we’d tend to agree.