The Local Economy Solution
The company’s senior vice president of real estate then offers his thanks and notes that your hometown is indeed a wonderful place, but is deficient in the following ways: access to transportation, high cost of housing, proximity to suppliers, or some combination thereof. He then notes that another city, which happens to possess all of these necessary attributes, was just in last week. They have offered a very attractive package of tax breaks and public investments that this mayor would need to beat in order to stay competitive.
Now that the competition and egos between mayors (who are by definition hypercompetitive) are properly stoked, a bidding war ensues and good economic analysis and public policy quickly fall by the wayside. In the end, the company moves to the community it was probably going to move to anyway, but with a generous combination of tax breaks and subsidies that justify the senior Vice President’s salary.
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