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NC Pays Dell to Create Jobs in Poland

In a great review of Kenneth Thomas’s new book on the continuing alarming growth of corporate welfare among state and local governments in the US, David Cay Johnston tells of how millions of taxpayer dollars that could have gone to hire teachers, firefighters, and health workers to provide valuable services in North Carolina ended up subsidizing jobs in Poland instead:

Thomas tells how Dell moved a factory from Ireland to Poland in 2009 and then months later closed a four-year-old factory built in large part with North Carolina tax dollars. The Irish taxpayers gave €53.5 million to Dell, while North Carolina gave as much as $242 million. But when the Poles offered €54 million more, it was enough to get Dell to move about 1,900 jobs to Lodz.

And as for arguments that corporate welfare from state and local governments is necessary to create jobs, here’s what Thomas and Johnston have to say:

Any thought that giveaways of tax dollars stimulate foreign investment in America is demolished by a little table on page 101 of Thomas’s book. It shows that between 1985 and 2007, the American share of global direct investment fell by two-thirds, from 36.7 to 12.7 percent. However, in the 15 more-developed EU countries where subsidies were few, the share of foreign direct investment increased from 28.6 to 40.3 percent.

As yesterday’s news of $11 million in new incentives to keep Red Hat in the Triangle makes clear, the failure of corporate welfare to generate new jobs and investment has yet to reach the ears of North Carolina’s policymakers.

6 Comments

  1. [...] This post was mentioned on Twitter by NC Justice Center. NC Justice Center said: RT @edmclen: NC Pays Dell to Create Jobs in Poland #ncpol http://t.co/IEgqoOl [...]

  2. Bruce M.McLaughlin

    January 11, 2011 at 3:21 pm

    Why am I not surprised to see this?

    W-S, NC paid Dell millions in tax incentives to build a plant in the area.
    Ground was broken, facility was built and 1,000+ people were hired to assemble computers.

    3 years pass, Dell closes shop. All people let go.

    Now this?

  3. Kosmas

    January 13, 2011 at 8:32 am

    Welcome to capitalism.

  4. Ed McLenaghan

    January 13, 2011 at 8:36 am

    To be fair, it should be noted that most of the money that NC promised to Dell was never paid, that Forsyth County and Winston Salem got virtually all of their incentives money back, and that the state ended up losing out on “only” $7 million after all was said and done.

    http://www.hpe.com/view/full_story/4225001/article-State-won%E2%80%99t-recoup-portion-of-Dell-incentives

  5. Kenneth Thomas

    January 13, 2011 at 1:58 pm

    If you read closely, Johnston does not say that NC paid Dell to create jobs in Ireland, but merely that the Irish closure and NC closures were announced only months apart. He also lists the amounts paid by each jurisdiction to attract the jobs. The 53.5 million euros paid by Ireland included multiple investments going back to 1991. Ireland is fully protected by clawback clauses; it is now a European Union requirement throughout the EU that if jobs are not maintained for 5 years, subsidies must be repaid. Ed has pointed out that NC lost a lot less than it could have.

    Poland’s 54.5 million euro subsidy to Dell is hoped to eventually create 3000 jobs in Lodz. The European Commission gave Poland permission to do this (it could have banned the subsidy instead), which I criticized in the book. As it happens, I gave a seminar at the Commission in Brussels on January 11, and members of the audience defended their decision by saying that Dell had already decided to leave Ireland. Eventually we still disagreed, but it was a very interesting discussion.

  6. [...] requirements for our “private partners” (companies taking our money) can backfire, check out this story from Progressive Pulse about the Dell Computers debacle. Recap: North Carolina paid Dell to open a plant in Winston-Salem. [...]