Negative Sum Game: Poaching Businesses as Race to the Bottom

To the right you will see the commercial that Nevada is airing right here in California. It is an attack against the California legislature. Which is kind of like hitting the broad side of a barn these days.

Chamber of Commerce folks like to point out the “massive” effects of poaching from other states. Yet, well, the facts don’t bear that out:

But other data show that business relocation has a minimal effect on California’s economy. The number of jobs lost because of business relocation each year – about 11,000 – is “relatively inconsequential,” according to a 2007 study by Public Policy Institute of California, a nonprofit and nonpartisan think tank. (LA Times)

The greater problem is that the resources pulled in these little tiffs is a net loss to both states.  Both states spend resources to pick off business from each other, and in the end it’s a zero sum game.  Well, less than zero as they end up giving incentives to new businesses to lure them, and watch the old ones slip out the door for greener pastures.

But when it comes down to it, California is a special place.  We simply have a combination of resources that few other places in the world can boast. Yet, given the vast resources of the state, others will be sure to continue their vulturing as we race to become the state offering the worst labor standards and the lowest taxes as states seek to become the new Somalia.