https://scholars.org/contribution/how-competition-attract-bu...

> A firm announces a plan to build a new facility, but where? Local and state development officials compete to attract the firm with ever-more-generous tax breaks and subsidies. This scene plays out again and again – even though research shows that incentives do not substantially influence firm behavior, even in the face of media exposes about wasteful giveaways. Why? Governments hope to encourage jobs and business profits, and hubris leads officials to believe “this time will be different,” even if incentives have not worked before.

> But something more pervasive is also at work. My research with Stephen Ellis demonstrates the role of “business climate” in driving economic development professionals and government officials to engage in an incentives arms race. Officials feel they must offer incentives, because failing to compete to attract businesses will be interpreted as evidence that their locality is not business-friendly. States and localities will therefore continue to compete, to the point of giving away more than the value of the new firm or facility. Can American citizens find ways to prevent the negative effects of this no-win arms race?

Because cities felt the devastating effects when industrial factories staffed with good union jobs went away, and yearn for their carbon copy replacement. These factories had ripple regional advantage effects beyond the factory workers. Armies of teamsters have to drive in and out of town to deliver inputs and outputs for industrial factories, and they all need to eat. Corporate and R&D types used to need to spend more time at the industrial factory. Put a factory in a region and a corporate office often follows. Put enough of them in the same region and you start to get an innovation hub as they all hang out and see each other at third spaces. Universities and innovation hubs mutually benefit and expand when distance matters.

So the industrial factory tax break model often did pay off. Data centers are selling the same story: give us tax breaks for big expensive capital investment and regional prosperity is yours. They often lie about even the direct number of jobs. But the implied regional advantage is definitely dead when it is all cloud and zoom, rather than widgets and happy hours.

> In exchange the local residents get nothing

Isn't that the case for a lot of these corporate welfare programs?

Datacenters have very little side-effects. The whole environmental "costs" are overblown. They consume little space and water when compared to agriculture and you don't need to have them in the city center. They can exist in remote and desolate areas. As far as electricity, they pay their bills themselves most of the time.

Compare that to most other industries where you have pollution, noise, truck traffic, low paying and neck-breaking jobs, need import/export ports, etc. The footprint of datacenters is rather low.

Most countries have a sh%t ton of space and some have lots of water (ie: Chile). There is little reason not to have them.

Yeah, something like that happened nearby. They set up this bike repair store near my place and started repairing bikes. No one asked me if I even wanted this store nearby. I've been living here for like a decade and they gave me nothing. They offered to repair my bike for a fee, but I can already do that at home for free. We should ban businesses if they won't pay everyone within the vicinity the fee they demand.

I think there was some kind of corruption as to how they get to just repair bikes without giving me anything. I've been a local for way longer than these people.

EDIT: And yes, they do get government money. SF has a city program to encourage local businesses or something so they get grants. Besides all businesses are eligible for SBA loans and no one asked me if they should be.

The obvious conclusion to me is that corruption is involved

they're the worst use of land possible

even housing produces far more economic activity than a shed full of servers

Having worked in a hyper scaler on a system to orchestrate hw breakfix, it requires a lot of hands. We replaced thousands of hard drives alone per day... And racks are constantly coming and going. Hyperscaler DCs are busy places.

a fence and some rent-a-cops won't stop anything but a trivial revolt

> Down here in NZ the govt subsidizes an aluminium smelter which uses 13% of the national electricity just to provide 3,000 jobs

I'm not in favour of giving the smelter owners a sweet deal but I believe there is some nuance which is lost in your comment.

When you say subsidize I assume you're talking about the price the smelter pays for electricty (I'm not aware of any direct subsidy).

Until about 2022 the transmission lines out of Manapouri heading north could only handle a part of what Manapouri could produce, other lines headed towards Tiwai Point to feed the smelter with the balance of Manapouri's output. This meant that negotiating electricity prices with the smelter owners was tricky because it was perfectly clear that there was nowhere else to take the electricity. In the past five years more capacity has been added to allow electricity from Manapouri to reach the National Grid and so, I presume, this significantly dilutes downward price pressure from the smelter.

There's also the job creation for the extra energy generation...