The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs

Companies are great at exploiting governments to get the best benefits they can. Alas, many of the "benefits" are not very beneficial. This books provides anecdotes and analysis of many of the "boondoggles" that government engages in.

Sports teams and events are an easy first choice. Teams often extract huge amounts of money from cities for stadiums. They will claim to provide great economic benefit, but they are primarily engaging in a zero-sum game for the same entertainment dollar. Sports bars near the stadium really do suffer if the team moves. However, as a whole, the city generally ends up the same. The stadiums also sit empty for most of the years.

Big sporting events like the olympics or world cup can be even worse. There are often huge expenses for building stadiums that are used for just a few weeks and then largely sit vacant. Tourism at the time of the event often remains rather constant. "Normal" tourists avoid the region while the event occurs. The events that have the greatest chance of financial success are in areas that already have stadiums. Yet even these locations still have the cost of infrastructure, police, tax benefits, etc. Barcelona did have a tourist "coming out" after the olympics, but many other cities (like London) were already well known. The only real consistent winners are groups like the IOC and FIFA.

Hotel subsidies are a similar boondoggle. Cities will often provide subsidies for hotels, with a belief that they would not otherwise be built. Yet cities will also raise lodging taxes to pay for sports facilities and the hotel subsidy. Hmmm. Developers become adept at seeking locations that will provide the most benefits. This often leads to accelerated profits. Incentives have also encouraged the development of malls and exurban shopping at the expense of downtowns. They indirectly say "Hi 3rd generation downtown business, we are raising your taxes to help subsidize a walmart on the edge of town." It remains a zero sum game. The residents may get cheaper junk at Walmart. But, they now need to spend more on car and gas to get there. 

Cities also fight against each other for jobs. Some companies actively seek the location with the most subsidies. Others have a place in mind and will gladly take the subsidies if given, but would still move there without subsidies. Companies that receive more subsidies also tend to underestimate the jobs and are more likely to move once subsidies run dry. (After all, it was not economically viable on its own.) Kansas City is a humorous case where companies jump across the state line as subsidies change.

Companies may be portrayed as the culprits, but they are often just playing by the rules. A concerted effort to combat the subsidies is needed to end it.