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Handouts to firms show how states serve the rich

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Nick Clark says a series of recent offers made by politicians to businesses show up who really holds power in society
Issue 2632
Amazon boss Jeff Bezos getting an award for envisioning the future
Amazon boss Jeff Bezos getting an award for ‘envisioning the future’ (Pic: National Museum of American History Smithsonian Institution/Flickr)

Some stories, hidden inside the bosses’ Financial Times newspaper, say more about how society is run—and in whose interests—than they let on.

Councils and governments are throwing enormous sums of money at huge corporations that are holding them to ransom.

This year Tees Valley council—authority for one of the poorest areas in the country—offered more than £100 million to the richest man in Britain.

It hoped that multi-billionaire Jim Ratcliffe might build a new car plant on the site of a former steelworks.

Tory mayor Ben Houchen said he “threw the kitchen sink” at Ratcliffe to get his Ineos car plant to Teesside.

“We offered to clean the site then give them the land for free, to build the factory, a £20 million cash grant, a £100 million capital allowance to offset against their corporation tax every year, massively reduced electricity rates, cash to train local workers, and a generous tax credit for research investment.”

It wasn’t enough. Ratcliffe apparently turned the offer down and is instead looking at sites in Portugal or Bridgend, South Wales.

In a leaked letter to Ratcliffe, Tory ministers Greg Clark and Alun Cairns offered “to explore exactly how the UK might support you on this exciting opportunity”.

Meanwhile in the US retail giant Amazon is so powerful it can dictate a shopping list of demands to cities competing to host its sites.

When looking for a host for its new second headquarters, Amazon published a document demanding “incentives” such as tax breaks, grants and fee reductions.

In the end it decided to split its headquarters between two cities—New York and Arlington, Virginia.

It will receive more than £2 billion in incentives, including grants worth tens of thousands of pounds per job “created”—and a helipad at each site.

Other states offered even more. Maryland and New Jersey each promised Amazon incentives worth £5 billion.

Not counting its latest windfall, over the years Amazon has been promised £1 billion to build its warehouses and distribution centres in the US.


Much of this is effectively to subsidise the “creation” of jobs so low paid that many of its warehouse workers rely on welfare food stamps.

These are more than just tales of greedy corporations.

They tell us something deeper about the relationship between big business and the state—and how society is organised.

On top of subsidies, Amazon also demanded road networks, transport links, and a specific level of education among the local population.

It also wanted “local government structure and elected officials eager and willing to work with the company”.

Ratcliffe said he couldn’t build his plant in Teesside because “there was no guarantee that the necessary infrastructure could be put in place to meet our timescale”.

So the most basic infrastructure of society is built to accommodate big businesses. And this is how things are supposed to work.

Corporations can use their power to get what they want. When threatened, they can also use it to actively sabotage things they don’t like.

For instance Theresa May knows most of capital wants a Britain with a close relationship to the European Union—if not to remain altogether.

So she’s banking on the idea that they’ll cause a run on the pound just to avoid a no-deal Brexit.

And in 2015, when a radical left wing government was elected in Greece, international capital threatened to force the banks to close to thwart its plans to end austerity.

All of which shows how much elected officials and politicians are in hoc to big business.

Politicians can make some limited decisions. But real power lies elsewhere.


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