Monday, July 16, 2007

Google doing Evil in North Carolina

I love the "do no Evil" mission statement that Google uses. It's one of those statements that's obviously too good to be true, particularly for a publicly traded company, yet they maintain it; bold.

Business Week has a great story on the process that Lenoir, N.C. and Google went through in order for Google to select Lenoir as the site for one of their $600m data centers.

Corporate Welfare (as it's often called) is one of the greatest detriments to our societal well-being in my opinion. It is basically described as a public municipality providing tax incentives (as well as others) to a private firm in order to lure that private firm to the locality, in hopes that doing so brings in revenue and jobs. As an aside, Wal-Mart is one of the worlds greatest recipients of Corporate Welfare.

Google's top-tier negotiators landed over $200m in tax breaks and other incentives from the repressed locality of Lenoir. The general issue with Corporate Welfare is the imbalance between the bottomless budgeted private firm's legal team, and an insufficiently equipped local city council. Making matters worse is that there are many municipalities that are so desperate for revenue, they'll do anything to lure firms to their region.

I'm grateful for living in Boulder, CO where Corporate Welfare has been kept to a minimum (though we're starting to show signs of weakness), but most of the U.S. isn't so lucky.

The counter argument to Corporate Welfare being a negative is that it is ultimately up to us, as citizens, to define how these deals (or lack thereof for that matter) get hashed out, however, sadly, as is often the case, the public often doesn't pay attention at the right level to counter the activity.

Google manipulated the desperation of a down-and-out community to their, significant, financial advantage. That's great news for Google and its shareholders (of which I am one via various mutual funds), but sad news for a community suffering from an already eroded tax base.

Google likely did not break any laws, but there's a line between "legal" and "right" that they crossed IMO. For all of the incentives they garnered, they skirted any commitment to guaranteeing any actual jobs for any period of time. Put another way, they can leave Lenoir in a few years, and move onto the next community that ponies up the right incentives, leaving Lenoir at the alter.

I constantly struggle with social responsibility vis a vis the capital machine that drives the planet. It's always a tough balance, but tax avoidance, just because one can, is generally shameful.

Free market economics... yea, yea, I get it (and support it). I like to have more of a conscience though.

I'll plug a consistently successful (~10% a year and never less) investment to make a point that money can be made within the confines of social responsibility; Pax World Funds.

1 comment:

David said...

Agree with your sentiments, Jud. I've come to think of corporations as completely profit-driven, without the concepts of "consciousness" or "doing right".

Once I was OK with "depersonalizing" corporations, and allowing them to do what they're optimally designed to do (maximize profits), I realized that its through laws / regulations that we ensure that our other societal goals (general welfare, environment, etc.) are met. From your blog post, sounds like the local government isn't meeting that standard with respect to luring Google to their community.

Don't want to sound like I'm big-government, and I think laws / regulations ought to meet the same criteria we shoot for in defining products: "just enough [requirements | definition | laws | regulations], and no more". Can be a tough goal to hit, that's where the "art" comes into play in business / government :->.