Incentives to Pander

How Politicians Use Corporate Welfare for Political Gain

Nathan M. Jensen, Edmund J. Malesky

• Publisher: Cambridge University Press
• Year: 2018
• Print ISBN:
  9781108418904
• eBook ISBN:
  9781108314428
• Topic: Economics
• Subtopic: Political Economy
• Index: Economics

Policies targeting individual companies for economic development incentives, such as tax holidays and abatements, are generally seen as inefficient, economically costly, and distortionary. Despite this evidence, politicians still choose to use these policies to claim credit for attracting investment. Thus, while fiscal incentives are economically inefficient, they pose an effective pandering strategy for politicians. Using original surveys of voters in the United States, Canada and the United Kingdom, as well as data on incentive use by politicians in the US, Vietnam and Russia, this book provides compelling evidence for the use of fiscal incentives for political gain and shows how such pandering appears to be associated with growing economic inequality. As national and subnational governments surrender valuable tax revenue to attract businesses in the vain hope of long-term economic growth, they are left with fiscal shortfalls that have been filled through regressive sales taxes, police fines and penalties, and cuts to public education.

Table of contents

• Cover
• Half-title page
• Series page
• Title page
• Copyright page
• Contents
• Acknowledgments
• 1 Introduction: The Global Competition for Capital Meets Local Politics
• 2 Theory of the Political Use of Investment Incentives
• 3 Incentives and the Competition for Investment Within Countries and Around the World
• 4 The Economic Case Against Investment Incentives
• 5 Economic or Political Competition?: Allocation and Oversight of US Incentives
• 6 Money for Money: Campaign Contributions in Exchange for Incentives?
• 7 Political Pandering in the United States: A Survey Experiment on Incentives and Investment
• 8 Pandering Upward: Tax Incentives and Credit Claiming in Authoritarian Countries
• 9 The Distributional Effectsof Investment Incentives
• 10 Potential Policy Solutions to the Pandering Problem
• 11 Final Thoughts
• References
• Index