“They’re groveling.”
That’s how one resident of Tulsa, Oklahoma, reacted to the city repainting a seventy-five-foot statue of an oil driller, erected in 1966, to look like Tesla CEO Elon Musk. Tulsa is reportedly on the short list—along with Austin, Texas—for a new Tesla Cybertruck factory, so local leaders are pulling out all the stops to woo the famously eccentric and egomaniacal businessman.
During the best of times, competition between cities and states to win new corporate facilities or poach existing ones results in the giveaway equivalent of a race to the bottom, with the financial price paid far exceeding the benefits local communities enjoy. In this instance, it’s far worse. In their effort to win Tesla’s favor, state and local officials are combining America’s cult of CEO worship with pandemic profiteering, allowing Musk to receive new benefits even after he explicitly threatened jobs and worker safety.
Recently, Musk chafed against coronavirus-imposed restrictions on reopening a Tesla plant in Alameda County, California. He attempted to blackmail the state into letting him open up, threatening to move Tesla’s headquarters to Nevada or Texas if his wishes weren’t met. He then simply re-opened the factory anyway, putting his workers at risk of contracting the virus. California officials backed down and gave Musk permission to start production again after other lawmakers, such as Colorado Democratic Governor Jared Polis, offered to poach Tesla’s California facilities.
It’s impossible to know, of course, how much of that decision was satisfaction with Musk’s coronavirus mitigation efforts and how much was fear that Musk was serious about leaving the Golden State. But that’s precisely the problem: because states engage in a competition for corporate favor, CEOs drive the agenda.
Which brings us to Tesla’s future Cybertruck factory. Musk says he wants to locate it somewhere in “central USA,” as he put it. Mayors and governors across the heartland immediately began to offer up tax breaks in an effort to entice him to choose their city. In April, local officials in Joplin, Missouri, even offered the company $1 billion in incentives.
Such largesse is typical for deals involving Tesla: since 2007, the company has received more than $2 billion in state and local subsidies from Nevada, New York, Oregon, California, Colorado, and Michigan.
But Musk is a dangerous partner for local communities. In Nevada, a Tesla factory subsidized by more than $1 billion didn’t deliver the jobs and investment promised. Moreover, there were plenty of indications the factory would have been located in Nevada even without the tax breaks. New York had a similar experience. Big promises by Musk led to big subsidies for a solar panel factory that didn’t bring its supposed economic benefits. State officials then quietly reduced the number of jobs the facility was supposed to provide in its first two years in order to qualify for subsidies—from nine hundred to five hundred—and watered down several other employment-related requirements as well. This is a common practice in these incentive deals.
For Austin or Tulsa, the risk is high that a new Tesla project will result in the same sort of heartache. And although it’s unclear at this point what sort of tax giveaways or regulatory favors the eventual winner will provide, there will almost certainly be some. In fact, Musk is so good at winning subsidies that he reportedly made Amazon CEO Jeff Bezos jealous, thus sparking the national embarrassment that was the competition for Amazon’s so called “HQ2.”
For a long time, America has had an unhealthy obsession with CEOs. Policymakers inevitably turn to them for help, especially during crises. Electing a business leader to straighten out the government is a common trope of American politics. That he played a decisive-looking chief executive on television gave Donald Trump the prominence and initial credibility necessary to launch a political career, which of course culminated in winning the presidency.
Today, that tendency to defer to (usually very wealthy) businesspeople when it comes to economic policy is colliding with the fact that the safest thing to do for public health is often to prevent them from engaging in business. The desire of CEOs to go back to making profits directly conflicts with the necessity to protect workers from the virus. Already, the national policy apparatus has tilted too far in the direction of big businesses during the pandemic. The federal response was to fire a money spigot at major corporations and intervene in credit markets to ensure they had a steady flow of cheap funds, while creating a janky, underfunded small business program run through big banks. At the state level, corporations are seeking, and even winning, new policies that will give them a leg up over the smaller competitors that will struggle to even reopen.
Meanwhile, workers at Amazon warehouses, big box stores, meatpackers, and other workplaces have been forced to work without adequate protective equipment, and many have contracted the virus. Instead of addressing their own shortcomings, businesses want immunity from coronavirus-related litigation, which Republicans in Congress seem willing to grant.
That Musk was willing to sacrifice his own workers on the altar of reopening the economy makes any future deal he cuts with a government body more disturbing. At some level, it’s understandable that local leaders in places like Tulsa and Austin are desperate to juice their economies from current lows. But Musk is only out for himself. Politicians need to do what’s best for their entire communities, which means standing up for workers and against Tesla’s grift.
Pat Garofalo is the author of The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs, the Boondoggle newsletter, and the director of state and local policy at the American Economic Liberties Project.
