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As a general rule, anytime a lawmaker rolls out some hot new economic policy idea with the word “zone” in it, I start to get nervous. We all should. It’s usually less a way of helping struggling areas than an efficient plan for transitioning state resources to wealthy investors.
But Nevada’s Democratic Governor, Steve Sisolak, is upping the ante by rolling out a virtuous sounding initiative that would, in fact, remake the company town for the 21st century. If enacted, his proposed Innovation Zones would give tech companies the literal power to buy land and set up their own governments in the Nevada desert.
According to a draft bill, which is circulating but hasn’t been officially introduced in the legislature, Sisolak’s plan would allow tech corporations working on eight areas — blockchain; autonomous technology; the Internet of things; robotics; artificial intelligence; wireless technology; biometrics; and renewable resource technology — to form their own autonomous towns on uninhabited, unincorporated Nevada land.
The corporations would set up school districts and law enforcement systems, as well as a local government. The initial officials would be appointed by the governor from a list of candidates chosen by the corporations, but the zone would transition to an elected board of supervisors once at least 100 registered voters move to the area. These tech boards would have all the powers of a usual Nevada city or county government.
Sisolak first floated this idea in a January address, and he’s pitching it as a supposedly more cost-effective alternative to Nevada’s usual model of economic development, which is to chuck a bunch of money at a big corporation in the hopes that something good happens. The state’s largest deal was $1.3 billion for a Tesla plant that hasn’t brought its promised benefits, bringing in less investment and job creation to the area than expected. Nevada also contributed some $750 million to a new stadium that opened last year on the Vegas Strip for the NFL’s Raiders. (If you want to know more about that, you can read about it in my book The Billionaire Boondoggle.) The list of attempts to entice corporations into doing some good for Nevada goes on and on, with successes lacking.
But instead of turning off the subsidy spigot and focusing on the sort of public investments that actually help local economies grow, Sisolak borrowed a worse idea from the past, giving it a techno-dystopian update.
There’s a long history of company towns in the U.S., dating back to the late 19th century, which includes famous names such as Pullman and Hershey. They involved a corporation setting up an operation — usually around resource extraction, such as a mine — which was composed not just of the business itself, but also company-owned housing and often company-owned stores, where workers bought goods using “scrip,” a form of currency they were paid in that was only good in that location.
Company towns were, understandably, famous for labor abuses; giving a corporation control over every aspect of its workers’ lives, from the homes they live in to the food they buy, didn’t confer a lot of power onto those employees. Company towns were also historically resistant to any sort of union activity. They fizzled out by the 1930s as the United States became more prosperous (but many policy analysts will say they still exist, in a form, in locales in which a town is dependent on just one employer).
It’s not hard to see how a similar dynamic to the company towns of old, though, would play out in the 21st century Tech Towns the Nevada bill describes. The promised elections only offer a veneer of democratic accountability. How can you hold a free and fair election or maintain a functional and just criminal justice system in an area where a corporation controls everything from the wages of the residents to the infrastructure necessary to maintain life? Moreover, the bill makes it very explicit that new laws created in these zones will supersede existing county laws, something that will both reduce and erode democratic accountability, as well as almost certainly encourage corrupt shenanigans.
At least initially, it’s quite clear that one corporation is meant to be a beneficiary of this scheme: Blockchains LLC., which works on projects based on blockchain, the technology backing things like the cryptocurrency Bitcoin. Blockchains’ CEO Jeffrey Berns has long made it known that he envisions a tech utopia in the Nevada desert, According to reporting by the Nevada Independent, Blockchains’ city “is envisioned to eventually employ 1 in every 50 Nevadans and account for nearly 2 percent of all wages produced in the state.”
The proposed specifications for becoming an Innovation Zone match up with land purchases Berns has already made in Nevada’s Storey County, east of Reno. He bought some 67,000 acres, and the bill requires a minimum purchase of 50,000, on just the sort of uninhabited, unincorporated land Berns scooped up. How convenient! In fact, Sisolak even specifically mentioned Blockchains when pitching his new zones. Tech titans have for years longed for some sort of independent, tech utopia straight out of an Ayn Rand novel, but Sisolak is the first governor, so far as I know, to give the idea an official stamp of approval and try to bring it to life.
Some reporters are connecting Blockchains’ and Berns’ political donations to the sudden support for giving him his own fiefdom – as he and his company have donated tens of thousands of dollars to Sisolak and a political action committee connected to him – but I don’t actually buy that. I think, and my years of experience reporting on these government business subsidies usually bears this out, that it’s more about the allure of fancy new tech jobs and a belief amongst lawmakers that there’s nothing to be done to juice economic development other than laying out a welcome mat to a big corporation.
I hope it’s apparent that this is a mirage: policies to grow local economies and create new jobs are not limited to subsidizing corporations with taxpayer dollars on the one hand or turning over all of the mechanisms of government to corporate overlords on the other. But lawmakers frequently don’t want to wield the tools they have to try to build a sustainable local economy; they want a get-jobs-fast scheme where they won’t be held responsible for results.
Sisolak is just taking this mindset to its logical conclusion, making something old and terrible new again by adding words like “blockchain” and “biometrics” and dressing it up as a special investment “zone,” rather than what it is: a company town, where corporations will effectively have the power to make the laws they and their workers will need to live by. We can only hope smarter heads prevail in Nevada and keep this bill as far away from passing into law as humanly possible.
This post originally appeared in a slightly different form on the author’s Substack Boondoggle.
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.