Speaking of job losses from trade, as we were the other day, here's a story from Germany:
Anti-Nokia anger in Germany for closing a factory is growing with politicians publicly ditching the firm's phones and joining calls for a national boycott in Europe's largest economy.
The Finnish mobile phone giant said on Tuesday it plans to close the factory in Bochum in the Ruhr industrial heartland and shift production to Romania where labour costs are lower. The closure will result in 2,300 job losses.
Finance Minister Peer Steinbrueck, from the left wing party in Chancellor Angela Merkel's governing coalition, attacked what he called Nokia's "caravan capitalism."
What I found most interesting about the story was the following:
The anger at Nokia is partly fuelled by the fact that the German government and the state of North-Rhine Westphalia, where Bochum lies, have provided the company with some 80 million euros (117 million dollars) in aid.
EU Industry Commissioner Guenter Verheugen, a German, told Welt am Sonntag newspaper the case should prompt a rethink of subsidies. "There is no point in the state paying subsidies to attract companies," he said.
This reinforces my belief that governments, both local and national, are making a mistake by engaging in competition for business through tax breaks/subsidies. Over the long run, any benefits may not be worth the money spent. Economic welfare would be improved if governments would agree among themselves not to provide these kinds of subsidies.
