> . . . > one of the problems with the studies that minimize the role of capital > mobility in search of more profitable climes is that it ignores the fact > that the capitalists lobby like hell to make sure that the place where they > are currently located (where their sunk costs are) will change its > regulations to match those in the places they threaten to move to. Of > course, the threat to move is part of the lobbying process. . . . Most of the research concerns tax rates, not regs. Obviously empirical research can be imperfect, if not badly done. There could be missing variables, or as you suggest, reverse causality (location decision affects tax rate/reg), among other problems. That still leaves some burden of empirical evidence on the contrary proposition -- that firms flog state governments into giving them whatever tax system they want. If this is so, capital flight is predestined, short of a major political convulsion. I don't believe it. Since the answer is likely to be in a grey area the research is not of much use to trade unionists. They are obliged to research specific companies and make judgements about just how far they can be pushed. At the state level, there is sufficient diversity among state tax and regulatory systems that it is not difficult for states to get a lot done without creating differentials that cause firms to bolt. EPI commissioned five papers on how state revenue systems could be changed to increase tax revenue significantly bearing this out. mbs
