Nevada Invents the Company Town, Again
Nevada Invents the Company Town, Again
Plus: Newspapers strike back against Google and Facebook.
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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. It’s usually an efficient plan for transitioning state resources to wealthy investors.
But Nevada has really upped the ante, with Democratic Gov. Steve Sisolak rolling out an initiative to remake the company town, giving 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, 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, law enforcement systems, and a government that’s at first appointed by the governor from a list of candidates chosen by the corporations, but then transitions to an elected board of supervisors once 100 registered voters inhabit the area. These tech boards would have all the powers of a usual Nevada city or county government.
Sisolak, who first floated this idea in an address last month, is pitching it as an 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 (though I imagine Sisolak and other Nevada leaders would take exception to my characterization). And it is certainly true that the state depends far too much on subsidies to try to juice growth.
The state’s largest deal was $1.3 billion for a Tesla plant that hasn’t brought its promised benefits, and it also contributed some $750 million to a new stadium on the Vegas Strip for the NFL’s Raiders (which you can learn more about in my book). The list of attempts to entice corporations into doing some good for Nevada goes on and on, with successes lacking.
Instead of turning off the subsidy spigot, though, and focusing on the sort of public investments that actually help local economies grow, Sisolak has pivoted to a dystopian remake of an old idea: The company town.
There’s a long history of company towns in the U.S., wherein a corporation would set 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 only good in that location.
Company towns are, 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, doesn’t confer a lot of power onto those workers. Company towns are historically resistant to any sort of union activity.
It’s not hard to see how a similar dynamic would play out in the Tech Towns the Nevada bill describes, even though there’s the veneer of democratic accountability because there will be elections and a justice system and whatnot. How can you set up a free and fair election or a functional criminal justice system in areas in which the corporation controls everything from your wages to your housing to the infrastructure necessary to live your life? The bill makes it very explicit that new laws created in these zones supersede existing county laws, so who knows what sort of shenanigans leaders there would cook up.
Now, it’s quite clear that one corporation is meant to be a beneficiary of this scheme, at least initially: 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 — and the specifications for becoming an Innovation Zone match up with land purchases Berns has already made in Nevada’s Storey County. How convenient!
Sisolak isn’t hiding this, specifically mentioning Blockchains when pitching his new zones. According to 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.”
Tech titans for years have 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 I hope it’s apparent that the choice Sisolak presents is a false one: 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.
Some folks are connecting Blockchains’ and Berns’ political donations to the sudden support for giving him his own fiefdom, but I don’t actually buy that. I think, and my experience reporting on these issues 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. Lawmakers 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 that 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: Giving corporations the power to make the laws they and their workers live by.
Hopefully smarter heads prevail in Nevada and keep this bill as far away from passing into law as humanly possible.
ONE MORE THING: HD Media, which owns a group of West Virginia newspapers, is suing Google and Facebook for killing the local journalism industry by illegally monopolizing ad markets. It’s good to see newspapers jumping on the bandwagon started by federal enforcers and state attorneys general.
And while we’re on the subject, I had a piece in Public Seminar last week about Google threatening to pull its search engine from the entire country of Australia due to lawmakers there pursuing a plan that would require Google to compensate news organizations. Read it here.
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— Pat Garofalo