Nations rise when they have pioneering entrepreneurs. And when those entrepreneurs become dominant, they demand concessions from governments, and in the process “tax” the citizens, for providing services which are critical and catalytic. I have called that “conglomerate tax”, a tax citizens pay to some of the leading companies in the world to serve them!
As noted in the press release, the Basing Authority will provide the land. That means Dangote Group will not have to pay for it. There is nothing wrong with that. He is investing to provide food security, provide youth employment and also improve the communities. That is what conglomerates do because they are the best creators of jobs, at least in short terms. While the state can plan to sell the land and invest the proceeds in startups, it may take years before those startups can generate the kind of employment and economic activity a conglomerate like Dangote can deliver in a year. For having that capacity, conglomerates tax nations. In other words, you have to subsidize their businesses through government supports for them to help you fix your pain points like unemployment as a government. They operate at the upstream level where the pain points are massive in the operations of governments. Their reward is Conglomerate Tax: the subsidization of their business operations due to their capabilities to help support government initiatives at scale.
Please note that Conglomerate Tax is a global thing. U.S. government may waive taxes for GE but will not listen to Facebook because GE is a conglomerate. They are treated differently because they technically build nations. Government may have the money but may also need a special plastic for a new warplane. There are few companies that can deliver such products. So, a government may engage a company like GE to research and develop the plastic. The company can ask for concessions to take that risk. Those concessions are taxes to nations since the nations must still buy the plastics if the conglomerate succeeds.
Yes, Conglomerate Tax is global for Dangote Cement, Amazon, GE, etc and it remains “the subsidization of their business operations due to their capabilities to help support government initiatives at scale.”
Today, we are reading that Biden’s government will provide $10 billion to enable Intel to decouple America from the risk of foreign semiconductor products: “In a concerted effort to bolster domestic semiconductor production, the Biden administration is engaged in discussions to allocate over $10 billion in subsidies to Intel Corp, a move motivated by the industry’s escalating significance in powering critical technologies across various sectors.
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“This development, reported by Bloomberg News on Friday, reflects a strategic maneuver aimed at fortifying the United States’ semiconductor capabilities amidst global supply chain disruptions and geopolitical tensions.”
From cheap FX dollars to waived import duties to many other things, nations apply special goodies to conglomerates, because they have accumulated and compounded capabilities, to help governments pursue their missions. Yes, Intel is helping Biden’s government on its Made in America initiative and Intel will get $10 billion goodies. And that is why you must not be annoyed when Dangote Cement gets goodies you cannot access in your small Ovim store. It is what it is!
Updated 4 days ago
The federal government is giving the semiconductor chip maker GlobalFoundries $1.5 billion to expand its manufacturing facilities, the Biden Administration announced Monday. The grant is only the third issued under the Chips Act, which was passed in August 2022 with the goal of boosting domestic chip production but has seen little of its $53 billion pot doled out. Delays have become the norm for the industry; Intel recently announced it was pushing back production on a $20 billion Ohio plant, placing part of the blame on the slow rollout of the federal grant money. New York-based GlobalFoundries will also have access to federal loans up to $1.6 billion for the projects in its home state and neighboring Vermont.
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What we give here are blanket subsidies (rather than strategic subsidies), and after a while we run out of money and ideas, coupled with unbridled penchant for stealing public money.
Again, we practice witchcraft at scale here, with most wearing victim mindset, while remaining consciously or unconsciously envious of those doing exploits. You see people complaining about those being favoured, even when they haven’t demonstrated capabilities on anything that should qualify them for special treatment.
We want to give subsidies to every farmer out there, including those farming on one plot, at the end, we neither draw any benefit nor remain stable, so it’s always loss-loss.
As always, effective education is a good place to start, but your leaders were not educated either, so it’s a case of moving from one disaster to another. Nigerians have perfected the art of giving what is holy to the dogs.
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