According to this NPR interview with Marginal Revolution’s Tyler Cowen, Carrier executives may have decided to keep jobs in Indiana for fear of Carrier’s parent company losing government contracting business.
That’s better than granting tax goodies. Those aren’t fair to other businesses, come at the expense of other taxpayers and empower politicians to grant tax favors.
Politicians love this power, because it costs them nothing to be so generous with our money and it sure sounds good in a campaign speech. “I kept these jobs here!” Instead of: “I volunteered you to pay higher taxes to keep these jobs here.”
It also encourages companies to game the system to seek such favors.
But, government, like any person or business, has the privilege of choosing who to do business with.
Businesses and people commonly use the threat of taking their business elsewhere to get what they want from their trading partners.