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Breathe Deep, Relocate Jobs

November 3, 2010

If you’re looking for something other than elections coverage (which was fun), then maybe we can take a look at the Unintended Consequences of government intervention in business.  How about some dish from the Register?

The [UK] government discarded a plan to rebate carbon credit fees paid by companies which were the best performers in reducing energy use and cutting carbon emissions. Instead, in October’s Comprehensive Spending Review, the Government announced that it would retain these fees paid for carbon credits which must be purchased from April 2011 by companies using 6,000MWH of power, turning the scheme into a stealth tax.

It means data centre operators and other big powers face rising power costs and costs for purchasing carbon credits, a double bite into their revenues.

Nice.  So companies spent a pile of money attempting to find ways to cut energy usage.  As a reward, they get taxed more because they didn’t get a rebate for the carbon credits they were forced to purchase.  I’m normally not a fan of government rebates, but rebates for a government mandate at least just gets you your own money back (minus overhead).  So now the companies who were keeping data centers in the UK are likely to put the next ones somewhere else rather than pay extra.  Good job, guys!

It is ironic that cheap electricity, which galvanised the later stages of the industrial revolution and was helped by the creation of the national grid, the inspiration for utility-driven IT services in the cloud, should now be so expensive that it is driving UK-based data centre operations overseas to locations with lower power costs and no or lower carbon-emission reduction taxation.

A while back, my company opened a new site in a new state to capture some opportunity for new tech employees.  We’d intended to make it the largest site we’d have over time.  Then the legislature in that state raised taxes, and the state just south (where we had a large site already) lowered its taxes.  So… drain jobs to the south.  None of this stuff is new, but the ability to move data via honkin’ big pipes is making it easier to work from anywhere and not suffer enough loss of productivity to matter.

So let’s cheer for consistency.  At least the next time someone wants to take opportunity in a developed country, they’ll know to look behind the curtain for the government agent with the brickbat.

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