... But that's different than the federal government picking winners and losers.
...
No, it's not.
Besides which, the things that you call "picking winners and losers", for example investing in solar energy generation, is decidedly NOT picking, it's incubating new tech. It happened with oil, with automobiles, with just about everything we've ever done. You're just wilfully closing your eyes to evidence you don't like because you're spouting an ideology. Lose the cult, think for yourself.
...States compete with one another to induce businesses to come to their state and create jobs and pay state taxes....
Do you think that's a valid public policy? Getting citizens in different jurisdictions to fight one another in a race to the bottom to benefit large corporate players who don't need the investment help in the first place? Why should citizens subsidize any one commerce over another? Shouldn't government strive to be neutral?
One of the problems that you see with democracy is that groups can grab enough power to get themselves advantages that other don't have. You have presented this in the context of unions in the past. I find that to be such a bogus position given how completely corporate power has taken over government and how weak union movements have become. You should update your reading.
...It's no different if Canada lowers income taxes for new foreign companies to convince them to open up businesses there.
Yes, countries do lots of things to induce investment. Some might be useful, some not. I'm not qualified to say whether they serve any useful purpose in the long run. Aside from the usual problem with government participation, the seeming lack of sunset plans, i.e., they don't know when to stop, any one measure is so intertwined with hundreds of others, I don't see how it's possible to arrive at a valid judgement about the actions. This might be a case where realpolitik trumps political philosophy. Other countries do it, so we have to. That's really just a measure of how loony we have become in ceding power to large corporations over that of citizens. I.e., money talks, even when it talks shit.