The Wrong Starting Point for Economic Development
The advice is wise, I’d say, for states to focus on economic development activities that benefit a broad range of businesses, rather than one or two big catches, but the experts in the field begin from the wrong perspective:
Creating sustainable new jobs is complicated, and states will need help from the federal government, says Robert D. Atkinson, president of the Information Technology and Innovation Foundation in Washington, D.C., who in 1996 was the first head of what was then the Rhode Island Economic Policy Council.
“First, the idea that states can fight and win the competitiveness battle on their own is simply wrong,” Atkinson says. “Unless Washington gets in the game, it will be very hard for states to grow their economies.”
Indeed, the economy is so complicated that it is folly to place its operation in the hands of politicians and bureaucrats. The more responsibility and risk can be distributed to individuals whose livelihoods depend on their being able to work and expand, the better.
The false starting point is the notion that government operatives “create sustainable new jobs” at all. At best, they help or hinder private citizens in their efforts, and by meddling they are more likely to hinder them. The article centers around a solar panel plant that recently left Massachusetts for China, thus illustrating the point: extra incentives and breaks offered to Evergreen Solar had to be forcefully withdrawn from the economy, somewhere, and now, in effect, they’re going to China. Moreover, the hip ambiance that’s been painted on green technology surely jaded Massachusetts officials’ judgment, with the end result that opportunities, considered as broadly as possible, were constrained.
In other words, the policies that drained money and effort for the benefit of a company playing in an industry that every state and nation is eying as the wave of the future should have been refocused to lighten the burdens of taxes, regulations, and mandates.
The closing moral of the linked article is that public negotiators should “write a good clawback,” so that they can force companies to repay taxpayer contributions, should they depart, but that misses the larger lesson — namely, that policymakers should stop pretending to be economic masterminds.