Sunday’s editorial is the second of a two-part series on economic development incentives. While yesterday’s installment focused on their worth on the state and national level, today’s focuses more on local efforts:
Yesterday, we discussed how economic development incentives are most often a preposterously bad idea on a national and state level, giving public money to businesses that hold jobs for ransom, not because companies actually need such help.
University of Missouri political scientist Kenneth Thomas, who has spent most of his career studying incentives, put it this way in a recent interview: “We’ve just created a system where we pay them a lot of money to do something they would have done anyway.”
But that was on the national and state level. What about locally? There, the situation is a bit different. As long as we don’t particularly care about the costly effect such giveaways have on the state or the nation, incentives can actually make some difference on the city or county level. Those who study the practice have concluded that grants and tax breaks are at their most effective when companies are trying to decide between similar cities or metro areas. It’s in this situation that incentives can sway decisions at least a bit, even if it’s at the expense of other areas in the state or region.