It doesn’t make any sense (VIII)

Cities do it; states and provinces do it; even countries do it. So “it” must be good. Or maybe not!

What these political entities do is lure businesses, through direct payments and subsidies, to their territory. corporate subsidyPoliticians can then commend themselves for the jobs “created” and tax revenue “generated.” Since the jobs merely move from one location to another, nothing new is created; nonetheless, officials are quick to claim the credit. In some cases, incentives are given to retain businesses that have threatened to leave if no largess is forthcoming. Under these circumstances, money for programs that would benefit all citizens is unavailable. The practice is wasteful and unfair; a slush fund for the well-connected.

Once one political entity engages in this beggar-thy-neighbor process others feel compelled to do likewise, creating a veritable zero sum game. Even supporters of such incentives admit the difficulty in gauging their effectiveness. In fact, a study by Angelou Economics found that job growth is tied primarily to a skilled, entrepreneurial work force, reasonable regulations and strong logistical support. The amount of the incentives offered carries little weight. In addition, a Minnesota study found that 80% of jobs created by firms receiving subsidies would have developed without the giveaways. To put job subsidy programs in perspective, it is estimated that government entities spent an average of $456,000 per job created. Does that make any sense?

It would be wiser and more efficient if governments used their revenue to upgrade education and training programs and create better transportation and communication networks. The entire region would benefit and the jobs generated would be higher paying and have greater staying power. Now that’s a plan that makes dollars and sense!


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