Our own Max Borders had this article in yesterday’s News & Observer. In it, he dissects the wrong-headedness of government officials thinking that it’s up to them to create and preserve jobs.
The economy is a dynamic ecosystem that we can’t design. While changes do affect people in the short term, we cannot continue to labor under the notion that government can successfully keep companies from changing without adverse distortions. Sure, a few politicians and a handful of thankful voters may gain from handouts that keep a company from getting leaner. But everyone else will lose out. In the long run, the unseen costs are huge.
Many "economic development" advocates fear that without incentive packages, businesses will move to other states or nations en masse. It’s time to overcome that fear, especially in light of growing evidence that areas utilizing incentives make themselves worse off.
The prevalence of incentives in NC may reveal something about our overall business climate:
North Carolina offers subsidies because its business environment is not particularly fertile. That should prompt us to ask: Instead of paying companies to come or stay, shouldn’t we be working on making our business climate more hospitable? Shouldn’t we be lowering corporate taxes to be competitive with other states? Indeed, aren’t we being so aggressive with our subsidies because we’re not competitive?