Companies win, governments lose with economic relocation incentives

One more blog about governments offering huge economic incentives, tax breaks and subsidies to entice corporations to set up shop in their region. Yes, there can be “clawback” provisions whereby if the promised economic benefits of new jobs and increased economic prosperity do not occur, the company has to give back part or all of the inducement it received. Also, most of the time, one state or local government is dangling great inducements to entice a company to relocate, thereby creating a significant loss in the other region when the company leaves. “It’s economically moronic, even though it tracks a nationwide trend of Big Government handing over money to selected big businesses,” writes Thomas Patterson, chairman of the Goldwater Institute. “The subsidies are touted as necessary for job growth, to stimulate depressed regions and promote economic development. Unfortunately, they just don’t work.” This is still valid, even though this quote is from 2011. (citylab.com, December 16, 2011)