You’ve gotta be somewhere, so you might as well choose where that somewhere is in a non-random fashion.
That seems to be the rule.
One consequences of this is that we now have local government officials and functionaries jet-setting the world promoting their towns, counties, cities . . . their hills and their dales.
A fascinating report from The Economist tells how the mayor of Thomasville, Alabama, came to sit in a north China pipe-factory canteen talking up his town. “Sheldon Day was there to drum up investment,” the report explains. “Two years ago he convinced another Chinese company, which makes copper tubes, to build its first American factory in the county next door. The plant will create around 300 jobs when it opens next year. Mr Day wants more.”
It’s a charming tale, even if “the battle for Chinese attention” be “fierce.” And risky:
The mayor of Farmer City, Illinois, cancelled his plans after residents expressed anger at the idea of using city money to woo foreign businesses. Chad Auer, a mayor in a right-wing bit of Colorado, had to take to YouTube to explain that when Richard Nixon went to China in 1972, it turned out to be worth his while.
Nixonian prudence aside, there’s an even darker aspect to this practice: Bending over backwards to entice businesses to an area . . . at the expense of existing businesses, residents, and any concept of equality before the law.
I refer, of course, to “tax incentives,” loopholes, tax credits, regulatory workarounds, and the like.
Fine, you pillars of society, going off promoting your town — so long as no special deals are made.
But make special enticements, and you morph from “seller” of community to “sell-out.”
This is Common Sense. I’m Paul Jacob.
8 replies on “Copper Tubes in Alabama”
Nice job Paul.
I do not mind tax incentives for new businesses to move in, but I also want to be fair.
For example, if the community leaders want a 3-year tax abatemet for new businesses to open up, then give the same tax abatement to existing businesses. If 5 years later the tax deal goes up to 5 year of abatement, then existing businesses receive an additional 2 years also–fair is fair.
I like business incentives, but I like fairness also. As Americans, we are good enough to demand, and receive, both!
I have always felt that the perceived need for tax incentives of any kind is an indication that the level of taxation is too high! I share your view that the playing field should be level for everyone so no tax breaks for anyone.
Paul, great piece.
I agreed for any number of reasons.
The best policy is to stop the favoritism and manipulations, and lower the costs to all. That promotes growth in a true, fair and sustainable manner.
If there has to be a subsidy in order to have an economic activity then the entity spawned is, by definition, not market sustainable. If the entity is market sustainable, it will happen without the subsidy AND be located in the lowest cost, greatest benefit, venue. That just might stimulate a better and beneficial form of competition, the one intended by the Constitution, competition amongst the several states, and their subdivisions to be the best venue generally.
Favoritism, to the benefit of one at the cost of another, remains, when reduced to its lowest common demonstrator, simply theft.
Will the mayor’s triumph, the subsidized copper pipe factory, put another previous and un-subsidized competitor out of business somewhere else in the country? Quite probably as the playing field is no longer even. Indeed the ruined competitor, and its former employees “will probably never know what hit them”.
We could start by taxing churches the same rate as any other business, and then lowering taxes on the rest of us proportionately.
To Tiump57, I agree incentives to businesses to move to a location, should also be available to existing businesses.
But I don’t like them regardless, and prefer laws with low taxes and bureaucratic burdens, that don’t change. Otherwise, what happens is that politicians sell the favors to businesses for campaign cash.
Good governance, low taxes and limited government (that only protects our liberties) is incentive enough. Other incentives are just the result of political factions looking for someone else to pay for the burden of government, and typically the result of politicians selling favors (but not to everyone).
Lots of wisdom in all of the above commentary. Going to send this to my socialist and big government Republican friends and see if they can comprehend.
Sorry,
I couldn’t disagree more. If the town wants it and the local people support it and leave those who accomplish it in power then we return to local control. We need more local control, not more of this homogenized, watered down bureaucratic, lowest common denominator accomplishing control from Washington. Simply put, if you tell investors you have nothing special to offer them, then somebody, somewhere else WILL and you become the biggest loser.
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