It wasn’t news when a report showed the NC Commerce Department has given nearly 80% of its incentives money (funded by NC taxpayers) to the 20 wealthiest counties; nor was it a surprise the Department gave most of the money (and tax breaks) to large corporations in big cities instead of small businesses in rural counties.
But one thing was odd: The Department’s explanation for this one-sided picture. The Secretary told the newspaper that giving incentives to rural counties, like Robeson County, is “central planning” – which, in his view, is dead wrong.
So it seems giving an incentive to a big company in Charlotte is free market economics at work but giving one out to a small business in a rural county is central planning.
With all respect to the Secretary, that sort of sounds like saying a cat’s a cat in Raleigh but in Alexander County it’s a weasel.[…]
MMM-Hmmm. At first, he sounds like he’s playing the class warfare game. But, hold on and read on:
I think there are three reasons most incentives go to urban counties.
First, it’s a cold hard fact that large corporations have the political muscle to get their hands on lots of incentives – while a small business in a town like Hickory has little or no chance at all.
Second, it’s also no secret our leaders, both the Republicans and Democrats, have embraced the idea that the best way to create jobs is by turning our two largest cities into the gridlock we know as Atlanta – while leaving nothing much in the rest of the state but unoccupied farm land.
Third, years ago, early in my career, I worked out a building lease with a large corporation. After the corporation signed the lease it went to the local government and asked what incentives were available to help pay for its move.
I thought surely – since the lease had already been signed – someone would figure out the corporation had already decided to move to Hickory. But I was wrong. To my amazement they gave away the tax dollars, and, looking back, I suspect they had a simple reason: It made them look good. They could claim their incentives grant helped bring jobs to Hickory.
I have a suspicion that’s how most incentives work. After all, Governors and Cabinet Secretaries and bureaucrats in the Department of Commerce all like to look good.
Incentives, by their nature, are crony capitalism. And there’s no avoiding political back scratching gumming up the works. But there is an alternative that actually is free market economics. For everyone.
We could abolish incentives. And use the savings to lower tax rates on all businesses in all counties. That would appeal to a big corporation with its heart set on moving to Charlotte and to a small business bootstrapping its way up in Alexander County. And we might not end up looking like Atlanta.