Thursday, October 4, 2012

More caution on tech park spending

Posted By on Thu, Oct 4, 2012 at 6:48 AM

A BETTER WAY: Protesters in Little Rock object to using tax money to displace residents for a tech park building. Slate article suggests building community from ground up, with schools, amenities.
  • KATV
  • A BETTER WAY: Protesters in Little Rock objected recently to using city tax money to displace residents for a tech park building. A Slate article suggests building community and the economy from the ground up, with schools, amenities, infrastructure.

Now it's Slate with a cautionary tale about the rush by local governments to spend millions of taxpayer money to incubate technology parks, as Little Rock is doing under a plan hatched and controlled by the Little Rock Regional Chamber of Commerce.

The article mentions Louisville, hampered in its aim to do tech startups by a shortage of programmers. Uh, yeah, spec buildings don't count for much without somebody who can run the computers. Maybe, the article suggests, the focus on sci/tech is the wrong focus. Why not focus on creating incubation for, say, a national restaurant chain?

Check this excerpt, which is brilliant because it synthesizes precisely what I've been saying for years about the vision lacking in the continuing headlong rush by Little Rock and Arkansas to pass out corporate welfare dollars:

Having a pizzeria in your town is no great achievement, but having the corporate headquarters of a major international brand is. Given the realistic limits to how much high-tech growth your typical city can expect, the smartest move may be to look around at what great small businesses you already have and ask what they need to thrive and grow.

So what exactly do they need? Kauffmann’s analysis of the Inc. data found that such conventional measures as local venture capitalist activity, R&D spending by local universities, taxes, and patents per capita didn’t matter. The level of college graduates with degrees in technical subjects, by contrast, makes a difference, as does the overall ratio of new businesses to old ones. Having good local schools and being the kind of pleasant place to live that might attract skilled workers also turns out to be a generally sound growth strategy. The nonsignificance of taxes is itself an interesting finding, since all else being equal people prefer not to pay taxes. The flipside is that taxes finance public services, which may do more to attract firms and workers than taxes do to deter them.

The moral of the story, in other words, is that becoming a friendly place for successful startups is mostly about the fundamentals. Startups come in all kinds of sectors, and the biggest driver of startup success is a deep local pool of skilled labor. That means being a great place to launch a business and being a nice place to live are deeply related goals. Good schools, solid infrastructure, appealing cultural amenities, and a reasonable balance between taxes and public services mean more than a supercomputer.

Shazam! Good infrastructure. Good schools. A good place to live, with cultural attractions. These things grow communities. Double shazam! Taxes are not much of a factor for industrialists, except that a good tax base generally provides infrastructure, schools and cultural amenities. In Little Rock, though, the same-old, same-old prevails. Pour $28 million into an office building — and destroy a neighborhood while you're at it — and we all will be trickled upon.

WHILE WE'RE AT IT: States just can't quit passing out lucrative corporate welfare to movie makers, despite growing questions about the cost/benefits of the incentives.

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