Speaking of extortion, aka corporate welfare | Arkansas Blog

Friday, April 8, 2011

Speaking of extortion, aka corporate welfare

Posted By on Fri, Apr 8, 2011 at 6:21 AM

Amen corner here today on story in New York Times. The focus is on competition between Missouri and Kansas for business location, but it applies in all 50 states and sometimes to competition within states:

...the interstate rivalry has grown fierce on a new battlefield — business — as the two states stage cross-border raids and entice companies with generous incentives to move a few miles and resettle on the other side.

Though some say such moves strengthen communities with new jobs and tax revenue, a growing chorus of leaders on both sides are wondering about the point of it all, warning that the efforts serve only to help private companies at taxpayer expense. Even some beneficiaries confess surprise at neighbors’ competing with such rancor.

Rather than create new businesses and draw new business from afar, the corporate welfare handouts sometimes just move businesses around a region they're already in or create expensive competition between neighbors. (A former state official relates to me a story of the state economic development agency some years ago extending incentives to move a business from one Arkansas town to another.)

Mark Funkhouser, Kansas City’s mayor, is a vocal critic of what he calls “this recent jobs poaching expedition,” complaining that the efforts drain time and money that could be spent on services like education and infrastructure that should be used to attract residents and businesses from outside the region.

“What politicians are doing is creating the illusion that they are creating jobs by short-term fixes that actually weaken the region’s ability to compete,” he said.

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