Executive Briefings

Why Give Subsidies? Let Me Count the Reasons                

All economic development projects involve subsidies. The only questions are: How much should the public subsidize these projects; why do certain projects get a bigger subsidy than others, and, why is the public we subsidizing any of them to begin with? There are lots of answers -- or maybe justifications is the better term -- to the "why" question. Among the favorites are:

1. Because we've got the money: Or at least we pretend we do. No climate is so favorable to producing a bumper crop of subsidies as that in which fiscal surpluses appear abundant.

2. Because everyone else does it: The maternal admonition of "if all your friends were jumping off a cliff, would you?" does not seem to work in the realm of economic development. Even though everyone insists that tax abatements and new roads and water and sewer lines to industrial parks really don't sway the location decision, no one is turning down those goodies either. Unilateral disarmament in the incentives race may be good economic principle; it may also take a locale right off the short list for location and investment decisions.

3. Because we think there's some economic benefit to offering subsidies: The corollary to the above justification is that offering subsidies provides an economic payoff someday, somewhere. We may lose money on the port, but think of all the trucking and warehousing jobs created in the region. Economic development may cost us now but think of the extra jobs and tax revenue to be generated by attracting companies.

4. Because you believe there's political advantage in it: This one is both obvious and not as simple as it first appears. Nothing gladdens the heart of a politico campaigning for re-election like being able to claim that he or she "fought" for new jobs in the local community, never mind the price of the fight.

5. Because we want to, damn it: This is the least used and yet most intellectually honest of the arguments.

6. Then the trick becomes finding enough people who agree with the notion (as well as enough people from the private sector to kick in some bucks and trim the hit to the public's wallet). Of course, someone could use none of those arguments and instead propose to build something without tapping the public treasury.

But as long as we're handing out money, who are they to be so impolite, or radical, as to turn us down?
http://seattlepi.nwsource.com/

All economic development projects involve subsidies. The only questions are: How much should the public subsidize these projects; why do certain projects get a bigger subsidy than others, and, why is the public we subsidizing any of them to begin with? There are lots of answers -- or maybe justifications is the better term -- to the "why" question. Among the favorites are:

1. Because we've got the money: Or at least we pretend we do. No climate is so favorable to producing a bumper crop of subsidies as that in which fiscal surpluses appear abundant.

2. Because everyone else does it: The maternal admonition of "if all your friends were jumping off a cliff, would you?" does not seem to work in the realm of economic development. Even though everyone insists that tax abatements and new roads and water and sewer lines to industrial parks really don't sway the location decision, no one is turning down those goodies either. Unilateral disarmament in the incentives race may be good economic principle; it may also take a locale right off the short list for location and investment decisions.

3. Because we think there's some economic benefit to offering subsidies: The corollary to the above justification is that offering subsidies provides an economic payoff someday, somewhere. We may lose money on the port, but think of all the trucking and warehousing jobs created in the region. Economic development may cost us now but think of the extra jobs and tax revenue to be generated by attracting companies.

4. Because you believe there's political advantage in it: This one is both obvious and not as simple as it first appears. Nothing gladdens the heart of a politico campaigning for re-election like being able to claim that he or she "fought" for new jobs in the local community, never mind the price of the fight.

5. Because we want to, damn it: This is the least used and yet most intellectually honest of the arguments.

6. Then the trick becomes finding enough people who agree with the notion (as well as enough people from the private sector to kick in some bucks and trim the hit to the public's wallet). Of course, someone could use none of those arguments and instead propose to build something without tapping the public treasury.

But as long as we're handing out money, who are they to be so impolite, or radical, as to turn us down?
http://seattlepi.nwsource.com/