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Tuesday, May 20, 2008

The Futility of Economic Development Efforts

Yesterday Rob did a story on Fargo and Cass county’s idea that a NEW sales tax should be imposed on the public in order to pay for economic development.  That got me to thinking what exactly is the justification for these programs.

Let’s not talk about the morality of forcing someone to pay a tax and giving it to another person who didn’t earn it.  Let’s also leave the discussion of why so many of these programs fail.  Let’s talk about the reason why the proponents say they’re worried.

It seems that these folks try to sell these things with the idea that if the community grows than everyone will be better off.  If there’s more people paying the tab then everyone’s tax bills should go down, right?

But if history shows us anything that after the people sink tons of money into economic development their taxes just never seem to go down.  Fargo has been very successful, or so I hear, with their economic development efforts.  But if that’s the case then why do they want a new tax?  If they haven’t been successful then why would you throw more good money after bad.

Another example is my home town of Grand Forks.  The Industrial Park is nearly filled up.  City council member Doug Christianson said that they need to raise taxes to pay to buy more land.  But when did taxes ever go down because of the businesses moving into the Industrial Park.  If it’s going to cost us more and more money for economic development then why do it?

In today’s Grand Forks Herald the subject was the competition between Grand Forks and East Grand Forks about who could subsidize new home builders to build in town.  Isn’t that something just crazy to be fighting about.  I mean if we get a new good neighbor who cares if they live across the river.

For the average Joe, this economic development stuff just doesn’t make sense.  So why is there so much pressure to do it.  I think a lot if not most of it is the egos of the various city leaders.  For some reason they aren’t satisfied in just running a good city.  They feel they have to meddle in areas beyond their expertise.  Then if the city grows they can take credit for it.  (I don’t remember them taking the blame when these same companies leave for the next better deal.) I think they also look to the towns that do play this game with a bit of ec-dev envy.  If another town is growing they think we’re doing something wrong.  I disagree that we have to be the biggest, I think we should work on being the best.

And the city employees are all gung ho for more people, more tax revenue, more pay and more workers so they have less work.  Why wouldn’t they be?  The thing is do we run the city for the people that work for the city?  Do we run it to stoke the egos of the elected officials?  No we should be running the cities for the benefit of the people that work there.  And you know what, if you do the job right then there won’t be a problem with growth because it will come. 

Comments

It’s not “economic development”, it’s robbing Peter to pay Paul, and the politicians get a windfall profit in both directions.


Hope and change, in a free world, are the private possessions of motivated individuals.

robert108 on May 20, 2008 at 06:57 pm
Avatar for brenarlo

Lack faith in free markets shows a lack in freedom itself. 

I think Milton Friedman said something like that.

brenarlo on May 20, 2008 at 07:20 pm
Avatar for Conservative Reader

Rob--
I’m not sure anyone has said it better.  For some reason, the collapse of centrally-planned economies of Eastern Europe didn’t teach us anything.  To your lucid commentary, I would simply add this one additional concept in opposition to the government redistribution of wealth: every inch we give on this principle is an encroachment on liberty.  What the government meddles in, it eventually controls.  Either we are for economic freedom or we are simply role-players in the government’s economy.  What has government done to deserve even a small measure of such intrusive power?  Not one thing, and yet we give them more and more and more capacity to direct our lives.  I shudder to think where this will lead in 10 short years.  We need a change in direction, and the Republican party of North Dakota better decide whether they are going to lead it or be cast aside in favor of an alternative. The watershed looms.

Conservative Reader on May 20, 2008 at 07:20 pm

The first thing you have to look at is whose land is suddenly valuable.

WOOF on May 20, 2008 at 08:25 pm
Avatar for theovermind99

But if history shows us anything that after the people sink tons of money into economic development their taxes just never seem to go down.

You’re talking about two different things here.  Any expansion of the economy, including expansion caused by using economic development funds, spreads the tax burnden to more and more people resulting in downward pressure on taxes.  The main problem that your getting at is a problem with the accountablily of city officals to actually act on that downward pressure.  As long as the public does not do that, city officals won’t lower the taxes.  This is true in any case of raising taxes for a particular project.  The town where I live raise the city sales tax .5% to pay for a new library several years ago.  The library is now up and paid for and we still don’t have the tax back to where it was.  Why?  Because the other people in my home town didn’t call the city commision on it.

theovermind99 on May 21, 2008 at 06:58 am
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