Tu-Uyen Tran over at the Grand Forks Heralds’ City Beat blog has an interesting juxtaposition of figures from his city’s economic development efforts.

The City Beat felt a little funny writing two stories that came out of the Grand Forks Growth Fund meeting today. In one, the city is preparing to lend $150,000 to a software company called Datacom International of Bloomington, Minn. In the other, the city is planning to write off $615,000 in bad debts from businesses that the city previously helped out, including the notorious WebSmart Teleservices Group. The amount totals about $730,000 in today’s dollars.

That’s about $14 for each and every soul in Grand Forks.  Who knows how it works out per actual taxpayer.  It is undoubtedly quite a bit higher.

And why was this money lost?  Because the city leaders in Grand Forks made the wrong investments with the people’s money.  But my question is, why are they being allowed to make those investments at all?

I understand the intent of economic development and like the idea of cities aggressively trying to reel businesses into their areas, but giving politicians the power to invest public money in private enterprise is a recipe for corruption and fiscal disaster.  Corruption because it’s all too easy for businesses and/or developers to grease the right palms and get a big chunk of dough from the public treasury, or deny a competitor the same.  Fiscal disaster because politicians, by their very nature, aren’t as good as deciding which businesses should exist and which shouldn’t as are tens of thousands of free, money-spending citizens operating in a free economy.

If Grand Forks wants more businesses in town the proper thing to do would be to cut taxes (they have the second highest sales tax rate in the state) and roll back burdensome, unnecessary regulations.  That’s how you attract businesses.  Not buy giving city politicians their own special investment fund to pick and choose which businesses get money and which don’t.