"Privatization" of Economic Incentives Fails to Address Key Problems

Our friend Jeanette Doran of the NC Institute for Constitutional Law penned this op-ed in the N&O on the issue of North Carolina’s economic incentives, and Gov. McCrory’s still vague plan to turn over the state’s incentives programs to a “private non-profit.” Among Doran’s concerns is the issue of transparency:

Records of the negotiations aren’t available until the negotiations are over. Current law exempts economic development records from disclosure until 25 days after an incentive is announced or a business announces it will not locate in North Carolina. By then it is too late for taxpayers to weigh in.

….

Privatization of economic development efforts does nothing to redress these problems and, in the case of public records and transparency issues, may actually make things worse.

Doran offers three suggestions to improve NC’s economic incentives efforts (while stating her top preference would be to eliminate them), including: more public disclosure before the fact, more truthful reporting of job requirement for the incentive recipients, and the creation of an ombudsman in the Dep’t. of Administration to “scrutinize the state’s investment in economic development programs and verify that the taxpayers are getting a real, positive return on investment.”

On that last note, I must interject that no government bureaucrat can realistically evaluate if there is a “positive return on investment” of these corporate welfare handouts and privileges. This is due to the age-old economic adage of “the seen versus the unseen.” Specifically, we can see the number of people hired at the company receiving the incentive, but we can’t see the jobs lost because other companies not receiving a handout or tax credit are placed at a competitive disadvantage, nor can we see the investment and job creation our economy must give up because money is being taken by the government and doled out to the politically-connected companies. Just because we can’t “see” or track these negative consequences makes them no less real.

Even the most politically-neutral, unbiased ombudsman will be unable to calculate the true net impact of the states economic incentives.

“Privatization” of Economic Incentives Fails to Address Key Problems

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