Out of Control Policy Blog

Finally, Some Common Sense on Economic Development

Anyone frustrated with the nonsense promulgated by tax incentive and Smart Growth proponents on economic development will find the most recent commentary by Bill King in Expansion Management magazine refreshing.

Mr. King takes on a number of "myths" about urban and suburban development head on and provides some important practical insights into the nature of business location and development.

*Suburban development, he says, occurs because suburbs often provide a more attractive and cost-effective busienss climate. While declining central city tax bases are a problems, we also need to accept the fact that the population growth in our metros is taking place in the outer suburbs, not in the city center, so it's only natural that that's where the job growth is.

* Companies moving to new locations within a metropolitan area is a good thing and represent important attempts by firms to remain competitive. If a company decides to move from one part of the metro area to another location within the same metro area, that should be looked upon as a good thing. Why? Because the real alternative is for that company to leave the metro area entirely for a location where it operate more profitably.

*Tax incentives are the primary reason businesses relocate--business costs and competitiveness are. Companies do not move because of incentives; they move to improve the business climate in which they operate.... As for the high growth areas in the suburbs, most of them don't even have to offer incentives – other than those incentives available to any company in the state that qualifies – in order to convince a company to locate there.

Companies that choose to leave the downtown area for the suburbs do so for any number of reasons: it is almost always cheaper to operate there; they have access to a more highly-educated work force; their tax rate will also probably be lower. Whatever the reason(s), the one thing they have in common is a healthier bottom line.

I could go on, but you get the idea. Take a look at this gem of an article instead.

Samuel Staley is Research Fellow


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