by

What is ‘Economic Development’ and why do we need it?

What is ‘Economic Development’ and why do we need it?

By John Pickerill, Montgomery County (Indiana) GOP Party Chair

At the last round of City Council, County Council, and County Commissioner meetings, a few of our courageous elected officials questioned why taxpayers are being forced to spend so much money on “economic development.”  That’s a very good question, indeed.  In the last 20 years Crawfordsville and Montgomery County have spent $4.5 million on a Commerce Park, $5 million on a building in the Commerce Park, $16 million on a fiber-optic network, almost $1 million on the Courthouse parking lot, $2.4 million on the airport runway extension, over $1 million on Montgomery County Economic Development corporation, and $120,000 on Amtrak subsidies.  In each instance we were promised economic prosperity is right around the corner.  When it didn’t work, millions more were spent.  And now there are plans to spend another $18 million on Downtown Revitalization.

A better question to ask first is, what do politicians mean by “economic development?”  Well, it’s usually when local government tries to lure large businesses into the county by promising them they won’t have to pay all the taxes that our existing businesses have to pay.  Or sometimes it means having taxpayers pay some of a new business’s construction costs (utilities, upgrading roads, or even putting up a building for them).  Sometimes it means having taxpayers pay for cosmetic changes to the city in hopes businesses will be lured by a pretty appearance.  It always means taxpayers are forced to pay a private organization (i.e., Montgomery County Economic Development corporation, a.k.a. Indiana West Advantage) to coordinate this cozy relationship between local government and big business.  In other words, “economic development” means a government-manipulated economy.

Is all this necessary?  Politicians pushing economic development will surely say it is.  In fact, they will convince you that your community will die without it.  The rich people and big businesses will supposedly move away, we’ll turn into Detroit, and those of us left will just scratch our heads not knowing how to feed ourselves.  It’s as if they think we’re incapable of making our own economic decisions without government’s wise, guiding hand.

Economic development politicians claim “We need to create more jobs by attracting outside businesses!”  But take a look around.  Our existing businesses are having a hard time filling the job openings they have now.  Does it make any sense to subsidize an outside business to move here?  Where will it get its workers?  Won’t it tend to rob skilled workers from our existing businesses?

These politicians claim “Globalization will lure all the businesses and people away!”  In other words, every other local government in Indiana and the nation is bribing businesses to come there, so we have to bribe businesses even more to come here, or we’ll be left behind.  But wait a minute.  Let’s think this through.  Isn’t this just a bidding war that pits taxpayers of one community against another community?  Where does it end?  This economic model may be a sweet deal for politically-connected businesses and politicians wanting to pass out construction contracts, but it is unsustainable for the taxpayers and their community.  If we want to avoid this trap we must have a different plan that isn’t dependent on government subsidies.

These politicians will claim, “Our community needs to grow!”  But we should challenge that claim.  Most people move to Montgomery County or stay here because they want to live in a small community, where it’s a good place to raise kids.  And, what will cause people to actually move away is if they think it’s no longer safe for their family.  It is a lot more important to address the growing drug abuse problem and related violent crime before it can destroy what attracts people here the most.  We can’t afford to divert our limited government resources on economic development projects until we have our substance abuse problem under control.

Unfortunately, politicians clamoring for growth and job creation isn’t so much about our economic prosperity as it is about their never-ending appetite for bigger and bigger tax revenues.  Go to the typical budget meeting and you’ll find them levying the maximum amount of tax on the citizens allowed by law.  When they reach that limit, they make plans to increase tax revenue by increase the number of people paying taxes or attracting white-collar jobs instead of blue-collar jobs.  More tax revenues mean more economic development projects and the political perks they bring.

I propose a different economic plan, one that is built upon the foundation we already have.  We are a proud farming and blue-collar manufacturing community with all the great ingenuity, craft skills, work ethic, and small business sense that brings.  We have a lot of potential entrepreneurs here.  Government must do everything it can to remove the shackles (taxes and regulations) from entrepreneurs to make it as easy as possible to start up new businesses and strengthen small businesses we already have.  And it must stop giving special favors (a.k.a., “economic development incentives”) to outside businesses that tend to hurt our existing businesses.

John Pickerill is the chairman of the Montgomery County Republican Party.  The views expressed in this article are his own and are not necessarily intended to reflect the position of the Montgomery County Republican Central Committee.