My good friend Bill Lutz has been on a tear lately… and once again I think he’s onto something. I’m always glad to be able to serve as his editor and publisher. Here’s his latest:
I fully believe that LinkedIn is a very powerful tool, and I find myself drawn to the discussions in those groups that I work in, most notably those groups in economic development. There are very few forums that provide a real-time discussion on relevant issues with input from every corner of the world from highly respected individuals.
On one such occasion, I was looking through discussions and saw the following comment dealing with issue of incentives in economic development:
A monetary incentive is the easiest way for elected community leaders to say “we respect you, want you and invest in our community.” Incentives bridges the gap between “saying” you will do something and actually “doing” something for the company.
In all fairness, this was not the complete comment, but I pulled out the two sentences that struck the loudest chord with me.
The comment left me speechless. It sounds like the author is all for selling out a community to land the big win… you want the big business to come in, you have to respect them and that respect can be bought, for the right price.
As I think about that string of logic, it gets me to one of the great paradoxes I see in the way economic development is being practiced. Our local governments, local chambers of commerce, local economic development organizations, are charged with hiring men and women of high caliber to lead economic development efforts. In this line of work, economic development professionals are careful to use vague code words to describe leads, they safeguard the business intelligence and trade secrets that they know, they understand that relationships are built on trust and they do everything they can to earn and keep the trust of the business clients that they are working with. Yet, according to this author, the “sell out” is the key. Of course, we are not selling out the business, we are selling out the community, the state, the taxpayer and whoever else might be footing the bill for the incentive.
The paradox lays in the fact that economic development professionals are hired for their ability to earn and keep trust, but not with the people that hire them. Rather, you might conclude that the trust they are responsible for maintaining belongs to the businesses they work with.
But, as I re-read the comment, I realized that there is more to it. The author tells us that the monetary incentive is the “easiest way.” Maybe that is the operative word – easy.
But easy for whom?
Of course it is easy for the business to accept the incentive, and it may be easy for the local government, the local chamber of commerce or local EDO to give out the incentive.
But is it easy for the community?
If a community get used to relying on the “easiest” way to bring in business, what’s going to be the strategy when it requires hard work? Any community that is willing to shell out money to a business is not fooling a soul when it claims that it just bought itself a long term commitment.
Do you really think the business you had to pay to come to your community wants to stick around if there is a better deal somewhere else?
I am beginning to think that economic development incentives are analogous to junk food for our communities. In the short term, they might satisfy our hunger and we might even feel better about ourselves and our community. But in the long run, the questions remain:
Is it worth it?
Will our communities continue to bloat up with empty buildings?
Could have the dollars that were used for incentives been better used elsewhere?
Was the easiest decision the best decision?