Incentives: Seize the Opportunity to Do No Harm

As I noted earlier this week, the debate over the use of incentives in economic development has been hot and heavy for most of the past month – across publications, social media conversations and in-office debates alike.  The people who have been sharing their thoughts with me span the spectrum, which makes for an interesting (and sometimes overwhelming) vantage point.

One particularly interesting set of comments was sent to me by Kathy Dodson, an economic development professional in California with an impressive resume.  Kathy came at this debate from what I thought was a unique perspective, and one that makes particular sense in a Wise Economy context: Kathy focuses on improving the quality and professionalism of the decision making and evaluation processes within the profession as a whole.  As I wrote a few days ago, the quality of our decision-making processes has an outsized impact on the results of what we do, especially in a complex, interdependent environment – and we have got to stop flying by the seat of our pants when we’re trying to decide where to invest our community’s limited resources.  Kathy also makes an eloquent case for economic development professionals to claim a leadership position, to become proactive in helping communities understand their true needs and acting in the manner that builds them up, rather than waste their assets.

Here’s Kathy:


The best thing to ever happen to economic development

The New York Times articles have thrown economic development into the spotlight in a most unflattering way.  Just over a year, ago an NPR program, This American Life, did the same thing.

Let’s not waste a good crisis.  It is time for economic development to grow up and become a discipline, a serious profession.  What we do is too important to leave to guess work and to those with a vested financial interest in the outcomes of our decisions.

Economic development professionals rarely have economics degrees, not to mention economic development degrees.  More problematic, we rarely look to the academic science of economic development to guide our policies.  Academicians in economic development rarely collaborate with economic development practitioners.    We should use this opportunity to demand improvements in economic development professional education and research.  Economic development practitioners typically have well-developed skills in community building, outreach and collaboration.  We need to capitalize on these important skills that are rarely taught in our schools and universities and combine them with a true understanding of what drives economic growth in communities at the macro and micro levels.  We need to strengthen professional and academic understanding of what we can influence, and even why governments should support economic development.

Just as we in the economic development profession must become more educated, it is our responsibility to educate leaders in government as to the true benefits and needs of economic development.  Economic development is important because it supports our communities and our nation.  Just as we use taxes to provide for health, safety and welfare of the citizens who pay those taxes, we need to also provide for the health, safety and welfare of the businesses that pay into the system so that our communities will prosper.

This is not done by giving one of them a bunch of cash and ignoring the rest – can you imagine the outcry if we did this with residents?  Supporting our communities is done by building a quality place where all businesses can thrive.  That means very different things in different communities, and the discovery and delivery of this important aspect of community-building is the job of an economic development professional.

Just as medical students are taught “first do no harm,” we need similar thinking in economic development.  Deep down, most of us know that transferring a big box store from one side of the county line to the other does not create economic development, and the incentives used to accomplish this impoverish the community.  We know the difference between smart incentives that are used for training that builds the capacity of human resources in our community, and incentives that leave our community, and leave it worse off.  We know that paying hundreds of millions of dollars to move a US company from one state to another does not make America wealthier or stronger.

We must seize this opportunity and improve what economic development is and what we do.  Maybe we can do this through existing organizations; maybe we will unite online, but let’s come together and plan a future that will make a difference, bring respectability back to our profession, and truly build prosperity for the future.  That is our job.


Do no harm.  Seize this opportunity.  Build prosperity for the future.  That is our job.

I’m very grateful to Kathy for trusting me with her thoughts and allowing me to share them here.  Let’s continue the discussion.


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