State and Local Incentive to Retain Business

Louise Story has authored a series in the New York Times lying out the folly as she sees it that tax breaks and other incentives offered by states and local communities need to be “nationalized.”
My argument against nationalization can be summarized by my example of the folly of GM management in the 70’s and 80’s that spelled the demise of this corporation, as we knew it.

Louise’s message this morning on MSNBC at least in part was that we need a national policy on tax breaks and incentives to level the playing field between states and to play in the global market. She used Texas as her example of “doing it wrong” by allowing Perry to convince business owners to move to Texas in exchange for tax breaks and other incentives. She says that while it is true that 50% of all private sector jobs created in the last ten years were created in Texas, she questions whether or not the jobs created were “good jobs” although she knows the states that lost business to Texas would happily have those same jobs back. Clearly she has a bias. This is why I find it hard to read a story that is supposed to be a “reporter” when in fact she has an agenda to nationalize local and state efforts to garner businesses to their respective states. I explained in earlier memo’s that I blamed GM for stupid contracts that gave outrageous health benefits, obscene raises and loosened quality of work requirements to a point where the product delivered was an embarrassment to GM and our country. Likewise I blame the politicians for giving tax breaks and other incentives at the local and state level to lure businesses to their area. Their motivation is selfish; they want to tell their constituents at the local and state level that they are doing something about losing jobs or gaining them from other areas. There is of course the union factor. In the early days the shoe business moved it’s manufacturing from the northeast to the south to lessen their ever-increasing manpower costs. Of course eventually the shoe manufacturing was moved overseas, The move of the shoe manufacturing off shore was the beginning of the scare to governors and eventually city councils to look at ways to keep business or get new business into their areas. The tax break seemed easy at first, just like it was easy for GM to give a “little more” on the health care plan or allow the union a “little more say over work conditions” with of course the same results, higher priced products with lower quality performance, enter the Japanese automotive manufactures.

Smart business people took advantage of the offerings from states and local communities and because the politicians wanted credit for gaining businesses or retaining businesses they didn’t sound the alarm that the original agreements in many cases weren’t be honored by the companies that took advantage of the breaks. Now the one thing I know that won’t work to solve the problems that have arisen from tax breaks and incentives is a “national program.” We can’t “level the playing field” in anticipation of efforts in the global market. Democrats won’t say it but they like libertarians and conservatives have seen the performance of Federal programs and it isn’t pretty. A national program means a Federally managed program and it won’t work. Federal management will add to the civil services head count and eventually increased costs to the taxpayers.

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