For those concerned with liberties lost when towns throw themselves into the business of economic development, this is not an encouraging story. Apparently the moribund towns of the fly over states are now discontinuing their unsuccessful practice of corporate welfare. Instead, Midwestern towns have opted to attract and retain younger populations through the limited use of individual handouts. Why else would someone agree to settle somewhere like Ellsworth, Kansas?
Free land is why. Ellsworth's pitch is this: Agree to build a house here and pay nothing for the lot it's on. Got three kids in school? OK, that's worth $3,000 toward a down payment. Need jobs? We'll help you find them. Still not sure? Come visit, we'll show you around.
And Ellsworth, Kansas is not alone. The Midwest has seen a declining population for decades now, and attempts to attract and retain large to mid-size companies have fared poorly. In response, towns all over the Midwest are switching the focus from elephant hunting to ‘economic gardening’ – a more bottom up process where individual families are incentivized (through free land, tax breaks, free property, job entitlements, etc…) to either stay or return to a dwindling locale somewhere in the Midwest.
One town is even offering to abolish state income tax for those under thirty as a means to retain residents. But the courts have already begun to recognize that economic incentives (including tax breaks) for large corporations come at the expense of other local companies and the practices has already been challenged on constitutional grounds. Reducing scale doesn’t make it any more constitutional.
‘Economic gardening’ is the wrong approach. Strong infrastructure, reduced tax burden, and a business friendly environment (meaning less political and bureaucratic wrangling) are the factors that naturally encourage economic development while allowing the government to maintain its proper role at the municipal level. Granting favors to the ‘right folks’ as part of a aesthetic, master scheme hardly seems like economic development at all, but just one more example of poorly conceived centralized planning.
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