The Outstater

June 23, 2016

For the use of the membership only (577 words).

THINGS ARE UPSIDE DOWN, or at least very, very strange — mostly in Indianapolis. The new tea shop on Fountain Square allows stray cats to roam freely among the tables. And this weekend the annual meeting of the U.S. Conference of Mayors will hear from both the Dalai Lama and Lady Gaga.

And something else is topsy turvy — and throughout Indiana. City Councils are grilling hapless business owners about their tax abatements and other reliefs from officialdom. These businesspersons, please know, may have had the real-life experience of putting up their home as collateral for a bank loan to make payroll. The city officials, at best, are expert at spending other people’s money.

The scene, therefore, is Kafkaesque. A seasoned CEO, hands folded respectfully on the table, sits in a straight-backed chair in the manner of a criminal defendant. He or she is examined not by a judge but by a detached group of townsmen from sketchy backgrounds firing their question seated in ostentatious executive chairs on an elevated platform.

This Theater of the Absurd, where self-interested politicians pick winners and losers among those struggling to stay above the bottom line, is described by the economist Thomas Sowell: “It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.”

In my neck of Indiana, county commissions (or their taxpaying constituents) may actually have to pay that price. They are being sued by one of those dark-suited CEOs — and rightly, to certain minds.

In this case, allegedly, the commissioners not only picked the private-sector winner but the land to be developed, land that the commissioners had purchased with a more favored firm in mind. The lawsuit charges that rather than neutrally consider the plaintiff’’s zoning petition, the commission protected its own interest and investment in a competing company’s plan.

The political motive might have been nothing more sinister than to make sure the commissioners’ decision to approve an economic “development” project didn’t look stupid when jobs would have been created regardless. There is a powerful interest among certain officials to appear at the ribbon-cutting as the kingpins they are imagined to be.

Coincidentally, Dr. Michael Hicks and friends at the respected Center for Business and Economic Research at Ball State University this week released a study that takes a hard look at all such “successes.” The study found that government efforts to attract the type of firms mentioned in the lawsuit (labeled “footloose” for their willingness to pick up stakes and follow tax incentives) were suspect.The title, “Why Local Economic Development Efforts Have Been so Disappointing,” hints at the conclusion:

“Traditional economic development efforts targeting footloose firms have performed poorly in terms of generating better economic outcomes. More importantly, the prospects for these policies have largely disappeared, leaving hundreds of economic development organizations in Indiana, and tens of thousands nationwide, executing expensive policies that do not deliver prosperity.”

Ribbon-cutting and kingpin-ism, then, might not be mere aspects of official economic development, they might be the sole products. It will be interesting to hear what Lady Gaga and the Dalai Lama have to say about that.

— Craig Ladwig



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