Holcomb-0; Rent-Seekers-320

January 20, 2019

According to Amazon, the cost per job for New York taxpayers is $48,000 for its new headquarters, compared with $22,000 for Virginia and $13,000 for Tennessee. In a statement released by Amazon, Gov.  Andrew Cuomo called the agreement ‘one of the largest, most competitive economic-development investments in U.S. history.'” — Nov. 11, 2018, Fox5 News, New York City 

GOV. ERIC HOLCOMB was “thrilled” to tell us last week that he persuaded 320 companies to locate or grow in Indiana. These businesses, the governor announced in the certainty only found these days in press releases, will invest more than $7.38 billion here while creating up to a record-breaking 31,112 Hoosier jobs.

Thirty-one thousand one hundred and twelve — imagine that, and by fiat, a wave of the Indiana Economic Development Corporation’s wand. So hooray for the governor.

Wait, though, don’t Republicans believe that jobs are created by getting government out of the way of individual ambition, productivity and innovation, not stepping in to take credit for it all? And can it be said that government by itself actually creates any jobs whatsoever other than those in its service? In fact, our taxes are what allow Holcomb, et al., to award incentives to politically selected firms (“rent-seekers” in economic jargon).

But we can’t be sure even that works. Consider the governor’s base number, on which all of his claims rest. How many of those 320 companies would not have come here had there been no IEDC? 

Economists say it is difficult to know unless you administer sodium thiopental. All the CEOs, of course, are happy to say publicly that the IEDC made the difference. The hope is that they will get more government assistance to pad quarterly reports to stockholders.

But what’s the verifiable number?

Well, if you have to know, it’s zero.

Now, you can appreciate that those in the economic-development industry sincerely believe they are creating wealth and jobs. You can even consider valuable their work in public relations and personal outreach representing the many great things our Indiana has to offer investors.

But how many of you would risk your money in a smiley-face venture that, success or fail, could not be deconstructed? That would not lend itself to cost-benefit analysis, where the only certain product is a press release?

OK, how many of you would risk someone else’s money if you could claim the credit?

The point is made. Let’s trust the electorate to get it.

— Craig Ladwig


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