Incentives vs. Real Economic Development

The practice of government giving incentives to specific industries and businesses is popular among politicians. For starters, it plays into the classic concentrated benefits and dispersed costs paradigm — in this case the business or industry receives great benefit, but the public is ignorant of the costs. Also, incentives seemingly allow politicians to avoid tough and politically-unpopular decisions while attracting business to their jurisdiction.

The problem is, as I write in today’s Albuquerque Journal, what is needed is for the Legislature to make tough decisions that spur economic development statewide and for the benefit of ALL businesses and industries in the state.

Unfortunately, local government has little say in some of the biggest policy decisions that are holding New Mexico back. But, rather than pushing incentives in a never-ending cycle of failure, our local leaders can and should work to use the bully-pulpit and work with local representatives in Santa Fe to spur economic growth. Oh, and go to the following links for more information on the economics of personal income taxes and “Right to Work” legislation.