Last updated on 2011.03.04
I heard Senator Russell Olson (R-8/Wentworth) whining on Statehouse last night about losing economic development opportunities to other states. Yesterday, Senate State Affairs, of which Olson is vice-chair, discussed HB 1230, Governor Daugaard's permanent economic development fund. Senator Olson spoke of how, as a professional economic developer, he's frustrated when they're competing another state to recruit a new company, and all the factors between South Dakota and the other state are equal, but then our hands are tied and we can't bring one more incentive to the table. That's why Senator Olson voted with the committee majority to recommend HB 1230 for passage, to give our economic developers one more chip they can throw on the table.
Now never mind Senator Olson's dogged refusal to acknowledge that this particular chip doesn't add much value to our bid for bargain-hunting corporate exploiters. Never mind that Senator Olson is taking us down the endless road of an interstate bidding war that South Dakota can't win with its limited resources.
Let's focus on Senator Olson's myopic mindset on economic development. Given $16 million or so a year, Senator Olson thinks that the best way to promote economic development is to hand that cash directly to the businesses we're trying to recruit. As Olson said in committee, "I'm a capitalist!" which apparently means he thinks purely selfishly, in terms of money in his pocket... or, in this case, money in the pockets of fellow capitalists. Hand the rich guys money, and then cross your fingers that some of it will trickle back to our own people in wages.
But there are always alternatives, Russ. What if we took that $16 million and patched all the potholes on the highway leading to the industrial park? What if we built a lovely public park across the road from the housing development where the new business's workers might live? What if we spent that money to refurbish the local high school and hire a couple more teachers to provide more foreign language and music classes for the corporate executives' kids?
Now just imagine coming to the negotiating table making that bid for the new company to move to Madison instead of Des Moines. We're neck and neck, and those darned Iowegians say, "Oh, by the way, Acme Widgets, here's a million-dollar grant." We turn to the CEO and say, "Gee, we don't have any more cash to offer you, because we spent it patching the roads, building a park, and hiring better teachers." Even if Acme Widgets takes the money and runs to Iowa, we still come out ahead, because we have invested in infrastructure and services that directly benefit every South Dakotan in the neighborhood. Plus those investments in public amenities have at least as much potential to draw workers and investors as corporate handouts.
Alas, Senator Olson doesn't see the value in such public investments. That same myopia is why our local economic development efforts (which Olson once ran) have mostly failed: we think the only way to enrich our community is to transfer our public wealth to private pockets. Instead, we should make concrete investments (literally when it comes to roads and schools!) that immediately improve South Dakota and give outsiders lasting reasons to move here.
Update 2011.03.04 08:02 CST: Bad economic thinking passes the Senate 28&ndash4. Corporate raiders chuckle.