Border Wars

Posted by: Thom Ruhe on January 16, 2013 Source: e360 Blog

The First Top of Mind issue for 2013 has gone online and in it, I talk about three important topics circling entreprenruship—all of which have the potential to impact (or continue to impact) it in a big way. For those who would like to tune in, I won’t spoil it by revealing all the topics, but I do want to elaborate on one that has struck a chord with me and others at the Kauffman Foundation.

It’s a practice around economic development that’s been dubbed “border wars.” The New York Times published a phenomenal article in December on the topic after having spent 10 months investigating business incentives awarded to large corporations by hundreds of cities, counties and states—an annual sum of more than $80 million a year. The piece illustrated the way in which large, established corporations are “creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages.”

As I read this well-researched, well-written article, which I highly suggest you do as well, I couldn’t help but think how unproductive this method of economic development is. As counties, cities, and towns vie for these established businesses to uproot from another county, city or town, to call theirs home, it begs the question: what if the billions poured into business incentives that essentially rob Peter to pay Paul (resulting in no net new job growth) was used to launch and support programs that nurture and encourage new company growth? After all, if you want job growth, there’s only way to do that, and that is to create new jobs. And we all know who’s been responsible for net new job growth in the past 30 years.

The Kauffman Foundation has done extensive research on the topic of job growth through entreprenruship. We are well equipped to discuss this topic with policy makers and hope to hold a roundtable to debate other ways in which local government can create jobs in their region, without taking them from across the border.

Tags:  Top of Mind, job creation, economic development, entrepreneurship