Many years ago a city government veteran explained The Theory of Competitive Stupidity to me.
“It makes no sense in the aggregate for cities and states to subsidize convention centers and stadiums and private businesses,” he explained, “but if one mayor or governor stupidly offers money to people to bring whatever they’re doing to his jurisdiction, then other mayors and governors have to be competitively stupid and offer money to lure them back.”
The result of all this is displayed in a series by Louise Story in the New York times over the last few days which concludes that state and local subsidies to private businesses cost taxpayers well over $80 billion a year. You can read the story, and see an interactive map which breaks down the subsidies by state here.
As wasteful as much of this stuff is – and I’m particularly offended by subsidies to sports franchises that are worth billions – there are times when if I were the public official, I might pull the trigger and try to help my community. And there are certainly ways that local tax and regulatory policy towards business can be improved.
You can hear the New York Times Louise Story discuss the series Wednesday on Fresh Air.