Econlib: Who Really Gains from Billions in Economic Development Incentives?
In this piece, the author surveys academic literature and uses Subsidy Tracker to assess the impact of economic development incentives. Not only do they tend to be more harmful than helpful, they often lack transparency and there is little will to track outcomes because they net benefits to elected leaders, the author writes.
“While one might think that these incentive programs are simply zero-sum (causing a firm to locate in state A rather than state B, so one state’s gain is another state’s loss), there are reasons to believe that there are secondary effects, deadweight losses, and unintended consequences of these policies that lead them to actually be negative-sum—that is society is worse off with these incentive programs that it would be without them. As (Frederic) Bastiat would point out, the resources devoted to incentives are socially wasteful because they have an opportunity cost.”
Read the full story at Econlib.