INFORMATION #2 07-29-1996 - Laserfiche WebLink

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Monday JUNE 10, 1996 ]BII 13 SS Colunm one A state of siege Costly competition to lure industry from other areas defended, assailed By Mike Meyers Star Tribune National Economics Correspondent The city of Cleveland forks over hundreds of millions of dol- lars for a new football stadium while closing I 1 schools for lack of cash. A Michigan town hands a small paper mill tax breaks that amount lo $2.4 milliou in public subsidies for each job at a plant thal employs 34 people. Minnesota delivers more than $300 million in credit to North- west Airlines and later pulls away from covenants that would have forced the airline to live up to the terms of the original deal. Mean- while, the Minnesota Twins wait in tile wings for a chance to have the public underwrite a new sta- dium. Billions of dollars in taxpayer money are spent every year on huudreds of programs designed to lure a sports franchise, an auto plant or a trucking terminal to move froln one state to another or to stay put in the face of incen- tives dangled by mayors, county supervisors and governors in neighboring communities or half a continent away. Search for jobs The defense of the bidding war between the states always is the same: jobs. Graham S. Toft, president of the Indiana Economic Develop- ment Council, made the case in favor of incentives last month at a national conference in Washing- ton, D.C. lie said they help ln-e- serve jobs in the United States in the face of incentives by foreign govermnents to lure finns to cross national borders. What's more, incentive deals have helped to raise Ihe standard of living in the Midwest and Soulh by attracting foreign investment to the United States, he said. "Without bidding lbr aud tracting foreign invesunent, espe- cially Japanese laulo plant} trans- plants, the Midwest would not only have been worse off for jobs, but have missed out on the de- monstrable effect that foreign production and manage~nent practices have had on U.S. auto firms," Toff wrote ill a paper pre- sented at the conference. But Robert Reich, tile II.S. sec- retary of labor, whose chief mis- sion is to foster employment, says it's time for a truce. At the conference in Washing- ton, sponsored by Minnesota Public Radio and the Ford Foun- dation, Reich sided with econo- mists who argue tile "economic war among the states" has pro- duced more victims than victors. Reich said government should concentrate on missions with economic payoffs that private en- terprise won't take on: educating the nation's children and build- lng roads, seaports ami airports. Spending billions of incentives as bait to attract new industries in- evitably leaves less money for fundamental government pro- grams, he said. Encourages movement Similarly, Ohio State Sen. Charles ttorn, a Republican, said of economic development pro- grams that encourage companies to jmnp from one locale to anoth- er: "This is an enormous decep- tion on the American people. These are monuments to greed." Last month, the Ohio l.egisla- ture passed a resolution calling for a national study of the cost of tile bidding wars -- no one knows the grand total -- and look for strategies to call a halt to the competition. At a Greal l.akes governors' c'onference to be hr;Id next week in Chicago, governors of Minnesota and several other states will be asked to champion similar resolutions in their legis- latures. Turn to INCENTIVES on D4