The Norman Transcript

Opinion

February 3, 2013

Hard questions unasked, unanswered

NORMAN — Editor, The Transcript:

The Transcript (“Chamber Hosts Legislative Breakfast,” 1/30/2013) reports that the Norman Chamber of Commerce has endorsed various goals including the following: “Economic development incentives that create and maintain jobs and investment in Oklahoma,” and “funding for the Oklahoma Quick Action Closing Fund to attract new jobs.”

In theory, the idea of making public investments on behalf of the community seems sensible. 

Programs like the Oklahoma Quick Action Closing Fund do “incentivize” businesses. 

Unfortunately, such strategies give businesses an incentive to play communities off against each other to maximize the size of subsidy they receive (i.e., create a bidding war).  The “winner” benefits only if it does not pay more than the additional jobs or investments are worth to the community. 

There is excellent reason to think that communities overpay for businesses – that is what the empirical evidence about economic development incentives indicates.

Firms have the upper hand in negotiating deals (e.g., political clout, more information about their business models, costs, etc.). 

Communities, on the other hand, are not well equipped to accurately assess the costs and benefits of development.  Norman, for instance, does not do fiscal impact analysis of the potential costs/benefits of new development.  (The Norman Economic Development Coalition tries to estimate the job impacts of new businesses, but it uses a simple, static model that always outputs an increase in jobs for any positive input.) 

Offering development incentives is akin to shopping for a car armed with minimal research on the value of a given make/model, and instead basing the purchase decision primarily on the dealer’s input.

Businesses typically employ professional advocates to “sell” projects to communities.  It must be politically difficult for elected officials to say “no” to promises of jobs, even if such promises are unsubstantiated or the jobs cost more than they are worth.

Text Only | Photo Reprints
Opinion
  • Quite the resilient bunch

    The people of Moore are a resilient bunch. They’ve bounced back from tornadoes before, but the current renaissance may be the quickest yet. FEMA officials said it would take two years to see some sense of normalcy. That’s hardly the case....

    July 24, 2014

  • A fresh start for VA

    All of us have high hopes for the confirmation and success of Veterans Affairs Secretary nominee Robert McDonald. If confirmed — and most believe he’s a shoe-in — McDonald will take over a paralyzed system of health care that is not ...

    July 24, 2014

  • Call up National Guard

    We’re not sure it will help, but you have to hand it to Texas Gov. Rick Perry. He deployed up to 1,000 Texas National Guard troops to help secure his state’s border with Mexico this week....

    July 23, 2014

  • It’s only getting worse

    Conditions for children in Oklahoma were starting to look up for a few years, according to the annual Kids Count reports. Now we know it wasn’t getting better. The recession was impacting the rest of the country, dropping their scores....

    July 23, 2014

  • Noting a life well lived

    James Garner never intended to be a movie and television star. He just kind of lucked into it, he would tell those who asked. If you have the itch to act, get a good-paying job and spend your free time at your local community theater, he ...

    July 22, 2014

  • Recount that really matters

    Americans have been hearing a lot about Congressional elections, but there’s another one halfway around the globe that will matter far more....

    July 22, 2014

  • Runoffs get no respect

    The Aug. 26 Republican runoff election for the Cleveland County District 3 commissioner post is one of only 18 races on ballots around the state. Only two races are statewide — the Democrat contests for U.S. Senator nominee and state ...

    July 22, 2014

  • Change some lines

    Editor, The Transcript: Looking at how our elected Republican friends are reacting to the refugee children crossing the border and now being housed in Lawton, I have a suggestion. Let’s edit the Christian Bible in several places to reflect ...

    July 21, 2014

  • New health care system demonized

    To the Editor: In October 2013, soon after we were asked to take over management responsibilities at our family business, we were visited by the company’s health insurance agent. She explained that a decision needed to be made regarding ...

    July 21, 2014

  • Norman Forward builds momentum

    The quiet campaign to build momentum for a citywide public works project is beginning to attract some attention....

    July 20, 2014