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POTUS and sumo wrestlers

by Heather Irwin

t's not every day we're asked to play confidant to the governor of North Carolina.

So when the call went out from Harvard University and Minnesota Public Radio for "economic advisors" on the Tar Heel State's continuing conflict over tax incentives and emerging economic development, we leapt at the opportunity to put in our two cents.

Well, "leapt" might be the wrong word.

We sort of scratched our heads for a few minutes in puzzlement. See, interstate commerce is not exactly the kind of thing we spend hours pondering. In fact, we haven't really spent any time on the subject at all. Maybe we should have.

While not as titillating as, say, a chorus line of naked tap dancers, the war now brewing between the states affects billions of taxpayer dollars, thousands of jobs, and the economic fabric of our country as a whole. It should, by rights, be among the hottest of political hot-buttons.

Conspiracy a Go-Go
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Good Grooming
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Defending the Government?
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Consider this: The state of Pennsylvania provided a US$71-million incentive package to Volkswagen to open a factory, beating out competing offers from other states. The factory created 6,000 jobs, but closed within a decade. Who wins as a result of an arrangement like this? Certainly not the taxpayers, since these business deals are often financed at the expense of publicly funded programs like education, libraries, and police.

Offering sharp-eyed business owners tax incentives, training subsidies, land, and even cash payments, the states are fighting one another tooth and nail to land what they hope will be an economic motherlode. Added to the volatile mix are the decision-making powers of state and local government officials, who usually have free rein to decide how and where to spend the money. Those who question how or why the money is being spent (should taxpayers really be expected to shell out $720 million to bring the Los Angeles Rams to St. Louis?) are quickly sidelined as anti-job, anti-growth fanatics.

There are, however, many circumstances in which incentives seem to work. After local officials in Normal and Bloomington, Illinois, provided Mitsubishi and Chrysler with $250 million in incentives to build a new plant, studies showed that the result was a major boon to the local economy.

But is this really such a good deal? Critics say that even apparent success stories like this come at the expense of the other states that lose the factories and the jobs - provoking de facto economic warfare between the states. The practice also encourages companies to seek (or threaten to seek) further incentives, and, perhaps, greener pastures - keeping local officials and the local workforce in a chronic state of panic.

"People come to this subject with passion. There are haters and lovers - very little middle ground," said Leonard Witt, project director for MPR's Civic Journalism Initiative. Witt, along with Harvard's John F. Kennedy School of Government, has created a comprehensive site about the states' battle for business - bringing readers into the fray with exhaustive research, audio, and original content.

But rather than simply keeping their newfound knowledge to themselves, armchair pundits are invited to enter a contest to become full-fledged economic advisors to the state of North Carolina. Do you think Governor Jim Hunt should extend the welcome mat to businesses, or should states get out of the bidding war altogether? Tell him - after all, you're an old friend and trusted advisor in this role-playing game.

The contest deadline is 29 April, and the best of the batch will be considered by the head brains at Harvard. One lucky advisor will be invited to participate in the "What Should Be Done about the Economic Wars among the States" conference in Washington, DC, on 21 and 22 May.

And hey, maybe you'll even get to meet the president and tell him just what you think of his economic initiatives. ....