ED Secret from 007: Incentives – Helping or Hosing Your Community?

This month, Jeffrey Finkle, President and CEO of the International Economic Development Council, joined us on Economic Development Secrets and discussed his views on incentives.


I think I have to call this a personal opinion, not an IEDC opinion, and make sure that people understand the difference, because the organization is not anti-incentives, but I think it is fair to say that many of our members who actually use incentives are not wild about using them. I’m not wild about using them because I think we use them often times for many of the wrong reasons.

[20 years ago] we had given out nearly a billion dollars worth of incentives to foreign automobile companies coming to the United States, and they were all coming to the United States. We spent that billion dollars just driving them towards Alabama or South Carolina or Tennessee or Kentucky. Had we not, they still might have shown up in Tennessee, Kentucky, South Carolina, Alabama. We could have taken that billion dollars and used it for something else. We could have put it into education. We could have put it into product development. We could have put it into entrepreneurship. I think we do incentives sometimes for the wrong reasons.

Now, at the same time, I am not suggesting for a second that somebody go out and stop using incentives today. Why is that? Because you will get massacred in the competition, because until there is a disarmament by everybody, one cannot disarm and put themselves in a position not to compete. Until we can figure out a better way, I think incentives are probably, unfortunately, still with us.

The other side of incentives is oftentimes communities get hosed. The other side is in control of the game, they know what they’re being offered elsewhere, they know where they’d really like to be, and they actually might like to be in your community, but they’re baiting the community into believing that they are not going to locate there unless you do some level of back flips and tax deductions, job training, site acquisition, whatever it might be, before they will locate in your city. Sometimes I almost wish a community would say, “Not playing that game,” and then all of a sudden find the company actually located in their city just the same, but we’re all afraid that we have to do something or we’d potentially lose the deal.


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