Jack McHugh at the Mackinac Center in Michigan explains the three major reasons that state and local government officials engage in so-called economic development here.

If these programs don’t work, why do lawmakers keep expanding them? I
think there are three reasons.

First, there’s a “seen and unseen” problem: It’s easy to see
a particular firm offering to invest and create jobs in one community
if the government will only grant it some special favor not available to
other firms. Harder to see are the negative effects of such activity on the rest of the
economy, including the additional tax burdens carried by the non-favored firms.

Second, while all this activity does nothing for real economic development, it’s a
highly effective tool for political development.
Doing the things necessary to foster real
economic growth ? cutting government spending, lowering taxes, reducing
regulations and modernizing labor laws ? are hard because they all make
politically powerful special interests angry. Expanding economic development
programs lets lawmakers pretend to be “doing something” to help the economy,
regardless of whether they really are. Plus, every favor handed out to a
particular interest in return for an investment generates opportunities for
glowing press releases and ribbon-cutting ceremonies.

Finally, perhaps the most important reason is suggested by
the multiplicity of state and local entities empowered to grant favors:
political careerism. The primary goal of members of our current
political
class, including almost every one of Michigan’s 148 legislators, is to
remain
on a government payroll for the rest of their working lives, and
hopefully
retire with a generous government pension and benefits. Prior to
becoming a
senator or representative, the vast majority of current legislators had
been
elected or appointed to some local government position, including in
economic
development entities.

In addition to these reasons, I would add that the economic development
has created hundreds (maybe thousands) of jobs for bureaucrats in the NC Department of
Commerce and county and city governments.  These career officials have
every reason to keep the scam going. Unfortunately, these jobs do not
create wealth in NC.   They drain wealth from taxpayers by awarding
funds and tax breaks to favored businesses.  Do Dell, SkyBus and Randy Parton Theater ring a bell?