Mitch’s post of Jason Jolley’s comments, that the state will need incentives less as it becomes more, competitive reminded me of the problems in the auto industry. GM (and Ford and Chrysler) made cars nobody wanted in quantities that nobody would buy and tried to sell them at prices nobody would pay. The manufacturers then had to give money to their dealers or directly to the customer so they could get the cars off their lots.
The problem was that the manufacturers were so busy giving out incentives in a bid to meet capacity and keep their union employees, they did not pay as much attention to improving their cars. Bob Lutz helped Chrysler find its way for a few years and is working his “car guy” magic at GM now.
Better cars mean fewer incentives and higher margins.
In North Carolina for FY 2005-06, the state collected $1.31 billion in corporate income tax revenues and gave away $1.25 billion in economic development incentives. It’s hard for growth to pay for itself when you give away the money you get from that growth.
When cities, counties, and states give incentives, what message does that send? Does it suggest a governor or legislature or city council that has confidence in the services provided?
