by Dr. Roy Cordato
Senior Economist, Emeritas
It was announced on Tuesday that Mercedes-Benz has decided to move its corporate headquarters from New Jersey to Atlanta, GA and not to the Raleigh area, as many were hoping. According to this article in the Triangle Business Journal, Georgia offered the company $23 million in corporate welfare payments while Governor McCrory was only willing to transfer a little over $18 million of taxpayer money to Mercedes. But the tax dollars saved are only the more visible cost savings associated with “losing” this bidding war with Georgia using other people’s money. The fact is that incentives like this give out of state companies an unfair advantage in competing for North Carolina’s scarce resources—labor, building supplies, electricity, land, etc. Every business and entrepreneur is in competition with all other businesses and entrepreneurs, both actual and potential, for the resources available to build and run their business. When one company gets a parcel of land or a ton of cement another business cannot. Added demand for these resources that result from state funded special privileges to some and not to others, drives the costs up for all businesses who are seeking access to those resources. So there is a wealth transfer to the favored business not only from taxpayers generally but also from existing businesses. All corporate welfare implicitly picks both winners and losers. The advantage that the politicians and corporate welfare queens, like Mercedes, have is that the winners are obvious and there for all to see, which works well for the politicians at ribbon cutting and election time, while the losers are all of those companies and entrepreneurs that never are able to gain access to the resources that flow to the favored and privileged businesses. So, as a resident and taxpayer of North Carolina, I say thank you to Mercedes for leaving us alone and deciding to fleece the taxpayers and businesses of Georgia instead. Ultimately your decision will will make North Carolina more competitive for real free market businesses that are doing it on their own.