Corporate Welfare vs. Business Friendly

One of the big North Carolina news stories recently has been the closing of the Dell plant in Winston-Salem. The controversy comes from the quarter million dollars in tax breaks given to Dell in 2004 so they would come to the area. Dell will have to give some of that money back, so it's not a total loss, but that doesn't change the impact this will have on the city. The main lesson to take away from this is how unpredictable corporate welfare is. Giving money to businesses to come to your area is not guaranteed to bring a net benefit. And even if it does bring a large employer, the chances of that business staying, or even existing, forever is small. When that large company goes away, so do the jobs it offered (at least in the short run). For a city to be so dependent on one company is risky, just ask Detroit. The real way to improve the local economy is to create a business friendly atmosphere (simple/low taxes, low crime, hard working/educated workforce). You don't need big business to thrive. After all, 99.9% of all companies have less than 500 employees. So why are these incentives so common? It may not help the local economy, but it does help the local politician.