Is business attraction immoral? Should states be allowed to offer financial inducements in order to entice companies to relocate to their state? Is it wrong for an economic development organization to organize recruiting trips to distant states for the sole purpose of luring businesses to back to their state?
What about the suburbs? Is it wrong for them to try to attract companies from the urban core?
Clearly, the answer depends upon the vantage point from which you sit or, as the saying goes, "It depends upon whose ox is being gored." Those on the losing end tend to be more aggressively opposed to the idea than do those who are generally on the gaining end.
Over the years, there have been occasional efforts to outlaw incentives used to help induce businesses to move from one location to another. The movement has its ebbs and flows, generally mirroring the ups and downs in the economy.
For example, in the early 1990s, companies were bailing out of states like California, New York and the Industrial Midwest in droves. However, what eventually stemmed the tide of outbound companies from those states was not a legal prohibition against incentives, but rather the elimination of many of the impediments to business that were driving companies to seek more hospitable locations.
These days, the same push for relief is coming from central cities throughout the United States. The movement is loosely called Smart Growth.
Like California and New York a decade ago, these cities are seeing jobs - particularly the good paying jobs - following the steady flow of people to the suburbs over the past several decades. In just about every major city in America, civic leaders and activists representing our nation's urban core are clamoring for the suburban jurisdictions to stop luring companies out of the city proper. Many blame suburban tax incentives.
The problem with this argument, and the reason it is most likely doomed to fail, is that it ignores the fact that incentives really have nothing to do with why a company is leaving - that has more to do with the business climate and work force issues - but, rather, where it eventually ends up.
People like to work close to where they live. They hate being tied up in bumper-to-bumper traffic for several hours a day.
Smart Growth advocates would argue that the solution is for people to move back into the city in order to be closer to their jobs. More likely to happen, however, is for those jobs to move out to the suburbs to be closer to where their employees happen to live. In fact, that's been happening for decades.
As many of those jobs leave for the suburbs, they leave behind them vacant buildings that, if left unoccupied to extended periods of time, become the source of other problems as well.
Unfortunately, environmental regulations, well-intentioned as they are, are a disincentive for most companies to locate in these "previously used" brownfield locations. As long as the incoming company inherits liability for any and all contamination later found to exist on that site, most companies are going to opt for a greenfield (i.e., virgin) site - usually in the suburbs - for their new facility.
It's cheaper and it's faster.
All of the arguments for Smart Growth are not going to change that, either.
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