As lawmakers ask whether the unemployment insurance system is holding back the country’s recovery from COVID-19, they ought to be focused on a bigger question: How do we want to recover? New opportunities will emerge and old investments may not pay off, which will bring bigger structural changes than temporary labor shortages. To encourage better growth for everyone, states ought to abandon their practice of using taxpayers’ hard-earned dollars to try to lure businesses to relocate or expand.
Right now, when Amazon or Foxconn or whoever says that they’ve got a project to place somewhere, states pull out their checkbooks. It doesn’t matter to politicians whether these jobs actually drive state growth (they do not) or even whether the costs are worth it (they are not); politicians want to show that they’re doing something about jobs.
Even if these corporate handouts could deliver on their promises, this is not the kind of competition between states that benefits the public. People shouldn’t want local prosperity to come to the places that spend the most taxpayer cash on business subsidies. They should want companies to go to the place where it makes the most sense. The point of the economy is not to create jobs, but to get people the goods and services that they want. Economic growth is caused by people using their brains, brawn and determination to better serve human interests and needs, not by political deals to move businesses from one place to another.
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