Eight-five years ago this fall, former Mississippi Governor Hugh White launched a bold experiment: The “Balance Agriculture with Industry” (BAWI) program. White hoped to jumpstart a stagnant, rural economy by subsidizing manufacturing firms to move to Mississippi. Instead, he fired the first shot in an economic development war between the states — a perpetual and unwinnable arms race that today consumes about $95 billion a year.
Worse, the conflict continues to distract policymakers from more equitable strategies that actually work, such as building a tax and regulatory environment conducive to growth.
Even in 1936, Gov. White’s idea was not exactly new. Adam Smith, the godfather of modern economics, warned of the dangers of subsidizing businesses in 1776. Nor did BAWI work. Mississippi remains America’s poorest state, with a per capita personal income just 70 percent of the national average.
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