Progress?

There's a trite old saying, popular with many folks in politics and business, that goes: 

"A rising tide raises all boats"

Basically, it posits that increasing economic activity - whatever the cost - benefits everyone, and such increased activity is often called Progress (note the capitalization and emphasis!). 

One of the more common ways for a community to subsidize Progress, is to offer tax incentives to companies considering relocation to the area. Politicians and local businessmen like to echo the mantra of "more jobs, more tax revenue, better roads and schools, improved public facilities", etc., as justification for offering these tax incentives. 

So, let's talk about those perceived benefits...

About those new jobs: every time I've witnessed a company relocate for the tax breaks, it seems that most of the jobs they brought with them (and all of the best jobs!) were already filled with current employees brought from their former location. Frequently those companies moved staff and then downsized, increasing unemployment in the new location! On top of that, immigration of job seekers from other areas (having nothing to do with crossing national borders!) often causes an immediate increase in unemployment in the area, and most will not not be hired. Those people often can't afford to move on, and thus become a permanent part of the local unemployed. The net gain in local jobs is not usually enough to offset the increased unemployment.

And about those improved roads, schools, and public facilities? With few exceptions, these things are pretty much always paid for by locally-collected taxes, to which (because of the tax incentives!) the new company isn't contributing - but not to worry, right? We're going to get more tax revenues anyway, so we can just pay for all this stuff out of them!

So, about those tax revenues: where are they coming from? Current residents and property owners, for the most part. The taxing authorities won't even have to raise taxes because local inflation will do it for them! Your local politicians and businessmen are fully aware that Progress will rapidly drive the cost of housing and other basic needs, and thus local tax revenues (from both ad valorem and sales taxes), to much higher levels. The tax breaks afforded the new businesses will insure that they are not paying their normal share of property taxes. 

So this Progress often comes with a significant (but usually ignored) cost to the community at large, in terms of environmental stresses, overcrowded schools, increased vehicular traffic, and even higher prices for the basic needs of life. Current residents end up paying the bill for this Progress, and most of them really won't ever derive any benefit from it. Progress mostly benefits only those who are actually able to participate financially in it: i.e., those who operate wholesale, retail, or service business, and who already possess enough excess, expendable resources that they can afford to put at risk. Most people don't fit those criteria, but will be the ones paying for it because of local inflation.

On top of that, a company will often simply operate the new site until the tax breaks expire, then move on to a new location and inflict the same stresses and damage on the new community.

"What damage" you ask? 

Well, have you ever seen elevated prices for food, clothing, housing, fuel, medicine, and other life necessities decline in a town, after a business pulled up stakes and moved on? In my experience, rather than lower prices to affordable levels, the providers of those life necessities mostly close up shop, and either cash out and retire from business, or move on to a new, more lucrative location, leaving their current employees behind and contributing even more to local unemployment. A large population of unemployed people is often accompanied by increases in malnutrition, homelessness, disease and crime, contributing even more damage to the community burden.

And what about those new roads, schools, and public facilities? Well, if construction hasn't started, it probably won't, but if it has, and didn't get finished, there are two choices: abandon the projects or finish construction. Abandoning a project has associated (and sometimes huge) expenses; but if it is decided to finish a project, there is an ongoing cost for the construction.  Any projects that actually get built and finished will result in significantly increased costs for facilities maintenance, which then the community has to fund through taxes (or else watch all that nice new stuff start to deteriorate).

Yeah, "A rising tide raises all boats", but only if all of the boats were already seaworthy - and we need to remember: the tide always goes back out!