Cato Daily Podcast
The Big Numbers Behind Economic Development Freebies
Dec 26, 2019
John Mozena, director of the Center for Economic Accountability, dives into the astonishing $70 billion annual spending on economic development subsidies. He challenges the notion that these funds boost job creation, emphasizing the often hidden costs and lack of accountability. Mozena critiques the infamous Foxconn project in Wisconsin for its high cost per job and discusses the real versus inflated economic multipliers at play. He also highlights how these incentives can detract from crucial public services like mental health, raising important questions about their true value.
17:50
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Quick takeaways
- States spend about $70 billion annually on economic development subsidies, yet these programs often fail to deliver promised job creation benefits.
- The prevalence of corporate welfare in economic development raises concerns about long-term fiscal health and the misleading claims surrounding job incentives.
Deep dives
The Scale of Economic Development Spending
States and localities collectively spend approximately $70 billion annually on economic development programs, which can be compared to the combined budgets of ten smaller states. This staggering amount often goes unnoticed by the public, as it is frequently framed as a necessary investment for job creation. However, many voters do not consider the implications of this spending, leading to a cycle where politicians benefit from promoting these programs while downplaying their costs. The enormity of this expenditure raises critical questions about its effectiveness, especially when juxtaposed with the social services that could have been funded instead.
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