This morning I blogged on the wave of state governments giving away taxpayer money to businesses in the name of “creating jobs.” One of the examples I mentioned is the Michigan Economic Development Corporation (MEDC), a state program that exists to generate press releases to provide cover for the state’s lamentable fiscal policies.
Michael LaFaive at the Mackinac Center for Public Policy in Michigan was kind enough to send me a recent report he wrote on the folly of state subsidies to businesses. State officials like to solicit studies from local universities that just happen to conclude that such-and-such government program is creating X number of jobs. (Of course, in the rare occurrence that a study doesn’t come back with what the bureaucrats were expecting, such study will likely disappear into thin air. I’ve seen that happen first hand.) Michael’s paper deconstructs a study on the purported benefits of Michigan’s film maker subsidies, which was prepared by Michigan State University at the behest of the MEDC. A quote he cites from a 2006 study on tourism-related economic development programs nails it:
“Most economic impact studies are commissioned to legitimize a political position rather than to search for economic truth. Often the result is mischievous procedures that produce large numbers that study sponsors seek to support a predetermined position.”
If you read nothing else, read the section on page 4 entitled “Why Government Subsidies Won’t Save Michigan’s Economy.” The reasons apply to all fifty states, not just Michigan.