Time for incentives that work

Paul C. Brophy

TEXT OF COMMENTARY

Kai Ryssdal: Part of the problem towns and cities are having as they try to figure out where their next dollar's coming from is how to replace old economy jobs with new ones. The traditional way to get new businesses to open up shop has been to offer huge tax incentives.

Commentator Paul Brophy says it's time to teach old municipalities some new tricks.


Paul Brophy: You hear lots these days about our general economic problems but not much about our urban economy in particular. Yet America's 100 metropolitan areas represent 65 percent of our population and generate 75 percent of GDP.

Many older industrial metropolitan areas are seeing their foreclosure, unemployment and poverty rates rise. Meanwhile, tax base, infrastructure and real estate values decline.

Many of these places are still making the transition from industrial-based economies to knowledge-based ones. Their difficulties aren't merely an effect of increased competition from China. They're partly a result of our own hide-bound urban policies.

A recent report called "Retooling for Growth" found plenty we can do to make our declining metro areas more globally competitive.

For example, we should stop playing the zero-sum game of luring business from one area to another with bigger tax breaks. Most job growth comes from the growth of existing businesses and local entrepreneurship, not from outside.

More metro areas can do what the Research Triangle in North Carolina did: invest in businesses that build on an area's existing strengths. In the Triangle's case, it was biotech and research. In other cities, it might be alternative energy or precision manufacturing. This strategy of focusing on an area's economic base helps a metro region compete globally.

Metro areas should invest in workforce development programs and quality-of-life assets -- things like good parks, safe streets, good transit -- to attract and retain skilled workers.

We can allocate state and federal subsidies in strategic and accountable ways instead of through earmarks and political grab bags. Minnesota, Illinois and Maine require annual performance reports as a condition of subsidies. Why can't Congress?

America is largely a nation of metro areas and their global competitiveness is a huge factor in the national economy. If the Fed and the Treasury can spend billions on shoring up banks and credit markets, surely we can find some new and better ways to invest in metro America's future.


Ryssdal: Paul Brophy runs a housing and community development consulting firm in Columbia, Maryland.

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