Mike Kueber's Blog

December 2, 2012

The role of government incentives in job creation

Filed under: Business,Economics,Issues,Politics — Mike Kueber @ 5:01 am
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Several weeks ago, I blogged about the importance of small businesses in job creation.   Taking a contrarian view, I asserted that genuine job creation comes, not from small businesses, but rather from businesses (usually large) that produce exportable products – i.e., those sold outside of the local economy. Based on this view, I suggested the following about the businesses that San Antonio pursues:

  • When San Antonio gives a tax incentive for a business to locate here, I hope the incentives go to businesses that enlarge the pie (i.e., a manufacturer with 50 employees), not those that merely cut up the pie (a big restaurant with 200 employers).” 

Today’s New York Times contains an article based on an extensive analysis of the wide-ranging incentives that various state and local entities bribe companies with – either to stay in their current location or, more commonly, to move into a new location.  Although the article touched on my point about some jobs (manufacturing, company headquarters, technology) being better than others (retailers, hotels), its principal focus was on whether companies were taking unfair advantage of state and local entities.   

Not surprisingly, the Times seems to believe that this is another example of capitalism wasting a lot of energy on something that is essentially a zero-sum game.  I agree that it is a zero-sum game, but the energy is necessary to ensure that everything is priced accurately.  If San Antonio will benefit from the installation of a Toyota factory in town, then Toyota is perfectly entitled to ask San Antonio to share some of that benefit with Toyota.  That enables Toyota to accurately price its investment. 

Competitive capitalism – you gotta love it.  If you don’t, maybe you live in one of those dying blue states. 

Some day I hope to talk to the San Antonio people about our strategy on this subject. 






  1. i’m more than tad cynical about SA and its growth policies. that is a major reason why we moved to fredericksburg. this is what i remember in in the late 90’s:
    – city, “we are running out of landfill so you must recycle!” me, “are you getting more landfill?” city, “no we are promoting growth.”
    – city, “we have ozone issues so drive less!” me, “are you providing mass transit?” city, “no, we are promoting growth.”
    – city, “crime is rising!” me, “are you hiring more police?” city, “no, we are promoting growth.”
    – city, “we’re outta water,let your lawn die!” me, “are you acquiring water rights?” city, “no, we are promoting growth.”
    – city, “we have traffic issues so ride share!” me, “are you building more streets?” city, “no, we are promoting growth.”

    me, “oh, i see now. all you care about is builders and realtors.” city, “no, we are promoting growth.”

    Comment by Q — December 2, 2012 @ 1:19 pm | Reply

    • I was in Austin in the 70s, and they had the same issue – i.e., quality of life vs. growth. Although there is an argument in favor of growth, not to help realtors/builders, but to have jobs for our kids, I slightly lean toward the quality-of-life position.

      Comment by Mike Kueber — December 2, 2012 @ 6:07 pm | Reply

  2. i just went thru your many posts. you still have one of the most thoughtful blogs that i’m aware of on this world wide web. i find your topics germane and your lawyerness comes out in a postive way – you often acknowledge other viewpoints…


    Comment by Q — December 2, 2012 @ 1:51 pm | Reply

    • Thanks, q. Unlike Obama, who often uses straw-man arguments, I try to avoid them. Liberals often point out, however, that there is no question which side I’m on. A Washington Post editor (Ben Bradlee) once made a distinction between fair and impartial. He said journalists should be fair, which meant that a story should provide the best arguments for both sides. But he also said that journalists didn’t need to be impartial, which meant that the reader didn’t know which side the reporter came down on. Sometimes one argument is much better than the other and a journalist doesn’t need to pretent to not see that. I like Bradlee’s position.

      Comment by Mike Kueber — December 2, 2012 @ 6:23 pm | Reply

  3. strawman, you crack me up. another phrase might be passive language. politicians use it. business people use it. spouses use it. friends use it. cars salesman use it… caveate emptor!

    Comment by Q — December 4, 2012 @ 3:51 pm | Reply

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