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The Gazette was mistaken to support renewal of Montana’s economic development programs in its editorial of March 18. With evidence mounting that the traditional economic development model of luring corporations with increasingly large subsidies and incentives is neither efficient nor effective, Montana should forge a new economic development strategy rather than renew an old and failed model.

New government accounting rules that require cities and states to account for the cost of tax abatements have finally given independent researchers the necessary data to prove what most economists have long suspected: Subsidizing specific companies rarely works to grow an economy and create new jobs. As researchers at the University of North Carolina-Chapel Hill and the University of Connecticut recently concluded in a large nationwide study, “This simple but direct finding — that incentives do not create jobs — should prove critical to policymakers.”

Other independent research has found that at least three-quarters of economic development deals go to projects that would have happened regardless, as the companies involved made their decisions based on fundamental business factors like customers, competitors and workforce rather than government incentives. Even Amazon recently admitted that was true of its HQ2 search, saying “Economic incentives were one factor in our decision — but attracting top talent was the leading driver.”

There’s no better time than now for Montana to develop a forward-looking, evidence-based economic development strategy that positions the state for the future — and no worse time to send it back into the failed policies of the past.

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John Mozena

president, Center for Economic Accountability

Grosse Pointe Woods, Mich.

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