advertising
print page Print  email page Email 
Putting Priority on People

It takes more than tax breaks to promote economic development

Four years ago, former Gov. Gary Locke and the Legislature went all-out to persuade Boeing to build its new 787 jetliner in Washington state. They offered tax incentives worth more than $3 billion over 20 years and other inducements, including a new dock that would handle oversize parts near the Everett assembly plant.

Today, the 900-foot dock is nearly complete at a cost of $30.6 million, about half of which came from the state. And here's the shocker: Boeing may never use the facility for the 787. Instead, Boeing says it's more efficient to carry parts in a supersize 747.

The dock will get used for parts for other airplanes. Boeing and other users will eventually repay the cost of construction.

It's not surprising that in Washington's zeal to keep Boeing, discussions between the two parties may have strayed from necessities to niceties. No one wanted to lose a jewel of our region's economy; the politics favored loading up the ledger, just in case.

But the Everett dock does seem instructive about a larger point: that economic development by government is a sloppy science practiced by people who don't work in business. We shouldn't be surprised when mistakes are made or that policies tend to favor larger and influential businesses. A mom-and-pop pizza joint doesn't get headlines for complaints about the business climate. It's easier to give a tax break to Boeing than to shower incentives on the humble office where the next business revolution is under way.

A year before the Boeing deal, Richard Florida published a book called The Rise of the Creative Class, which challenged assumptions about economic development.

Among his arguments, Florida said cities should focus less on luring big employers than on nurturing conditions that attract creative people. The arts play an important role in his theory. Highly educated workers want to live in communities where the arts flourish, even if they're too busy to ever go to the theater or the museum, says Florida, a professor at George Mason University.

Critics have ridiculed some of Florida's points as a kind of latter-day elitism in disguise - tax breaks for bohemians and software engineers playing Hacky Sack. In the New York Times, Joe Queenan scoffed at the notion that creative people would pick Anchorage over the Big Apple. And yet Florida's ideas have taken root across Washington state.

Florida's message is especially welcome in Seattle, where the arts have long been viewed as an asset in economic development. The city recently trumpeted a study funded by the Paul Allen Foundation that discussed how the arts not only help lure employers and employees, but also play a role in stimulating jobs and investment. The study found that the arts themselves are a big business, generating $330 million in economic activity in 2006. Seattle arts organizations employ 7,992 people.

Florida's concepts may be tougher to implement in communities with structural obstacles, such as a local economy dependent on crops gathered seasonally. Not every town can be a Sausalito or an Ashland. But look at Tacoma. In recent years, the City of Destiny has at least partially shaken an image more defined by a dusty downtown and Hilltop gangs. Tacoma has a new story, driven by an edgy promotional campaign, tax breaks, hustle, and massive public and private investment, most notably in the arts.

Tacoma is working on a new economicdevelopment strategy devised after a visit last September by Florida and his company, Creative Class Group. One of the tactics is "Love Tacoma," a program to connect young, creative workers to the arts and with each other. Amy McBride, Tacoma's arts administrator, says cities would be much better off focusing on nurturing the creative community than on catering to larger employers.

1 Comments »

  1. Pat said, Tuesday, 09-10-07 14:26 From: Pat Haley [pat@portofdouglas.org]
    Sent: Friday, September 21, 2007 5:28 PM
    To: Leslie Helm
    Subject: Letter to the editor

    Casey Corr's observations about the impact of the arts in new business recruitment (August/2007, Putting Priority on People) represent a common misunderstanding regarding the definition of economic development. While the "soft" features of a location such as its appearance or "quality of life" activities such as the arts may have an influence on a company?s site selection process, these features better represent what are called community development. Community development has an internal focus and attempts to make life more pleasant for those in a particular location. Economic development as it relates to new business recruitment focuses on essential operational needs of a business such as power, water, sewer, transportation, shipping docks, etc. These features are commonly referred to as infrastructure and have an external focus for the operational needs of business.



    It is also important to make a distinction between primary industries and secondary industries. Primary industries add wealth to a region by creating a product or service and selling it to those on the outside of the region. Secondary industries are supported by the distribution of that wealth with the purchasing and selling of goods and services among those inside the region. Without the money created by primary businesses, no one has the resources for the purchase of goods or services in secondary businesses. Nor will they have any money for community development projects such as the arts. The best thing that can happen to a secondary business like a mom-and-pop pizza joint is for a primary business like Boeing to flourish and prosper??make that extra large please.?



    The cost of infrastructure, however, is often very expensive, and as businesses consider various locations for their operation they will simply choose a site that has the least development and infrastructure costs. The role of government in economic development then becomes the public policy question of how to reap the job-creation benefits of primary industries?do we collectively pay for the essential items needed for businesses to locate and grow in our region or do we place the entire burden on the private sector? Thankfully, the federal government offered free land to the railroad industry to provide incentives for the expansion of the western United States and also created the Rural Electrification Act that permitted public utilities to be formed to provide for the low-cost electrical infrastructure needs of primary industries such as agriculture and aluminum. Obviously, there is a role for both public and private investment in economic development, and the best type of infrastructure projects are public/private partnerships such as the dock project for the Boeing Corporation. While on the surface public contribution in the infrastructure needs of private industry may seem like ?sloppy science? and corporate welfare, for government to view the operational needs of businesses from their perspective provides a better understanding of what really stimulates economic development.



    Pat Haley, Director

    Port of Douglas County

    www.portofdouglas.org




Comments

Leave a Reply

Leaders in Health Care


advertising
advertising
advertising
advertising
advertising



© Washington CEO Magazine 2008