Billions in Bribes Couldn’t Overcome Business Climate

As the old saying goes, “you can put lipstick on a pig, but it’s still a pig.”

Such is the case with the business climate in Pennsylvania. And it appears Amazon recognizes this. Earlier this week, Nate Benefield noted how Pennsylvania lost a national bidding war last year for HQ2, a multi-million dollar second headquarters with up to 50,000 employees.

Now we know Pennsylvania cities Philly and Pittsburgh were at the forefront of the bidding, offering far more than the “winning cities.” From bus ads in Seattle to research and “development of assets,” BillyPenn reports Philadelphia spent more than $500,000 just on campaigns to attract Amazon.

Amazon can't fault the “generosity” of Pa. politicians. State leaders reportedly offered Amazon $4.6 billion in tax breaks to locate somewhere in the commonwealth. Philadelphia offered an additional $1 billion. Pittsburgh's additional offering remains under wraps, the subject of a Right-to-Know lawsuit.

After more than a year of groveling by state and local government leaders, Amazon announced it would instead open two smaller, regional headquarters—one in New York City and one just outside of Washington, DC—as well as an operations center in Nashville. The “winners” (a questionable label given the cost to taxpayers) offered far less than Pennsylvania:

  • New York City offered $1.7 billion in grants and tax breaks.
  • Northern Virginia proposed up to $550 million in cash incentives tied to job creation.
  • Nashville offered $102 million (and will gain 5,000 jobs).

Corporate welfare doesn’t work. Period. It didn’t lure Amazon to Pennsylvania. And other smaller-scale attempts have failed because job creators care about more than giveaways. What do they care about? The fact that Pennsylvania ranks poorly compared to other states in tax rates, regulatory burden, and economic freedom.

Billions of dollars in “lipstick” doesn’t change the fact the business climate in Pennsylvania stinks, our unemployment rate is above the national average, and more people move out of Pennsylvania than in.

The secret to attracting jobs isn't taxpayer-funded “economic development” for whoever politicians favor this month. It's substantial tax reform and spending restraint.

A more business-friendly Pennsylvania can retain existing businesses, enable their expansion, and attract new investment without secret deals to fork over billions in taxpayer dollars. This is a more sustainable model than bribes to well-connected corporations. It’s also fair. Why should existing businesses be forced to subsidize their competitors?

We've tried many shades of lipstick over the years, but the pig is still a pig. It's time to try a new approach.