Monday, March 18, 2013

A Minor Musing About Precognition And SB 235

I haven't posted much about SB 235 for a simple reason: I view my relationship with every business in the same way I view my relationship with a casino--they're the house and they're going to win in the end.

I also know businesses provide jobs and people need jobs to acquire the necessities of life, so South Dakota communities need to attract and keep businesses.

Bob Mercer provides glowing review of SB 235. He praises the legislation for its transparency and the fact that it gives elected officials oversight:
It’s also doubtful that many people know the state Senate will now hold confirmation power over the 13 voting members that the governor appoints to the state board.

And it’s likewise doubtful that many people know about the giant and positive change in government transparency contained in the legislation regarding these reinvestment payments.

As recently as the winter of 2008-09, the Rounds administration resisted revealing the names of the business projects that received permits under South Dakota’s construction-tax refund system.
Perhaps it's my natural cynicism, but one part of the plan still seems counter-intuitive. Mercer writes:
A key provision is that the board must determine whether the business wouldn’t have located in South Dakota without a package of local and state incentives.
My first reaction to that criterion is snarky: When did Miss Cleo come out of retirement and move to South Dakota?

On a more serious note, won't any business with  a semi-competent CEO be able to point to competing offers in other states and threaten to take the business there if South Dakota doesn't pony up the cash? How hard is it to manufacture competition from Itstoodamnhot, Mississippi?  Exactly how is the state going to be able to prove that the business would not have located here without the incentives?


Troy Jones said...

I am not moved by the "key provision" argument. I think it irrelevant.

Business understands the principle of "loss leaders." Military strategists understand sometimes you have to sacrifice to win the war.

The economic entity of South Dakota needs a vibrant economy. And, sometimes that means having universities with particular focus, or roads built to certain places, or certain types of basic industries or services. In all cases, public subsidy is justified. To deny ourselves any of these is to cut off our nose to spite our face.

LK said...

I don't disagree with your last paragraph. My biggest concern is that the incentives will be used primarily to attract businesses that provide relatively low paying jobs.

Now that I reflect on your comment, I think I may have written the post too hastily. I could have supplemented my retirement income by helping businesses write their "proofs." Another opportunity lost. :)

troy said...

Two comments:

Create competition for employees and all wages go up.

The unskilled need any job to get skills. The other day I was talking to a parent about their unemployed college grad. All they could get were McDonalds jobs.

The reality is this person has never even had a Mcdonalds job because they wanted there child to enjoy their youth. The reality is the their child hasn't grown up. A low paying job is everyones first job.