The Economic Development of Florida

Part of a Discussion on Economic Development for the Village Square’s Take-out Tuesday event.

Learn more about our April 4th event on “The Economic Development of Florida: Corporate Welfare or Job Incentives?” here.

Incentives Work for Fort Lauderdale and Florida

Written By: Mayor Jack Seiler

For months, we’ve heard a lot of political chatter coming out of Tallahassee about Enterprise Florida and business incentives. Yet, most of what has been said is nothing more than conjecture with only flawed, misleading arguments to back it up.

Very few of the people giving opinions on what the state and its communities should do to diversify and grow the economy have any experience working in those areas. Nor do they understand the real-world implications for what they propose.

As a former state legislator and Mayor of a City Commission that actively partners with the County, State and our local economic development organization to assist companies in adding jobs, I know firsthand what incentivized companies and jobs bring to a community.

…high-wage jobs in any of our municipalities, and indeed throughout the state, help all of our communities thrive.

Take, for example, Hotwire Communications. The company relocated its headquarters to Fort Lauderdale late last year, bringing with it hundreds of new jobs and millions of dollars in investment to our city’s uptown business district. This investment increased the tax base, allowing our City to provide more services to our neighbors. Hotwire Communications bought a building that sat empty for years. The company actively sponsors local nonprofits and gives back. Not even six months after locating here, the company is a valued part of our community.

And that’s just one example. There have been several other companies that have chosen Fort Lauderdale over locations in other states in recent years, representing hundreds upon hundreds of jobs and hundreds of millions in capital investment. My counterparts in Miramar, Sunrise and others also understand the value of performance-based incentives as they actively court companies to grow in their cities. We celebrate these announcements together, knowing a rising tide lifts all boats and high-wage jobs in any of our municipalities, and indeed throughout the state, help all of our communities thrive.

Florida has led nearly every other state in the country in terms of job growth over the last several years. To date, Florida’s private sector job growth rate is 3.6 percent, twice the national average of 1.8 percent. When you have a recipe for success, why mess with it? Our major competitor states such as Texas and Georgia would certainly be thrilled to see us discontinue the use of incentives. Why hand those jobs, which represent thriving, high-wage industries including life sciences, manufacturing, technology, headquarters and aviation/aerospace, to name a few industries, over to our competition on a silver platter?

Instead of listening to the pundits and so-called experts, I ask you to consider a more reliable source with real world experience in economic development – right here in the City of Fort Lauderdale.

Lessons Learned: Free Market Means More Money

Written By: Henry Mack

In Economics in One Lesson, Henry Hazlitt rightly observed that economics is “haunted by more fallacies than any other study known to man.” He argued that most fallacies generally stem from one of two false assumptions: that of “looking only at the immediate consequences of an act or proposal” and that of “looking at the consequences only for a particular group to the neglect of other groups.” I would add a third, however: that of thinking that the State not only has a right to the product of one’s labor but that it can subsidize economic growth with it.  It doesn’t, and it can’t.

Programs such as Enterprise Florida have consistently failed to yield a significant return on investment, and not because most of them are generally corrupt.  Firstly, state redevelopment agencies arbitrarily incentivize businesses to shift resources, or locations.  They do not change their production plans.  In the short term, this may result in a handful of jobs but at what cost to the market or taxpayer?  Instead, businesses should relocate or increase production plans based on market conditions On this, Hazlitt provided a nice example:

If a bridge is built to meet an insistent public demand, it solves a traffic or transportation problem otherwise insoluble. But if a bridge is built primarily “to provide employment” or “to spur business development” it is a different goal and market need becomes a “subordinate consideration.” Projects or businesses now have to be. Thus, instead of thinking where (or even if!) bridges or businesses must be built, government agencies or state legislators begin to ask themselves where bridges can be built. Absent need, “bridges” have no real market value and contribute absolutely nothing toward economic growth.

Programs such as Enterprise Florida have consistently failed to yield a significant return on investment…

State legislators should train themselves to look beyond the immediate.  Had they done so, they would have seen that Enterprise Florida was inherently incapable of providing more than half the amount of jobs it said it would.  In Hazlitt’s own words, “It is true that a particular group of bridge workers may receive more employment than otherwise. But the bridge has to be paid for out of taxes. For every dollar that is spent on the bridge [read: Enterprise Florida] a dollar will be taken away from taxpayers.  If the bridge costs $1,000,000.00 the taxpayers will lose $1,000,000.00.  They will have that much taken away from them which they would otherwise have spent on the things they needed most.”

So what’s the answer?  Well, for one, Florida legislators should roll back the state’s occupational-licensing laws and other cumbersome regulations, coupled with corporate tax cuts.  Legislating high taxes across the board is not only immoral, sanctioned thievery, but it has the unfortunate effect of forcing states to compete through corrupt development agencies like Enterprise Florida. We should be competing freely by lowering taxes.  This would constrain government spending and permit real, lasting economic growth.

One should recall one last “Lesson” of Hazlitt: What economic development would have occurred if state development agencies had not intervened in the first place? Evidently, a lot more.

Learn more about our April 4th event on “The Economic Development of Florida: Corporate Welfare or Job Incentives?” here.