Subsidizing Companies And Neighborhoods Alike

Amazon’s announcement that it will build a second headquarters has sparked interest among politicians, in cities from Atlanta to Pittsburgh, who want to lure the internet retail giant. Each candidate is sure to continue the tradition of municipal governments outbidding each other to offer as many direct and indirect subsidies as possible. In the process, they may end up trying to subsidize specific neighborhoods as well.

When Boston landed General Electric’s new headquarters in its Seaport District, the tax subsidies offered to the conglomerate attracted deserved scrutiny. Why should one company be granted so many favors? But lost in the story was the fact that the Seaport has been the result of a distorted urban policy that gives favorable treatment to city-designated “innovation districts,” while archaic restrictions prevent dynamism elsewhere (a recipe for high rents and gentrification.)

The best “economic incentive” for luring job creators is not doling out corporate welfare, nor is it picking which neighborhoods will win or lose. It is allowing cities to nurture the services and amenities that will cause major employers to consider them in the first place. Cities have the opportunity to accomplish this through market dynamism, facilitating economic opportunity for all of its residents–not just select beneficiaries. They ought to take it.

Ethan Finlan
Ethan Finlan is a writer and sketch comedian based in the Boston area.