Fact Checking Claims About Economic Incentives

In the doldrums of the oil downturn, economic resiliency, development, and diversity have never been more important. And it’s become apparent — especially here in Minot where we see evidence of businesses closing almost weekly, that we haven’t been very good at creating any of those things.

Perhaps it’s because we’re using the wrong methods. Fargo City Commissioner Tony Gehrig offers his thoughts on the conventional thinking that permeates government-driven economic development. The full article found here on Say Anything Blog is worth the read; a lot of the specifics use Fargo as an example, but┬áthe core concepts apply everywhere and are worth some mental chewing.

Mr. Gehrig’s conclusions — first, there is a time and place for incentives.

…incentives can and should be used for a limited time and scope when there is an area under threat of failing.

Tony Gehrig, Fargo City Commissioner

Second, we should always beware the unintended consequences.

If we see growth where we reduce property taxes, it must also be true that we see less growth where we increase property taxes. That is how incentives work. Government picks who will win and who will lose. For the vast majority of you reading this, you lose.

Tony Gehrig

It’s all relevant here in Minot right now because we are in the doldrums. And we did just pick a winner. This past Monday, City Council awarded Skyscopes, a Grand Forks-based unmanned aerial┬ásystem (UAS) company looking to break into the energy industry with a $375,000 forgivable loan; it’s basically a grant.

I hoped we picked well because by picking a Skyscopes, we also picked the losers — all the other UAS companies that might have invested Minot because of the raw opportunity. In the game of giving way tax dollars, there is almost always a less-visible equal and opposite effect — by incentivizing one player, we disincentivize another.

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Josh Wolsky

Developer & Writer @TheMinot Voice, Fan of the Souris River, There's a lot to Savor about Minot. Fortunate to be a 'former' City Council member ;)