John C. Mozena, President of The Center for Economic Accountability presented How to Grow an Economy: Lessons from Watching it Done Wrong.
What should a government be looking to achieve through economic development? The economy should be growing, resilient, provide opportunity, inclusive, provide a desirable quality of life, and be able to support public services. Trying to achieve this, sometimes subsidies are awarded.
There are 10 potential incentive programs, including tax credits, tax rebates, sales tax abatements (which Dan Gilbert receives for his downtown construction), utility discounts, and tax-free zones. John is a proponent of the free market system, which does not include subsidies. He says that research shows, with very little argument, that they do not create jobs, don’t grow economies, harm a state’s long-term fiscal health, artificially increase inequality (only large companies receive them), discourage innovation, and increase the burden on other taxpayers. In the best-case scenario, only 25% of companies base their site selection on financial incentives and it barely ranks in the top 10 of the factors considered.
Going with in-state small businesses is the best way to grow GDP, personal income, and employment and it helps if governments are not too burdensome in the process. For example, to start a restaurant in Detroit, the City requires 15 license/permit fees totaling $6,545, dealing with 9 different agencies, 12 in-person activities, and filling out 20 different forms. In all there are 77 separate steps. (This is not out of line with other major cities).
Using a garden vs. meadow analogy, John favors the meadow where nature (the free market) dictates its growth. The government steps in only when necessary.