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Slow Growing States Reconsider Corporate Welfare Spending

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Peter Fricke Contributor
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Over the last two decades, Missouri and Michigan have been among the nation’s leading spenders on corporate welfare, but have ranked dead last in economic growth.

The Show-Me Institute’s Andrew Wilson called on Missouri lawmakers to “adopt a whole new set of economic policies to replace the failed policies of the past two decades,” and admit that “spending billions of dollars of taxpayers’ money to subsidize commercial projects … was a ghastly mistake.”

Legislators, he claimed Wednesday, “have turned Missouri into one of the nine states considered the ‘corporate welfare kings of America’,” spending more than $5.2 billion in state and local subsidies to private businesses over the past two decades, according to the Mercatus Center.

Wilson asserted that such gratuitous corporate welfare is at least partly responsible for the fact that between 1997 and 2013, “Missouri ranked 49th out of the 50 states in growth of state gross domestic product—just ahead of bottom-dwelling Michigan.” (RELATED: Research Sheds Light on Corporate Welfare in the States)

Michigan, too, seems to realize that it is not getting the expected bang out of its economic development buck, but according to the Heartland Institute, “corporate welfare doesn’t work, and no amount of reorganizing will make it so.”

Earlier this month, Michigan’s Republican Gov. Rick Snyder signed an executive order combining the state’s economic development and job training programs, which he billed as a way to coordinate the state’s efforts to both attract and fill new jobs.

However, Heartland points out that, “they’ve been married before, and it didn’t work well.”

The two efforts were both previously run through an agency called the Michigan Jobs Commission, but were split by former Gov. John Engler “because he thought it would improve the state’s economic development efforts.”

“Why is a comprehensive, unified approach necessary today, when it apparently didn’t work in the past?” Heartland wants to know. (RELATED: Both Parties Are United in Support of Corporate Welfare)

In Missouri, on the other hand, Wilson urges lawmakers to consider new ideas, rather than simply repackaging old ones.

To begin with, he says they should “stop putting the public sector cart in front of the private sector horse,” and acknowledge that public sector planning and control stifles economic growth. (RELATED: VA House Speaker gets Primary Challenge Over Tax Hikes and Corporate Welfare)

Consistent with that, they should abolish the Missouri Department of Economic Development, which currently distributes about $400 million per year to “the politically selected few,” and return the money to individuals and businesses through broad-based tax cuts.

Wilson also encourages the state to “make greatly increased use of tolls on Interstate 70 and other major roadways and bridges,” and consider privatization of utilities like sewers, which he claims would promote efficiency and provide the government with an infusion of cash.

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