12.23.08
Small, Locally-Owned Businesses To The Rescue
In the Victor Valley, as in other locations, our economies are built upon small, locally-owned businesses (SLOBs). SLOBs provide the bulk of the jobs, provide customized and specialized service to local residents, and recycle funds for the local economy, rather than sending huge slices off to “headquarters” somewhere else. Yet, local political leaders’ hopes are based upon attracting large, out-of-area corporations (LOOACs) to move to town and provide hundreds of minimum-waage jobs. These same companies are being courted by large numbers of other communities. Like your community and mine, each community is dangling a basket of tax abatements, subsidies, and exemptions to attract LOOACs to town.
And yet, those incentives are paid for by local taxpayers, including SLOBs. We are, in effect, taxing SLOBs extra to give it to LOOACs. The Small Biz Survival blog has this to say:
Small Biz Survival: Abatements and Incentives: Where are they for small business?
And yet…civic leaders in these communities, mine included, swoon like a teenager in the throes of first-love at the prospect of a big corporate company bringing their operations to town. Oh, they run after ‘em and buy them gifts and talk sweet nothings in their ear with offers of abatements and deferments and infrastructure investments and tax credits.
Now that banks and corporations are falling like dominoes, we need to look closer at what we are giving away and what we are getting in return. It seems to me that it is a better use of funds to shut down some of these “economic development offices” that our towns have opened in order to pursue LOOACs and to devote those funds to strengthening existing SLOBs and helping new ones to be established.
After all, the LOOAC will have no real ties to your community. As soon as another locality offers a better package of incentives or at the fist sign of economic distress, they will leave town, taking all of their job openings and infrastructure improvement bond repayment funds with them. A forward-looking city council will turn off the gift spigot and start supporting the local business community instead.
