Just like I always write, only in the New Yorker...

Check out this, from James Surowiecki. He's wrong that this practice dates from the 70s (the South has been on this bandwagon since the 30s, at which time such corporate goodies frequently faced state constitutional challenges), but he's right that it's a big waste, money thrown away on economic inefficiencies. These cities and states are essentially buying employment, which they could do more cheaply by using the money to pay their citizens to dig holes and fill them up. As Surowiecki also points out, companies lured by tax incentives are not anchored very strongly, and frequently leave when their cost equation shifts the slightest bit.

Surowiecki notes that cities are engaged in a prisoners' dilemma over this practice, but in mentioning Irvine, California, he points out that there are other options. Consider (gasp) the Triangle of North Carolina, where state money has been used to fund higher education and assist in the development of land for new businesses, but not for much else. By creating a center of human capital, NC hasn't had to pay millions to lure businesses (we speak of the Triangle, upstate where human capital levels are much lower, the guvmint checks to corporations fly fast and furious).

Seems so obvious, really, that spending money on education, infrastructure, and quality of life projects might be a better long term strategy than corporate handouts. Maybe the case Surowiecki addresses will force cities and states to take that route.