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An overflow crowd attended a Feb. 13 special meeting of the Big Rapids Township Board about state and local economic development policies and programs. I was there to speak, as was John Mozena, president of the Center for Economic Accountability.
The board of Mecosta County township had previously heard from economic development officials who pushed a $700 million-plus subsidy deal for Gotion Inc., which makes batteries for electric vehicles.
I explained the awful track record of deals like this one, noting that the Mackinac Center studied 2,300 Michigan-specific deals across nine programs or program areas. The results showed no or negative impact in six of the nine. Where jobs were created, they came at an extremely high cost.
Audience members engaged me, along with Mozena and fellow audience members, in sometimes-contentious exchanges about the Gotion proposal. Some thought it was a welcome free lunch for the region. Others — small business owners — worried about a subsidized company hiring away their employees, noting it is very expensive to find and train new ones.
It’s easy to view a state-subsidized deal as something that is “free” because people believe the company wouldn’t have come without the subsidies. Research shows, however, that 75% to 98% of corporate relocations, expansions and job retentions would have happened without incentives.
Costs associated with such deals are often underreported. State officials claim that Gotion will create up to 2,350 new jobs, but in an era of low unemployment, it is likely those jobs will just be filled by people who are already gainfully employed nearby. And this is just if the company succeeds. A 2017 Foxconn Corp. deal in Wisconsin promised to bring more than 13,000 jobs by 2022, but to date, it can only lay claim to 1,000, if that.
Other audience members were concerned that a huge auto-related manufacturing plant would radically change the nature of the community and could harm the environment.
The Mackinac Center’s presence at the meeting helped provide context for the debate over subsidizing jobs in Big Rapids.
After the meeting, several audience members said they were helped by the research materials and public testimony the Mackinac Center provided, noting it had changed their views.
