Wednesday, July 20, 2011

Bad news for Missouri

According to the Post-Dispatch, the Missouri legislature has agreed "on a tax credit deal that would include subsidies for data centers, science startups and a Chinese cargo hub at Lambert-St. Louis International Airport."  Time and again these state programs have been shown to be counterproductive, or at best ineffectual, in increasing employment in states that use them.  (I have a forthcoming paper that summarizes these findings.)  Nonetheless, politicians still believe that they are better than markets at allocating resources.  Perhaps their motives are not so pure. If there a policy that the Commerce Clause should be stretched to cover, this is the one.