Industrial selection | Con
State’s focus is too narrow for job creation
By Jim Stergios
Globe Correspondent / January 30, 2011
The state has lost 200,000 payroll jobs since 2001. Sadly, Massachusetts’ failed stake in Evergreen Solar is representative of the state’s failed approach to job creation.
How did taxpayers become major players, with a $58 million package, on the balance sheet of Evergreen Solar? We empowered an alphabet soup of entities and funds to place highly concentrated bets on a select group of politically defined “sweet spot’’ industries — film production, alternative energy, and life sciences.
While important, these industries are disproportionately the focus of economic development officials. The film industry will at best account for a few thousand jobs; alternative energy somewhat more, perhaps. Even the largest of these industries, the life sciences, will produce only a small fraction of the 250,000 jobs the governor promised when legislation was introduced, based on data produced by the state’s own life sciences center.
The odds that this politically targeted approach will work are not good. The public entities charged with making investment decisions with your tax dollars lack the expertise to understand the dynamics of the industries in which they invest. They also lack the knowledge of employment in the state to realistically assess potential job creation.
Like many companies, Evergreen Solar is facing the trials of competing in a dynamic, global market. Their cost position, technology leadership, and place in the value chain are all affected by decisions made by rival companies and investors worldwide. Sophisticated investors, who are putting at risk their own capital or market reputation, may be able to discern winners and losers in this environment; state bureaucrats and political appointees cannot.
We need a new approach to put the hundreds of thousands of unemployed Massachusetts citizens back to work. We need to stop picking winners and losers, and stop making such concentrated, publicly funded bets on specific companies and industries.
But we need to do more. We should ensure that tax incentive and credit strategies apply broadly, for all industries making research-and-development and other new investments. Second, more than government handouts, entrepreneurs and investors need a consistent and fair tax regime. Finally, the state’s calling card is our educated workforce; to compete nationally and, more importantly, internationally, we need to return to proven education policies not the latest fads.
Jim Stergios is executive director of Pioneer Institute for Public Policy Research