Conclusion
The Verdict on Targeted Economic Development Subsidies
The evidence shows that Idaho's economic development practices are based on principles thoroughly debunked by Mercatus Center research and other academic studies. These programs do not deliver their promised benefits and are causing more harm than good to Idaho's overall economic health[62].
The Strength of the Evidence
The strength of these findings is rooted in extensive academic research. The Mercatus Center's work draws on a wide range of studies, some dating back over a century, providing a long-term perspective on economic development subsidies. This research isn't just recent analysis but builds on decades of economic study and historical evidence. The breadth of sources, spanning from historical records to contemporary economic analysis, provides a comprehensive view of the issue. This depth of research offers a solid foundation for the conclusions drawn about the ineffectiveness of targeted economic development subsidies.
The Deceptive Nature of Current Practices
Idaho is engaging in a deceptive practice by promoting these incentives as effective economic development tools when the evidence clearly demonstrates they are not. The state's policymakers are using a failed approach that has been proven ineffective and counterproductive[63].
The Mercatus Center's research is unequivocal: targeted economic development subsidies do not work. Idaho's incentive programs align precisely with the practices that Mercatus has shown to be ineffective or harmful. This conclusion is unambiguous[64].
The Need for Policy Reform
Given that Idaho has previously relied on Mercatus as an authoritative source, the state cannot credibly dismiss these findings. Idaho must acknowledge the fundamental flaws in its current approach and completely overhaul its economic development strategy based on the evidence[65].
This analysis conclusively demonstrates that Idaho's entire economic development strategy is based on failed principles and is actively hindering, rather than helping, Idaho's economic growth and prosperity. The state must urgently reconsider its approach, focusing on creating a level playing field for all businesses and investing in broad-based public goods that benefit the entire economy rather than pursuing targeted subsidies that have been shown to be ineffective and potentially harmful[66].
The Path Forward
At a time when state and local governments face reduced revenues and potential cuts for critical services, the funds wasted on targeted economic development subsidies represent the lowest-hanging fruit that could be repurposed to better uses. Moreover, getting rid of subsidies would also lead to improved economic development, increasing tax revenues in the future[67].
Idaho stands at a crossroads. The state can continue down its current path of targeted subsidies, despite the overwhelming evidence of their ineffectiveness and potential harm. Or, it can take bold action to reform its economic development practices, aligning them with the Mercatus Center's and other researchers' evidence-based recommendations.
Idaho could create a more dynamic, competitive, and prosperous economy by shifting away from targeted subsidies and towards broad-based improvements in its business climate. This could involve lowering tax rates for all businesses, investing in education and infrastructure, and fostering a regulatory environment that encourages innovation and entrepreneurship.
Furthermore, Idaho should redirect the resources currently spent on targeted subsidies toward supporting its small businesses, which make up over half of the state's private-sector employment. These small businesses, which form the backbone of Idaho's economy, benefit far more from broad-based improvements in the business environment than from targeted subsidies that primarily benefit large corporations. The current subsidy-focused approach is detrimental to small businesses, effectively handicapping their growth and competitiveness.
A Call to Action
Ultimately, the Mercatus Center's research presents a clear challenge to Idaho's current economic development strategy. The state must decide whether to continue to ignore this evidence at the expense of its economic future or embrace reform and chart a new course towards sustainable, broad-based economic growth.
By abandoning its reliance on targeted subsidies and embracing evidence-based economic development strategies, Idaho has the opportunity to become a leader in effective, equitable economic policy. This shift would not only benefit the state's businesses and residents but could also serve as a model for other states seeking to break free from the destructive cycle of subsidy competition.
The path forward is clear, but it will require political courage and a commitment to long-term economic health over short-term political gains. Idaho's policymakers must prioritize the state's overall economic wellbeing over the allure of ribbon-cutting ceremonies and headline-grabbing business attractions. By doing so, they can create a truly business-friendly environment that benefits all of Idaho's businesses and residents, not just a select few.