Political Motivations Over Economic Logic

Policymakers continue to offer these incentives despite their ineffectiveness primarily for political gain. The Mercatus studies reveal that the ability to claim credit for "job creation" or attracting high-profile companies provides significant political benefits, even when the economic impact is neutral or negative. This creates a perverse incentive structure where politicians are rewarded for providing subsidies, regardless of their actual economic impact[15].

The research shows that voters often have a positive view of politicians who "do something" to attract businesses, even if those efforts are ultimately ineffective or counterproductive. This is exacerbated by the fact that the costs of subsidies are often diffuse and long-term, while the perceived benefits are immediate and highly visible[16].

Research has shown that politicians seem to benefit by being seen as "doing something" to improve the local economy. Good intentions and the short-term goal of good optics appear to matter more (especially with regard to reelection campaigns) than the real long-term economic effects (which are hard to accurately measure). However, when taxpayers and voters are informed of the tradeoffs required by subsidies—higher taxes and reduced public services—their approval of these policies disappears[39].

This dynamic is at play in Idaho. The political incentives to offer subsidies and claim credit for "job creation" are overriding sound economic decision-making. Idaho policymakers are prioritizing short-term political gains over the long-term economic health of the state.