We know politicians love ribbon-cuttings; the bigger the better.  Politicians crave the major industry announcements and the big plant opening. And politicians love “recruiting” out-of-state multi-national corporations. What they do not acknowledge is that these corporations play states against each other like a fiddle, extracting better and better deals and the expense of the winning bidder.

If our economic policies are well demonstrated on big screen. Consider Back to the Future. The multinational corporations are played by Biff, while the people of Alabama are portrayed by George McFly.

We act George McFly in economic development. We beg and plead for out-of-state corporations to come and plunder our state’s resources: both natural, fiscal, and human. We auction off our state and finances in fierce competition with other states. We “incentivize” these corporation in the name of job creation with property tax abatements, corporate income tax credits, sales tax exemptions and rebates, free land, infrastructure development etc. All the while, we promise to provide them a “pro-business” environment, which means limited liability,  legal immunity in court, and limited regulation for their activities when they mess up. To stay with the movie analogy: when they wreck our car, we are expected to pay for the damage.  We consistently fight to be the victim of exploitation.

Should we be dependent of these out-of-state corporate interest for our economic prosperity. It should be free to work, just like it should be “free to pee.”

Our politicians here are the older brother, the little sister is the people of Alabama, and the bully is the transnational corporations. Our leadership should fight for our rights, not actually give our “twinkees” away to the bully. We should not need to give away our limited financial resources, environmental health, nor economic independence to help these corporations pad their profit margins.

I do not suggest we stop all industrial recruitment, but our economic development dollars and policies should most certainly be more favored toward our locally-owned business and local economies. While not good for politicians and their photo-ops, locally owned business development actually makes better economic sense.

As shown by a new University of Pennsylvania study,

Many communities try to bring in outside firms and large factories, but the lesson is that while there may be short-term employment gains with recruiting larger businesses, they don’t trigger long-term economic growth like start-ups do.”

Stephan Goetz, professor of agricultural and regional economics at Penn State, and his researchers, who report their findings in the current issue of Economic Development Quarterly, studied data on the economic growth in 2,953 U.S. counties, including both rural and urban counties.

Goetz said a better strategy to promote economic growth may be encouraging local businesses rather than recruiting large outside firms.

We can’t look outside of the community for our economic salvation.” Goetz said. “The best strategy is to help people start new businesses and firms locally and help them grow and be successful.”

The research also revealed:

Small, locally owned businesses and start-ups tend to generate higher incomes for people in a community than big, non-local firms, which actually can depress local economies. . . Smaller, locally owned businesses, it turns out, provide higher, long-term economic growth.

Let us stop kowtowing to transnational corporations and look to ourselves for “economic salvation.” We can take the rein of our economic destiny and actually achieve higher, long-term economic growth.

Let us stand up for our local communities and local economies (our “Loraines”) for once. Better long-term economic stability and resilience can only be achieved by taking these locally-owned businesses by the arm.

The better strategy: develop dense networks of locally-owned businesses which substantially meet locally needs, locally. The clusters of economic independence would develop such economic potency that out-of-state corporations would want to locate nearby to join the networks, (and without the artificial “incentives” but by sheer force of the economic synergy and free market competition.)

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