The Help That Fails

Portland was recently chosen as one of five cities where the U.S. Small Business Administration will bring a program this year intended to boost urban businesses that have “high growth potential.” The program will select certain business owners for 26 weeks of free training on such topics as marketing and financial management. The goal will be to “generate new jobs, attract investment, and provide a sustainable economic base” for Portland.

This is the classic political approach to economic development: pick a few favored businesses, spend tax dollars on hand-outs, and hope that it creates wealth. But it never really works. The people doing the targeting are picking winners (and therefore losers) on the basis of political considerations and personal preferences, not estimated returns on investment. Therefore, the tax dollars they spend for the training will yield few positive results, while making the rest of us worse off.

This is not wealth creation; it’s actually wealth destruction.

A much more effective strategy would be just to lower business taxes across the board and repeal regulations that are unrelated to public health or safety. This would encourage private sector investment and help create a rising tide of opportunity that would lift all boats, not just those chosen by some federal bureaucrats.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute.