When the Oregon legislature convenes in January it will be asked to spend almost $40 million to help certain “innovative” industries. The request comes from the legislatively-created Oregon Innovation Council which is trying to “identify Oregon’s top innovation-driven growth opportunities, maximize the state’s competitive advantages and establish Oregon’s niche in the global economy.”
The Innovation Council recommendations include funding for certain food processing companies, development of a commercial-scale wave-generation park in Newport, and a research center to develop and commercialize new drugs to fight infectious diseases.
Unfortunately, such government-directed investments have a poor record of achieving their economic development goals. Using tax dollars to pick winners and losers in the economy often fails because people aren’t as careful when investing other people’s money as they are when investing their own.
Also, the only way to give millions of dollars to some industries is by first taking that money away from other industries and individuals in the form of taxes. Those funds will therefore not be available for other uses, such as creating jobs in sectors the Innovation Council deems less worthy of consideration. Taking these funds from their original owners represents a cost to the economy which often exceeds any good that might be done by government economic development programs.
Of course, the costs in terms of lost jobs and opportunities are “unseen,” while the investments in wave machines are obvious. Perhaps that’s why so many politicians in both major political parties support such ineffective programs.
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