EDITORIAL: Growth means new business
July 3, 2008 · Updated 11:24 PM
Association of Washington Business President Don Brunell spoke in Oak Harbor last week and his comments repeated a mistake that is all too common in the business community.
Much of Brunnels time was spent in discussing ways to attract businesses from neighboring states. He mentioned semiconductor manufacturers in Oregon who may be enticed to jump to this state, for example. And California is undergoing extreme budget difficulties and may have to increase business taxes. In that case, some of those businesses might be encouraged to flee to Washington.
This is a two-way street, of course. Other states are circling Boeing like buzzards waiting to pick apart a carcass. Washington is struggling to retain its largest industrial employer, but its unlikely to be able to match whats being offered by bigger or more desperate states with fewer environmental and business regulations.
On the local level, Oak Harbor lost a computer software manufacturer last year to Bellingham as the Whatcom County Economic Development Council cheered. Their gain came at the expense of the Island County Economic Development Council, which failed to keep the business here.
On both the state and local levels, these are zero-sum gains. One jurisdiction can brag about stealing anothers business, but theres no real gain in jobs or productivity. Some people and government jurisdictions make money while others lose, but its like a game of table stakes poker: No new wealth is created.
Which is why state and local economic development agencies should devote all their time and energy to nurturing new businesses that will produce new jobs and new wealth. Its the only way to create economic activity that benefits the local community, the state and the country as a whole.
Brunell should have been proposing significant tax benefits for people who start new businesses in Washington. There are tens of thousands of former Boeing and tech company workers looking for jobs that arent there. Make it easy for them to start their own businesses and hire others. How about no state or local taxes the first three years? Theyre not paying anything now, so theres no loss. And in three years the survivors would make a huge contribution to society. Now thats economic development, rather than economic thievery.