San Jose CA does economic development the right way: no subsidies, no special deals, best deal for all

Sam Liccardo, mayor of San Jose California says his city won’t be offering any subsidies to Amazon to attract their 2nd headquarters and 50,000 jobs. Offering special incentives to big companies to locate in your city is “a bad deal for taxpayers,” he says. Benefits are just not commensurate with costs.

Writing in the Wall Street Journal this morning Liccardo says it usually turns out that a company that wants to come to town has already decided, and any city subsidies are just a financial ‘cherry on top.’

Mayor Sam Liccardo

He asks “So why do public officials throw away taxpayer dollars in subsidies while trying to promote economic development? Perhaps because they can. The subsidy represents something tangible that officials can point to as the factor that ‘sealed the deal’ to create more jobs.

“The harder work of investing public dollars in schools, infrastructure and amenities takes years of concerted effort but has far greater payoff. A healthy economic ecosystem that supports innovation and growth is what makes a community attractive to a company like Amazon.”

Cutting special deals isn’t right

Liccardo says the success of San Jose has been through crafting policies that apply equally and are open to all competing businesses:

Downtown San Jose

“Cutting special deals with individual companies isn’t the right strategy…Our recent economic development successes—including the doubling of Adobe ’s world headquarters and large expansions at the Google and Apple campuses—got done without a single cent of taxpayer money being used for subsidies, tax relief or discounts on land.”

Subsidies to companies to locate won’t help, he says.

“A talent-challenged city might land a call center or an assembly plant with a tax break, but innovative companies won’t invest in a research-and-development center in the hope that computer science and engineering expertise will suddenly fall from the sky. Cities should focus on building the workforce first—investing in human capital, enacting startup-friendly policies and joining with local universities and workforce training programs.

“As elected officials, we would do well to resist ribbon-cutting and take the longer view. To attract innovative employers, let’s all stay in our lanes, create safe and attractive cities for talented people to live in, and clear bureaucratic red tape. In other words: Get out of the way.”

BACKGROUND: The City of San Jose has just over 1 million population, sometimes called the capital of ’Silicon Valley’ is 180sq miles at the south end San Francisco Bay. Pueblo de San Jose founded in 1777 is the oldest European settlement in California, and was the state’s first capital.


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