Incentives can't keep Dell online

The futility of a city, state or region trying to buy its way to prosperity is persuasively demonstrated by Dell Computer's latest announcement. Dell is closing down its $150 million, 750,000-square-foot plant in Forsyth County, just four years after North Carolina and local governments lured the computer maker to the state with promises of incentives topping $300 million. At the time, the $280 million in state incentives was the biggest industrial package the state ever offered.

Now it's down the tubes, along with the 950 jobs that will be lost. Dell says, unconvincingly, that the Forsyth plant can't be converted to produce the laptop computers customers are now buying. The incentives were based on creation of jobs, so the state and local governments might be able to recover incentives already awarded or refuse to pay promised incentives. The should demand the return of every nickel.

State courts have found the state's generous incentives for businesses moving into the state are constitutional, and federal courts have allowed states to compete one against the other for industries willing to sell themselves to the highest bidder. Although some of these incentive deals have worked out, enough have gone awry to leave a sour taste in the mouths of taxpayers. Competing businesses, paying state taxes, maintaining hefty payrolls and providing long-term jobs, have special reason to be miffed by the state's myopic pursuit of fickle industries.

Like a woman on the make, states can seduce industries into moving in with them, but a wayward industry, like a wayward husband, tends to repeat its bad behavior. There's always a better offer out there somewhere. Current U.S. trade and tax policies encourage more alluring deals from foreign countries, where workers are eager for jobs at wages less than a tenth of the U.S. minimum wage.

States need to wise up and stop mortgaging their future on the luring of some new industry that will go anywhere for the right offer, and North Carolina needs to re-examine its industrial recruitment policy. How many more industries might the state attract if its investments in individual-industry incentives were converted to lower corporate tax rates for all? A wiser policy might make it more likely that homegrown industries will flourish and create the hundreds of jobs that industries like Dell are willing to give and then take away.