It didn’t take much political courage for Gov. Doug Ducey to yank away a $1 million deal from Nike earlier this week after the company cowed to the demands of a former professional football player.
If you’ve been living under a rock, just know that Nike decided to not release a pair of shoes featuring the so-called “Betsy Ross flag” when Colin Kaepernick, the controversial former quarterback for the San Francisco 49ers, took offense because a handful of extremist groups have apparently appropriated the flag for their own purposes. With Kaepernick’s involvement and the announcement coming just days before America’s most patriotic holiday, everything about Nike’s bungling of the situation seems somehow orchestrated to create an easy pitch for politicians looking to score political points. Enter Doug Ducey.
Arizona’s governor quickly announced that he had no intentions of continuing a $1 million state subsidy offered to Nike to locate a new facility in Gilbert. It had the intended effect, with a next-day poll showing that 77 percent of Republicans supported Ducey’s decision.
Here’s the issue: Ducey’s decision to take back the money was a capricious action on his part, one that involves a long-planned business transaction involving a lot of taxpayer money. Despite what you may think of Nike’s cowardice, that facility was being counted on to provide 500 jobs and make a pretty sizeable economic impact in the metro Phoenix area.
Government incentives are problematic for many reasons, but using them as a political weapon makes them even worse.
It’s easy to rally around the flag and join the pile-on against Nike, but what if the issue was something a little more politically charged? One politician shouldn’t just be able to award and take away taxpayer funds to private businesses based on personal beliefs.
To be clear, Ducey’s decision was the right one, but not for the reasons he cited. Nike’s retreat was, as Ducey said, shameful. However, there are better reasons to avoid such incentives. There are strong arguments that government handouts to private businesses are simply an ineffective use of public resources. Nationwide, there’s an arms race between states to attract large companies, but studies have shown there’s often little follow-up on investments, meaning companies are able to take the money and then can be slow to deliver on jobs or other promises. Worse, there’s little evidence that government incentives do anything to change the location decisions for companies.
There’s something to be said for governments creating business-friendly environments, and Arizona has certainly been a leader in that regard, eliminating cumbersome occupational licensing laws and keeping businesses taxes low. But handing out cash and waiving taxes seems counterintuitive in most cases.
We’d like to see Arizona get out of the cash incentives game altogether, instead putting that money toward building a stronger statewide infrastructure – think highway interchanges, rail spurs, better air service -- that’ll sell Arizona on its own as a great place to do business. Doing that would take political whims out of the mix.
— Today’s News-Herald