With Holtec claiming it may hire 3,000 in Camden, I think it’s worth stepping back and discussing the broader waterfront development strategy. The Holtec deal may end up being significantly better than the 76ers deal. Indeed, I hope it is. But that doesn’t mean that continuing to invest hundreds of millions of dollars in corporate subsidies is Camden’s best strategy or the best use of money. Rutgers Professor Julia Sass Rubin stopped by in the comments and argued as much. I bumped her comment because I thought it was worth the read:
Photo Credit: Tom Gralish Philly.comTwo points.
1) The development model taking place in Camden – a local government working to replace the low-income residents it is supposed to represent with a wealthier population – is one that has played out repeatedly in other communities, such as New Brunswick. In Camden’s case, the alignment of interests between the Christie Administration and the George Norcross political machine that controls Camden has made that effort more blatant.
2) Economic development research has consistently found that tax abatements and other direct financial subsidies that governments give to corporations in order to “attract” or retain them, are ineffective. Large corporations move to a location or stay there because it makes business sense for them to do so. Tax subsidies are rarely large enough to figure into those calculations.
What does? Broader business decisions that the location will impact – e.g., transportation expenses, access to suppliers and markets. Also key are quality of life issues that impact senior managers, who are making the decisions. Is the commute reasonable? How good are the public schools in the vicinity where the managers are likely to live?
Ironically, the good infrastructure and high quality public schools that attract companies to a location draw on the same tax dollars that the tax abatements divert to corporate profits.
The generous tax abatements have become a race to the bottom for municipalities and states, with corporations playing them off against each other to get the largest gift they can from the taxpayers.
That is not good for anyone but the corporate shareholders.
There is a broad literature on how to effectively improve the economy of a region through building infrastructure and providing access to high-quality facilities and job training and investment capital. So far, Camden does not appear to be following that model.
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