Senate Bill 820, approved by the NC Senate this week, would choose “economic development” policies over economic growth policies. John Locke Foundation’s Jon Sanders and Dr. Roy Cordato explain the difference between economic development and economic growth and how this is not a good choice:
Policies for economic development “target specific localities, regions, and businesses for special privileges at the expense of the rest of the state.” (Note that “at the expense of the rest of the state.”) They also “lure politicians and bureaucrats anxious to direct private resources toward their pet projects while erroneously claiming that they are promoting the good of the state as a whole.”
Who directs the resources? Politicians and bureaucrats. Whose resources are they directing? Other people and businesses’ (the rest of the state). What gets in the way? Laws limiting how much of other people’s resources they can direct.
On the other hand, policies that promote economic growth are “aimed at allowing businesses to act efficiently and entrepreneurs to innovate and pursue opportunities as they see them.” They’re based on the premise that “private entrepreneurs using their own money or the money of voluntary investors know best how resources should be allocated. The problem facing policymakers then is to see to it that property rights are secure, that entrepreneurs can use their property rights in any way they believe will be most productive, and that tax and regulatory policies do not get in the way of this process.”
Who directs the resources? The people who own them. Whose resources are they directing? Their own. (Suddenly those questions are redundant.) What gets in the way? Laws, taxes, and regulatory policies hindering them from employing their resources in ways they believe will be the most productive.
Read more here.