What if someone told you “politicians sacrifice long-term economic performance for individual, political gain”? Many people would yawn (or sigh) and say this is obvious, or perhaps they would say it’s obvious with respect to the politicians in that other political party (the one that opposes their own). Nathan Jensen and Edmund Malesky, however, have not only made the claim quoted above, they’ve set out to prove it through hard data and careful argumentation in their book Incentives to Pander: How Politicians Use Corporate Welfare for Political Gain.
Through survey evidence, investment allocation data, cost-benefit analysis, and discussions of the current state of research, Jensen and Malesky show that politicians at all levels of government (across political parties, and internationally) use incentives to attract businesses to their districts so that they can claim credit when a business moves into their district and avoid blame when a business chooses not to relocate. Politicians have found that this is an effective strategy for attracting votes. Along the way, the authors also argue that these incentive policies are ineffective as an economic development strategy. In fact, often the businesses that do relocate to a particular area would have done so regardless of the government’s benefit packages.
Incentives to Pander is a book that deserves a wide readership. The data-driven, academic nature of the book will likely keep it from being widely read, but perhaps the authors will consider writing a distillation of the book that can be more easily digested by a general audience. This seems doable, especially since they’ve already distilled the book’s argument into a two-minute video, which you can watch below.