Did Barack Obama Take A Page From The John Hoeven Economic Development Playbook?


For a lot of North Dakotans, hearing President Barack Obama talk about his new “promise zones” had to sound like deja vu. North Dakota has had something called Centers of Excellence, the brainchild of former governor and current US Senator John Hoeven, since 2005.

I just wrote about that over at WatchDog.org, but check out how similar the policies sound.

This is from WhiteHouse.gov, talking about President Obama’s promise zones:

Each institute is designed to serve as a regional hub designed to bridge the gap between applied research and product development, bringing together companies, universities and other academic and training institutions, and Federal agencies to co-invest in technology areas that encourage investment and production in the U.S.

This is from a 2005 press release sent out by then-Governor John Hoeven’s office:

A Center of Excellence for Economic Development is a hub of research and development on one the campuses of the North Dakota University System around which related businesses expand and dynamic new businesses cluster.

So how well has the policy worked out in North Dakota? After all, the states are the “laboratories of democracy.” How the policy has worked here might be a predictor of how it will work nationally.

The people in charge of running the “centers of excellence” say everything is great. They doubt an economic impact worth hundreds of millions of dollars (using economic multipliers that read, frankly, like something out of a fairy tale). But according to the program’s most recent annual report from 2012, North Dakota taxpayers have invested nearly $70 million while the program claims to have created 1,082 jobs.

That’s a cost to the taxpayers of nearly $64,000 per job created. That’s up from 2008, when a North Dakota Policy Council review found each job created by the centers costing taxpayers $42,000. In 2009 – four years into the creation of the centers of excellence – a state audit couldn’t discern “whether the Centers of Excellence are having the desired economic impact as required by state law.”

James Pethokoukis, an economist working with the American Enterprise Institute, called President Obama’s promise zones “weak” policy. I think North Dakota’s experience with this sort of policy is proof of that notion.