The City of Fargo made a big mistake when they agreed to FedEx $660,000 in tax incentives to move a facility to their community from Grand Forks.
Not only was this a problematic move given that Fargo was essentially using economic development largess to poach a company from another North Dakota city (yes, that’s exactly what happened) but when asked by City Commissioner Tony Gehrig if they actually needed the incentive FedEx representatives said they did not.
That moment happened back in 2016, but it got mocked last night by HBO’s John Oliver in a pretty excellent segment on economic development policy in general. The City of Fargo bit happens at about the 8:50 mark:
I’ll admit to not being a very big fan of Oliver’s work, generally, and I think he confused policies promoting targeted economic development benefits with states and communities that work to keep taxes generally low.But overall this segment wasn’t too bad.
Here’s a longer clip of that moment from the Fargo commission meeting if you’re in need of some context:
This all calls into question the utility of economic development incentives. Proponents of these policies say they’re necessary for our communities to remain competitive. Since pretty much every other city/county/state in the nation is offering these incentives we pretty much have to if we want to attract businesses to our communities, they argue.
It’s a sort of arms race in taxpayer handouts.
But is it really needed? Would FedEx really not build a facility in North Dakota if cities like Fargo or Grand Forks didn’t dole out incentives? I suspect, since demand for parcel delivery doesn’t hinge on economic incentives, that isn’t the case.