A survey of Tennessee’s voluntary state funded preschool program found statistically significant negative results for children who enrolled in the program compared to those that did not.

There have been numerous studies on early childhood education in the past that proponents will likely point to in an attempt to discredit this survey. But this is the first randomized control test, or “gold standard” study. Because the program was oversubscribed, researchers were able to randomize the sample and provide a control group.

As we have often seen, this study showed some positive effects on student achievement at the end of preschool, but those gains have dissipated as the children enter elementary school. Specifically, by third grade, the survey found statistically-significant adverse actions on student math and science achievement and no significant effects on reading achievement.

These results don’t mix with the popular narrative of the day: that preschool is a wonderful thing, it is popular, and we would be better off if every parent began enrolling their child in a program at three years old. And because parents aren’t doing this, that is why their children may struggle when they hit kindergarten. That is the message from many politicians and the media.

Mississippi is headed in that direction

Mississippi began its journey into state funded preschool five years ago. Proponents celebrated that we were “finally” doing something. At the time, Mississippi Center for Public Policy was one of the few groups willing to speak out against such a program. As is often the case, legislators push a program because it sounds good or feels right without looking at the unintended consequences.

Mississippi has many wonderful private preschool providers. Many are run by churches, others by private schools or some other private enterprise. But they are competing with one another. They compete for students and the tuition needed to stay in business. That is healthy.

And parents can then choose the best program- for their family. That decision may be based on curriculum, or some other factor that is important to them such as whether the program is three days or five days or if it is a half day or full day. And it will usually involve talking with friends or scouring Facebook or other websites for reviews.

Beyond that, preschool isn’t necessarily the preferred early childhood education format for every family. Data shows it’s not and we see parents becoming very flexible for their children. If one parent can’t stay at home full time, many parents adjust their schedule so one parent can always be at home. Or they start working from home. Or they have relatives or friends watch their child. Again, there are options that families are taking advantage of.

Parents still offer the best childcare

For those who are fans of regulations, you will like the Tennessee program. The state mandates the minimum length of daily instructional time and the maximum size of a classroom. All teachers need a state license and each school has to choose among a set of approved curricula. So, very much like elementary and secondary school. And the results weren’t that much different.

What children need are involved parents. This has not changed, and will not change. Family is the building block of society and parents are responsible for raising their children. Children who stayed at home in Tennessee were better off than children who were enrolled in the program.

The debate today is similar to any time large government programs were born and expanded. In the 1960s, there was a perception that families and churches aren’t meeting all the needs for those in poverty, so the assumption is that government must step in. That’s the wrong step to take.

Yes, poverty programs solved some short-term problems, but they created the long-term perception that government was going to take care of people, inadvertently leading to more single-parent families. And the poverty rate remains virtually unchanged.

There is a belief that if something is wrong then only government can solve it. And as time passes, the government program only becomes larger and the private or non-profit sector shrinks before it disappears. We then begin living under the impression that this is government’s responsibility, regardless of how poorly government is functioning.

A parent friendly solution

Many parents like the idea of state funded early childhood education because it would remove a financial burden. That is understandable, but the state can do that without usurping the role of the private sector, and the family. And moving children from a good setting to a free, but poor, setting.

The federal government offers tax credits to help with childcare costs, and the state could do something similar. Rather than investing tax dollars in programs at state approved preschools, that same money could be returned to families for their child’s needs via tax credits. Families would be helped, the private sector would flourish, and government would not be expanded.

Pregnancy centers in Mississippi are providing free support and services for women that will eliminate the demand for abortion, regardless of any new rulings from the Supreme Court.

It is a wonderful time to be a pro-life Mississippian. It’s an even greater time to be a pro-life Mississippian with passion for free markets. The Center for Pregnancy Choices- Metro Area, with two Jackson locations, is a force to be reckoned with for our state’s abortion industry.

In fact, the Fondren and Frontage Road centers may just be the thing that makes Mississippi the first abortion-free state in the nation.

Supreme Court’s latest decision on pregnancy centers brought us closer to that reality than ever

If it were not for the Supreme Court rulings of Roe vs. Wade and Doe vs. Bolton, Mississippi would likely already be free from the requirement of legal abortion. Time and time again, abortion laws have passed our state legislature, often with the tireless work of the Mississippi Center for Public Policy, only to be halted by activist judges, and ruled as “undue burden” in the 5^th Circuit Court of Appeals. The “undue burden” that halts the courts from ruling in favor of our state’s wishes refers to women needing to leave the state to find doctors who will commit abortions. It takes time to overturn court decisions, pass legislation, and see court seat changes.

The Center for Pregnancy Choices- Metro Area isn’t willing to wait for court processes to end abortion in our state. Private donors, churches, and local community groups fund free services that wipe out the demand for abortion far before the courts catch up to the conscious of Mississippi residents. With one lone abortion facility in our state, Jackson Women’s Health is standing on one leg.

The death of over 2,500 Mississippi babies annually takes place in the famous “pink house” in Fondren. Nearly half of the women obtaining abortions are from Hinds, Madison, and Rankin Counties. To put that in perspective, 1 in 7 pregnancies end in abortion in the tri-county area. Despite being a pro-life state, despite our overwhelmingly pro-life legislature, and despite our Bible belt reputation, abortion remains a reality for thousands of women in our state.

This is where The Center for Pregnancy Choices- Metro Area penetrates the market—with compassion and practical care

The CPC Metro Area offers medical-quality pregnancy tests, high-quality sonograms, counseling, literature, parenting classes, referrals to community services, infant supplies, and prenatal vitamins for free. Conversely, the JWHO abortion facility charges hundreds of dollars for consultations, sonograms, and counseling all pointed towards their highest profit product: abortion. They do not offer support for women desiring to carry their pregnancies to term. Under the banner of “choice,” women often enter and leave JWHO feeling as though abortion is their only choice.

The nurses and staff of The Center for Pregnancy Choices- Metro Area journey alongside pregnant women of all ages, races, and backgrounds to ensure they are informed of all resources available to them. A woman who enters the CPC Metro Area is counseled by a trained professional to hear her story and educate according to her needs. She will then receive a free sonogram, where she will be able to see her baby. She will leave with prenatal vitamins and literature to help make her decision. This woman can return or call back for help at any time she needs to be heard. Following her decision to carry to term, she can enroll in free parenting classes to prepare for her unplanned parenting experience and receive supplies such as diapers and clothes as incentive for participating. Following her decision to abort, she may still return for post abortive healing sessions with a group Bible study.

When a woman learns that there are ways to meet the needs of her unplanned pregnancy, she often feels the relief of not having to go to the pink house across the street. Instead, the entire staff celebrates her, her pregnancy, and her child.

Heavy, burdensome regulations threatened the freedom of pregnancy centers like The CPC Metro Area around the nation

The narrow 5-4 NIFLA vs. Becerra decision to protect the rights of charitable pregnancy centers is monumental. The law in question placed burdens on pregnancy centers that would force their staffs to betray their own conscience and offer confusing, conflicting information. Pregnancy resource clinics would have been mandated to include information on how to obtain abortions and, if not medically licensed, required to display a lengthy disclaimer in several languages that they do not employ medical professionals.

These charitable organizations, that save states millions of dollars with their non-governmental services, were to be treated as “fake clinics” with ulterior motives. Imagine visiting a salad bar and noticing mandated advertising of the burger joint next door. This is the world the “pro-choice” community wanted for pregnancy options. Instead, the court ruled that it was indeed the right of the pregnancy centers to offer their free services without the burden of intrusive advertisement regulation.

With Justice Kennedy’s seat pending for confirmation, many Americans are hopeful that the courts will catch up to the desires of states to determine their own conscious on abortion legality. In the meantime, the Center for Pregnancy Choices- Metro Area will be here, in Jackson, meeting the real needs of Mississippi women.

English statesman William Wilberforce and his Clapham Sect that started the movement to end the slave trade believed that culture is upstream from politics. Mississippi, the Hospitality State, the most philanthropic state in the nation, and arguably the most pro-life state in the nation, is that culture shift. We will rise up and meet the needs of women beyond the date that politics catches wind of our success.

Colleges and universities, both public and private, have long fashioned themselves as beacons of academic freedom. The place where ideas are to be discussed and debated, and conventional wisdom is challenged and deliberated. A place where various and diverse opinions are welcomed, and the young men and women, who will soon enter the workforce, are better off because of that experience.

Now, back to reality.

That sounds like a wonderful utopia, but we know the unfortunate truth. We know that too often academic freedom is only extended to one side of the political spectrum.

And ideas are not to be debated. Rather, one ideology is to be the truth and everything else is wrong, and usually bigoted, racist, and sexist for good measure.

Conservative speakers are regularly shouted down or shut down. In some instances, we have even seen small riots. And colleges have little appetite for supporting freedom of speech that they don’t like, nor do they care to protect the speakers themselves from the riotous mobs.

After all, if the bulk of the administration, faculty, and student body all think the same way, they see little reason or benefit to accept differing points of view; even as college leaders claim to promote academic freedom.

But a recent state Supreme Court ruling in Wisconsin just might strike a blow for academic freedom in America. Actual academic freedom; not just freedom in name only.

A professor at Marquette University, Dr. John McAdams, was effectively terminated for posting an opinion of a political topic on a blog that differs from the administration. The case is pretty simple. A graduate instructor, Cheryl Abbate, listed gay rights as an issue that “everybody agrees on” and “there is no need to discuss it.”

When a student, at this Catholic university, approached the instructor for debate, she called the student homophobic and said she was “invited to drop the class.” The student told McAdams about the encounter and he then wrote about it on his blog and named the instructor.

After Abbate received hateful messages, the school rallied behind the instructor. McAdams had to go in front of a Faculty Hearing Committee and suspension was recommended. The president of the university then added that McAdams could not be reinstated until he signed a letter saying his blog post was “reckless and incompatible with the mission and values of Marquette University.”

He declined.

That is where the lawsuit began. With the help of the Wisconsin Institute for Law & Liberty, McAdams won his case as the Supreme Court declared that the decision to fire McAdams violated Marquette’s own promise to protect his academic freedom.

Marquette is a private university. Private enterprises should have broad latitude on employment policies. A religious school, for example, should not be forced to hire a faculty or staff member who is of another faith or is atheist. Just as an employer should be free to require his or her employees to stand when the National Anthem plays.

But a university cannot make up the rules as they go along. Nor can they selectively enforce policies to fit what they do or don’t like. If a university wants to offer its professors academic freedoms, such professors must be allowed to say what is not popular among the administration or faculty.

This ruling represents one professor at one college in Milwaukee, Wisconsin. And as the new school year begins, there will certainly be new examples of conservative students or speakers who have had their rights restricted.  But the hope is that in a world where the left has virtually unilateral control, liberty and freedoms may emerge.

And freedom of speech may enjoy a platform on our college campuses, again.

If a family in the United States is not satisfied with their assigned district school, they do have options besides moving to a different school district, but these options are not available to everyone or even most.

One option is charter schools. Charter schools are public schools that receive government funding but are given the flexibility to innovate while being held to a high academic standard. Like traditional district schools, they are open to all children (though that is often limited based on capacity and district lines), they do not charge tuition, and they do not have special entrance requirements.

Charter schools are approved by an authorizing entity, which in some instances may be the local school district, and are run by either non-profit or for-profit entities. Each charter school has a “charter” that can be revoked by the authorizer after a certain period of time if that school is not producing the academic outcomes agreed upon. The authorizing board provides one level of accountability. Parents provide additional accountability. No family is assigned to a charter school; rather families must choose to enroll their children, or “opt-in,” and they can leave at any time.

Charter schools are relatively new in the United States. The first charter law passed in Minnesota in 1991 and City Academy in St. Paul, Minnesota became the nation’s first charter school to open its doors the following year. After the first school, the charter school movement soon began to spread. Numerous states quickly followed Minnesota’s lead and by 2016, 44 states including Mississippi had approved charter schools on some level.

For the 2016-2017 school year, more than 6,900 charter schools are serving an estimated 3.1 million students. In a ten-year period, enrollment in charters has tripled from 1.2 million since the 2006-2007 school year. The current numbers represent about 6 percent of total public school enrollment today.

In many urban areas that have long suffered from having the worst district schools in the country, the charter movement has flourished. During the 2016-2017 school year, 17 districts across the country had 30 percent or more of “enrollment share,” the percentage of public school students attending a charter school,” with New Orleans being the nation’s first nearly all-charter district.

However, charter schools are not readily available to every family who may wish to enroll their child. This may be due to either new laws, restrictive laws, or lack of school options and availability. That is certainly the case in Mississippi where the school districts in which a charter school can be located and the number of charter schools that can be authorized each year is limited.

Mississippi was one of the last states to join the charter school movement. The state’s first charter schools opened for the 2015-2016 school year.

The current law created a state authorizing board who is the sole authorizer of charter schools in the state. If a charter wishes to open in a school district rated “A,” “B,” or “C,” they first need to get approval from the local school board. That has yet to occur, and the focus has instead been on failing school districts. Students who wish to attend a charter school must either reside in the school district where the charter is opening, or they can cross district lines if they attend a school district rated “C,” “D,” or “F.”

This is an excerpt from School Choice: How to Unleash the Market in Education by Brett Kittredge. It was published in Promoting Prosperity in Mississippi.

Few policy reforms have been as popular as welfare-to-work. Why, then, is the U.S. Senate trying to kill state efforts at encouraging able-bodied adults to get a job?

Welfare-to-work was one of the signature policy wins of the 1990s, resulting in the 1996 Personal Responsibility and Work Opportunity Reconciliation Act.

The legislation was signed by President Bill Clinton, after being shepherded through Congress by House Speaker Newt Gingrich and Senate Majority Leader Trent Lott, who recognized welfare had become a trap for many Americans.

The two most important features of the federal law were time limits on how long recipients could remain on welfare and work requirements for those on welfare. Both of these reforms were targeted at able-bodied, working-age adults on cash assistance (TANF) and food stamps (SNAP).

The positive impact of federal welfare reform is well documented. A 2004 report by the left-of-center Brookings Institution states: “The welfare-to-work objective was predicated on a simple proposition: poor families are better off employed than on welfare.

Jobs are the best antidote to poverty. The work requirements have helped increase the employment rate of single mothers, lowering welfare dependency and child poverty.”

In particular, poverty rates for black children reached an all-time low.

In spite of its immense success and popularity, the temptation to reverse federal welfare-to-work and related reforms has been unrelenting. Even though he signed PRWORA, Clinton crafted an expansive waiver process that had already started to undo some of PRWORA’s gains by the time he left office.

President George W. Bush not only failed to reign in the waiver process, he oversaw passage of the 2002 Farm Bill (in his defense, he vetoed the 2008 Farm Bill), which loosened food stamp requirements even more, including opening up the program to noncitizens.

Then, beginning in 2009, the Obama administration used the Great Recession in an attempt to unilaterally–and thus illegally–dismantle TANF work requirements.

To say the least, the waiver process under the Obama administration was not transparent.

As late as 2013, no state had even formally applied for a TANF work waiver. Instead, regional offices pressured state welfare agencies to accept various waivers, allowing longstanding policies to be overturned with a single email. Most state lawmakers, and some governors, were unaware that their human services departments had even requested such waivers.

The results soon became evident. Whereas only 12 states had obtained statewide permission to waive food stamp work requirements before Obama took office in 2009, two years later 47 states were waiving food stamp work requirements.

This stampede was aided by the American Recovery and Reinvestment Act, which also suspended the work requirement nationwide for two years (2009 and 2010). Food stamp participation rates–and food stamp spending–skyrocketed, with spending doubling under the Obama administration, even as it had already doubled under Bush.

With food stamp spending hitting $80 billion in 2013, lawmakers in conservative states started ringing the alarm bell.

Kansas was one of the first states not to renew its waiver. In doing so, Kansas merely reverted to what the 1996 welfare reform law actually says–that able-bodied adults without children are only eligible for food stamps for three months every three years.

After three months, these adults have to find work, volunteer, or obtain job training in order to remain on welfare. Kansas tracked what happened to those able-bodied adults who cycled off their state rolls. Almost two-thirds obtained employment within a year, many finding permanent well-paying jobs in a variety of industries. Other quality-of-life measures, like marriage rates, also increased.

Here in Mississippi, the poorest state in America, lawmakers first started pressuring for change in 2015. In 2016, Gov. Phil Bryant declined to renew Mississippi’s waiver. And in 2017, the legislature codified that Mississippi could not waive federal work requirements for SNAP.

The $867 billion Farm Bill (H.R.2) just passed by the U.S. Senate threatens to undo this reform for Mississippi, as well as Arkansas, Florida, Kentucky, Missouri, and West Virginia. The subterfuge was accomplished by deleting 7 U.S.C. 2015(o) and moving the work requirement to 7 U.S.C. 2015(d). This occurs on p. 295 and pp. 326-327 of the 1,242-page Senate bill and is a textbook illustration of why it is bad practice to amend laws by reference without indicating what is being changed.

At best, the substitution creates unnecessary confusion. At worst, the result for Mississippi and the aforementioned states is to invalidate their state laws that specifically cite subsection 2015(o) in eliminating the work requirement waiver.

It is tempting to believe the Senate didn’t realize that in the back and forth of crafting the Farm Bill it might be gutting state efforts at helping able-bodied adults find work. Given the tendency of past Farm Bills to expand welfare eligibility, the artful deletion seems intentional.

This assumption is buttressed by the Senate’s tabling of a floor amendment aimed at reforming the food stamp waiver process altogether. In any event, the offending language needs to be fixed now that the Farm Bill is headed to conference.

As demonstrated in a new study by the Employment Policies Institute, more generous welfare entitlements lead to more poverty and more people on welfare.

Whatever the benefits of a targeted and limited safety net for families in crisis, able-bodied adults should be expected to work. Allowing these folks to remain on food stamps indefinitely is personally and socially destructive.

It is immoral that the U.S. Senate is not only doing nothing to free people from the welfare trap, it is also trying to stop states from doing so themselves.

This column appeared in the Daily Signal on July 6, 2018. 

Today, Governor Phil Bryant named Shadrack White, Director of the Mississippi Justice Institute, the new Mississippi State Auditor. White will replace outgoing Auditor Stacey Pickering, who recently announced his resignation.

“The Governor displayed wisdom with his choice of Shadrack White as State Auditor,” Jon Pritchett, President & CEO of Mississippi Center for Public Policy said. “Though we are certainly disappointed to lose a talented member of our team, we are proud of Shad and happy for he and Rina and their families. Shad’s service as the Director of the Mississippi Justice Institute was exemplary and his work on government accountability and transparency has set a solid foundation for his successor. It’s an honor for one to have the opportunity to serve his home state and I’m confident Shad will serve all of the Mississippi taxpayers well. We should all sleep better with a constitutional conservative in the state auditor’s office.”

White will be sworn in on July 16, 2018.

“While I’m excited for my next step, I’m saddened to leave the talented team at the Mississippi Center for Public Policy and the Mississippi Justice Institute,” White said. “In its short history, the Mississippi Justice Institute has built a reputation for taking tough stands against government overreach and violations of our transparency laws. Its next director will step into a job full of opportunity to make a real difference for Mississippians. I don’t think it’s an accident that MJI’s first director is now a U.S. Attorney, and its second will be State Auditor. Mississippians and Mississippi leaders recognize the powerful force that this Institute and MCPP have become, and that power is being used to make Mississippi freer and more prosperous for the people of this state.”

Prior to White, Mike Hurst was the first Director of MJI. He served in that role until he was named U.S. Attorney for the Southern District of Mississippi last year.

What creates prosperity? Why are some states rich and others poor? Why does Mississippi consistently rank as one of the poorest states in the nation? Can anything be done to move Mississippi 'out of last place?'

Join Brandon Cline and Claudia Williamson, editors of Promoting Prosperity in Mississippi and the Co-Directors of the Institute for Market Studies at Mississippi State University, for MCPP's July 26 Liberty Luncheon as we discuss these questions and how we can truly promote, encourage and experience prosperity in Mississippi.

Here are the details:

WHAT: Liberty Luncheon: Promoting Prosperity in Mississippi
WHO: Featuring Brandon Cline and Claudia Williamson, Co-Directors of the Institute for Market Studies
WHEN: Thursday, July 26, 2018 at 11:30 a.m.
WHERE: River Hills Club, 3600 Ridgewood Rd., Jackson, Mississippi

Space is limited so sign up today.

Conservatism is a word I’ve heard a lot since moving here to take the position as CEO of Mississippi’s conservative think tank, the Mississippi Center for Public Policy. It seems almost everyone considers himself a conservative. I’m discovering the word has lost some of its meaning, though. It has become interchangeable with the GOP or with one’s views on the Second Amendment or on being pro-life. But those definitions of conservative are not wholly accurate. More importantly, they’re not enough. A conservative is also willing to stand up to encroaching power of all forms of government, to the growing corporatism that seeks to govern us from the boardroom, and to the menace to our society that is a progressive culture.

To make Mississippi a leader in economic growth, entrepreneurship, job creation, and prosperity, we have to make progress on the issue of our long-standing dependence on government. We have to change our public policy. We need to value work, remove barriers to risk-taking, free parents to choose the education path that works for their own children, and leverage the power of the private enterprises of faith, family, non-profits, and private organizations. The faith-based and philanthropic generosity of Mississippians is amazing. It can create so much good, but we have to prevent government from competing with this philanthropy. The best solutions in civil society come from local, efficient, effective, temporary actions where a personal relationship ensures mutual accountability. This is how we used to solve the problems in our civil society.

There are far too many Mississippians who seek to petition government to do this work. Worse, too many individuals and companies are looking to the government for a contract, a job, a partner, or protection from competition. When we allow government to become the Holy Grail in this way, we weaken the free market. We create a disincentive to the formation and deployment of capital. We thwart the opportunity for all Mississippians to prosper. What’s more, such reliance on government ensures only those with power have significant influence on Mississippi, including determining who represents us in the legislative and executive branches of our government.

What makes a “conservative” is not a party or allegiance to a particular leader or political campaign, but the power of ideas. As conservatives, our ideas are based on bedrock values and fundamental truths. Freedom is a policy that works. A limited and restrained government is the essence of our system. And the principle of ordered liberty holds it all together. Our goal at the Mississippi Center for Public Policy is to play a leadership role in building a Mississippi where individual liberty, opportunity, and responsibility reign because government is limited. We believe this is the only way nations, states, and cities have ever enjoyed durable prosperity.

If we remain committed to these ideas and work hard to convince others of their value, we can all experience a Magnolia renaissance. And we can say conservatism made it possible. Real conservatism. The kind of which Bill Buckley, Ronald Reagan, and Milton Friedman spoke. The kind where we are free to pursue our individual liberty and speak our minds. The kind where we encourage people to take action and take risks in pursuit of their happiness. The kind where we take personal responsibility for our futures and stop looking for government to solve all of our problems.

There is an important role for government but it must be limited. Government functions best when it is closest to the people and when it is open and transparent. And the states are the best avenue for getting things done. Although our national government continues to grow into an unwieldy and bureaucratic swamp, our country is still federalist. We are a collection of semi-sovereign states. Federalism is a conservative idea. As Reagan stated in his first inaugural address, “The federal government did not create the states; the states created the federal government.” Thanks to our founding fathers, the real political and policy power is supposed to belong to the states.

Though I’ve lived in Mississippi for only a few months now, I’ve come to learn that y’all are not very fond of people telling you what to do, especially not people in Washington, D.C. I admire that. That’s a conservative thing, too. That independence goes to the heart of the conservative movement. It was present at our founding. It was what compelled Bill Buckley to start National Review. It was what gave us Ronald Reagan and Donald Trump. And if we harness it, conservatism will lead us to a prosperous Mississippi—a Mississippi where individual liberty, opportunity, and responsibility reign because government is limited.

Since the inception of the Balance Agriculture with Industry (BAWI) plan, the State of Mississippi has provided private business enterprises with billions of dollars in taxpayer-funded subsidies. The argument advanced by the proponents of selective or targeted incentives is that the benefits of subsidies (i.e., more employment, higher wages, more tax revenue to state and local governments) in luring companies to locate in Mississippi are substantially greater than their costs. As discussed earlier, forecasts of the total economic benefits anticipated from business subsidies are based on projections of employment gains and promises of higher wages paid by the targeted businesses. Through a Keynesian multiplier effect, these employment and wage gains will spill over to other areas of the economy and create even more employment opportunities and higher wages.

However, the employment projections rarely become reality because the models used commonly to estimate the multiplier do not account for the job displacement effect, instead assuming contrary to fact that every person employed at the subsidized plant is a new addition to the workforce and that every dollar paid to those employees (the plant’s total payroll) adds to the income earned by residents of the state. Our simple graphical analyses in the previous section show clearly that the promised job gains from the Nissan’s Canton, Mississippi, plant fell far short of those projected ex ante. However, even if the benefits of a taxpayer-funded subsidy did outweigh the costs using standard measures of economic impacts, such an outcome would be a necessary, but not sufficient condition for concluding that the incentive package passes a benefit-cost test, thereby delivering net economic benefit (benefits > costs) because the analysis fails to consider the subsidy’s opportunity cost. One opportunity cost of a taxpayer-funded subsidy is the private-sector economic activity that would have been generated (but is lost) had the subsidy not occurred and the dollars allocated to it remained in the hands of private individuals and commercial businesses. As just explained, an additional dollar injected into the private sector is exchanged repeatedly in series of market transactions and thus creates economic value greater than the initial dollar. The converse also is true: Every additional dollar of tax revenue taken from the private sector reduces economic activity by more than one dollar.

The true cost of a taxpayer-funded subsidy to business therefore is not just the actual dollar amount of the subsidy, but rather the actual dollar amount of the subsidy plus lost private-sector consumption if the subsidy resources were to remain in the private sector. This observation suggests that the true economic cost of a taxpayer funded subsidy is much larger than the subsidy’s accounting. So, for example, in the case of Nissan’s Canton plant, the true economic cost per worker actually exceeds the $203,125 accounting cost presented earlier because in order to finance the $1.3 billion subsidy, economic activity in the private sector will fall by more than $1.3 billion (the multiplier effect working in reverse). The economic criterion for a subsidy to generate a positive net benefit is that those benefits must be greater than the dollar value of the subsidy plus the opportunity cost of the lost private sector consumption.

A business subsidy inherently assumes that every dollar of a taxpayer-funded subsidy is worth more to the economy than if the dollar remained in private sector hands. While this may be true in some cases, the academic research and evidence presented herein suggest that possibility is more the exception than the rule. So, as was discussed in Chapter 3, public officials who advocate for taxpayer-funded subsidies to business are implicitly claiming that they know better than do private individuals and firms interacting in free and open markets how to most effectively allocate resources to their highest valued uses. If that actually were true, then we should allow legislators and public officials to decide all business activity within a state. But, we have seen throughout history (the former Soviet Union, Cuba, Venezuela, and North Korea immediately come to mind) how poorly planned economies perform. Of course, the argument is not being made here that taxpayer-funded subsidies to lure businesses to Mississippi and other states is equivalent to having a planned economy like the aforementioned countries, but the difference is only a matter of degree. Even though less economic planning occurs in the United States than in other nations, planning fails wherever politicians and public officials displace market processes because they lack the information (price and profit signals) and incentives necessary to decide which economic activities merit encouragement and which do not.

Legislators and other public officials who support taxpayer-funded subsidies likely do so with the best intentions — to create greater economic opportunity and a better future for the citizens of their respective cities, counties and states. However, despite these best intentions, it is likely that, in most cases, taxpayer-funded subsidies will do more economic harm than good, in part owing to ignoring the opportunity cost of lost private-sector consumption. That harm is amplified because officials everywhere compete with one another to assemble incentive packages that will entice businesses to their respective jurisdictions. Such competition for business creates ever larger taxpayer-funded subsidy packages that likely will cause even more substantial net economic losses for society as a whole. The only way to stop this race-to-the-bottom is for public officials to stop offering selective incentives to businesses and instead foster a more favorable economic environment for all business activity, which includes companies already doing business in a state, whether large or small (e.g., lower taxes on citizens and businesses across the board, control over-excessive and wasteful government spending, promoting a skilled workforce, and minimal regulation). The free market, rather than politicians and bureaucrats, will then decide where business activity will locate.

We think that, in order to promote prosperity, all states and localities should abolish their economic development agencies, thereby saving the budgetary costs of official salaries, benefits and travel expenses to visit and cut deals with companies looking to move or to build new plants. Unilateral disarmament in the vigorous incentives arms’ race triggered by Mississippi during the Great Depression may, of course, cause the state to lose opportunities to lure big-name employers in the short or medium term. If an announcement that the Mississippi Development Authority has been shut down is paired with a dramatic cut in state business income taxes, however, the negative impact on revenue will be at most short-lived.

Here’s a chance for Mississippi to lead the nation forward with much better effect than its adoption long ago of the Balance Agriculture with Industry program. State officials may then realize that they all are made better off by disarming because selective incentives only shift economic activity around geographically and do not foster prosperity. On the surface, interstate competition for business location is a zero-sum game: one state’s gain is another’s loss. But, looked at more deeply as we have done in this chapter, the arms’ race is a negative-sum game because the ostensible benefits of the competition in terms of job gains, whether direct, indirect or induced, are less than the costs imposed on the private sector, thus hindering economic growth and prosperity in all states, including Mississippi.

This is an excerpt from “Selective Incentives,” Crony Capitalism and Economic Development by Thomas A. Garrett and William F. Shughart III. It was published in Promoting Prosperity in Mississippi.