Taxpayers will pay $300,000 to bring a distribution center for auto parts retailer O’Reilly Auto Parts to Horn Lake in Desoto County in north Mississippi.

According to Mississippi Development Authority spokesperson Tammy Craft, the agency will provide a $250,000 grant for workforce training and a $50,000 grant for equipment installation.

The company will refit a 580,000-square foot warehouse purchased in February at the DeSoto 55 Logistics Center and will create 380 job. Horn Lake will also provide property tax exemptions. 

O’Reilly Auto Parts is moving its distribution center, one of the 27 it has nationally, from Little Rock, Arkansas to Horn Lake. Missouri-based O’Reilly Auto Parts has 5,000 stores in 47 states and will convert the former Little Rock distribution center into what it callsa super hub store.

In a news release, MDA executive director Glenn McCullough Jr. said that Mississippi’s location in the center of the Southeast provides strategic advantages for the company.

Gov. Phil Bryant said the announcement marks 1,300 state-assisted jobs that have been created via various projects in Desoto County. 

These projects include:

  • Medline Industries, which will bring 450 jobs to Southaven in DeSoto County and will receive $3.8 million from state taxpayers to build a medical supply distribution center.
  • German agricultural equipment company Krone, which moved its headquarters and 45 jobs across the state line from Memphis to Olive Branch, will receive $7.3 million in property and inventory tax breaks in addition to a $250,000 equipment relocation grant. The company could also receive some income tax rebates that could add up to $675,000 annually over the next decade.

From 2012 to 2017, taxpayers have spent $678 million in just MDA grants alone from 2012 to 2017.

Select incentives for a few may generate headlines or photo-ops, but it does not generate sustained economic growth. 

Economic development policy really means the state picking the winners and losers by employing direct subsidies and tax breaks to attract or promote specific businesses or industries. An authentic effort to grow our economy would not focus on giving targeted companies the assistance and resources without providing those to all companies and industries. 

It is not fair to the current companies in Mississippi, who built their businesses without government help, to find themselves competing with companies subsidized by taxpayers. For too long, Mississippi has followed a policy that supposes “economic development” can be a meaningful driver of economic well-being in the state. It cannot. That policy is a losing one.

The evidence produced from analysis points convincingly to the conclusion that these targeted incentives do not produce long-term benefits in excess of their costs. In many cases, the cost-per-job is extraordinarily high. While some high-profile companies and their political allies may be better off, non-beneficiary companies may lose workers or experience wage increases, or both, and the state’s economic activity as a whole slows.

When political favor seeking is emphasized like this, it thwarts the private sector and tips the scales in favor of those companies and individuals with access to political relationships. It sends a message to the private sector that it should not focus on consumer-oriented actions, like product/service innovation or marketing, and focus resources instead on lobbying, legal representation, and elections. That’s not a recipe for sustained economic growth.

And we should also acknowledge the opportunity costs of corporate welfare. By eliminating corporate welfare, Mississippi, and every state in the nation with income taxes, could reduce their personal and corporate income taxes for everyone. Or, the money that is sent to select industries could instead be used for infrastructure, healthcare, education, law enforcement, or other basic functions of government. 

Rather than increase the hand of government in our economy, we should trust the “invisible hand” of the marketplace and the proven incentive of profit and loss for the allocation of resources.