One day last week, USA Today screamed a headline about cities and states providing inducements (reduced tax rates and so forth) to businesses that locate in their area. There is apparently widespread "buyer's remorse" that these businesses are not worth the offset in taxes given them. Those complaining do not understand economics, for if all quit this practice save one governing district anywhere in the country, guess where everything will be built? In that one area that does provide inducements. I do agree with one aspect of the argument, however: it is fully fair and right to go back at a specified time in the future and audit the recipients of such largess to determine if they truly created all the jobs they said they would. And, along with that, there ought to be contractually specified consequences if they did not. The issue is poor contractual parameters, not the existence of such inducements.

There is another way to provide business inducements without reducing future taxes: offer to take on all the costs of environmental control for any business that locates in your government's region. Businesses ought to jump on that in a heartbeat, for it not only reduces the costs of construction and operation, it puts the business and the local community on the same side of the pollution control issue. Given a choice, I would be surprised if any business would not take this advantage over the tax one.

I spent last week in the Midwest and came to the conclusion that every town and county is building or planning to build either an ethanol from corn plant or a soybean biodiesel plant. This is a bubble of historic proportions, rivaling the recycling bubble of the mid-1990's or the even the dot-com bubble. Many individuals and communities will be burned when the smoke clears from this one.