Last weekend’s column criticized three economic development deals. By Tuesday, the city cancelled the project that so enraged Muncie residents. This was good news, of course, but the project was bad economic development policy from the very beginning. The Muncie Redevelopment Commission should never have brought this plan to city officials. There is a lesson here for every Indiana community. 

At first blush, the deal to bring a recycling firm to Muncie might seem a good idea. The city has several million feet of excess industrial property, including one behemoth factory site that used to house the Borg Warner plant. The plant would employ 90 or so workers and recycle metallic materials into usable products. Like most early 20th century industrial sites, the Borg Warner site is not usable for most activities. This might seem to be a good place for both tax incentives and a recycling plant. 

Unfortunately, it never was a good idea. Fortunately, public outrage stopped the project. This happened following revelations that the company submitted permits to release stunning levels of mercury and lead into the air. There is much community outrage at the company, Waelz Sustainable Products, but I am convinced that the Muncie Redevelopment Commission was aware of this permit. Few successful companies would be naïve enough to hide this sort of information. The Muncie Redevelopment Commission has demonstrated few limits on naiveté. I am sure it is just sloppy recordkeeping, but all of this could be cleared up if the MRC can locate the missing economic development agreement made earlier this year. 

The proposal never should have made it to city council because the project was always the wrong type of project for Muncie. Many communities make this mistake, so let me recount why this was bad and what made it so. 

To begin, I want to reiterate, I’m a free market economist and welcome employers and jobs into any community. I think communities really only need to ask two things of companies. First, are you damaging health or property values through pollution or some other disamenity, and second, are you going to pay your own way? The answers to both questions were always wrong for this community and any economic developer with a lick of common sense would have known that. 

The project was always going to be a disamenity. Even if the factory didn’t emit toxins, a new factory within site and smell of Muncie would simply reduce the attractiveness of a struggling city. Manufacturing is a critical industry, but modern factories with emissions don’t belong near populated places. That much should’ve been clear to local economic developers and members of the Muncie Redevelopment Commission. 

The 90 new jobs were to pay $45,000 each, which sounds great, but is about 20 percent lower than this industry averages across the state. No doubt the MRC knew that when they proposed more than $15 million of tax incentives, and asked the state for a further $4 million. In this deal, the MRC asked taxpayers to pony up more than $170,000 per job for an employer that operates in 45 states and makes hundreds of millions of dollars in revenue each year. I am frankly challenged to describe accurately this sort of rationale in a family-friendly column. 

I should also note that many who spoke about this plant acknowledged a need for more jobs in Muncie. That, folks, is nonsense. Muncie currently has over 5,000 more jobs than it has workers. The city has to import 5,000 people each day who work, but choose not to live in Muncie. The problem isn’t housing—Muncie has 5,000 excess homes and high rental vacancies. The problem isn’t the weather, or taxes, or the absence of mountains or seashore. Muncie cannot attract people because the quality of public services is dismal. The schools are in receivership, while fewer than a third of kids pass their standardized tests. Muncie’s streets are cratered, public buildings are in disrepair and the Redevelopment Commission is unaware of all this as they mindlessly divert more tax dollars to economic development schemes. 

I’d like to say this was an uncommon problem in Indiana; it is not, though Muncie is surely a negative outlier. When asked whether or not the public outrage surrounding this deal would hurt Muncie’s economic development prospects, one city official said that it would. She is wholly mistaken. The absolute best thing for this community, and for many others around the state, is to stop doing stupid economic development deals. 

Far too much public spending on economic development is done with no meaningful analysis. In far too many places, economic development is simply the process of closing whatever prospect comes to town. It is all tactics and no strategy, and everyone needs to ask more of their elected officials and economic development teams. It’s time to study that great strategist Sun Tzu, who said that tactics without strategy is nothing but the noise before defeat.