The Indiana Economic Development Corp. audit is the latest example of the truly first-rate effort of the Braun administration to clean up a festering mess. There’s a lot more work ahead, but the recently released audit report lays out a series of unacceptable failures by the past board and CEO.

The IEDC used to be lean, focused and engaged in a narrowly defined mission, which it executed effectively. But during the Holcomb administration, IEDC changed leadership and produced several policy failures.

The IEDC audit report detailed some, but by no means all, of these failures. The audit findings include blatant violations of public trust. It is sobering to consider that a broader investigative scope could well have resulted in indictments.

Legislative investigation will tell us much more about who, when and what went wrong. A bipartisan effort should strengthen the governor’s ability to reform the IEDC.

But the IEDC failures are symptoms of a deeper problem in our approach to economic development. If we don’t fix that underlying problem, corruption and misuse of funds will return again and again.

Economic development policy should not be about an elite cadre of business leaders picking winners and losers. Indeed, if the audit tells us anything, it is that the men and women on the previous IEDC board and leadership were not capable of meeting the most basic business processes and ethical rules. The notion that these same people could wisely choose the right mix of companies or industries to do business in our state is laughable.

The most troubling revelation from the audit report is donations to the IEDC Foundation that were almost immediately followed by either IEDC funds or large tax credits. This paints a very clear picture of an organization intensely concerned with self-dealing, not economic growth in Indiana.

This cycle of donations followed by tax breaks or direct IEDC spending cost the state some $168 million, or about $60 per family. Over the three years of the audit, the IEDC spent some $1.4 billion on economic development, or roughly $35,000 per job created in the state over that period. But, this is only a drop in the bucket.

Local governments spend far more to match IEDC projects. All told, Hoosier taxpayers probably spent $70,000 in economic development for every net job created in the state. The bulk of this spending has been on attracting manufacturing jobs, but Indiana has 7,000 fewer factory jobs today than when former Gov. Eric Holcomb took office. It would not require much introspection to consider this effort a failure.

With Holcomb’s administration, the state’s economic development policy shifted away from the Daniels/Pence model of prudent, low-cost business concierge services. From 2005 until 2017, Indiana didn’t really focus on picking winners and losers. Instead, the focus was on making a state where any business could thrive.

The Holcomb model was radically different. We made hugely expensive pitches for the Amazon headquarters and crafted a proposal for the ill-fated Foxconn development. We are lucky to have dodged both. We were especially lucky not to have been selected for the Foxconn deal, which was always a scam, costing Wisconsin taxpayers $4 billion and then-Gov. Scott Walker his political future.

Then came the LEAP District.

Lebanon, Indiana, is a good place to do business. It is a very pleasant community near both the large population center of Indy and the research powerhouse of Purdue. With the promise of a renaissance in semiconductor manufacturing, it has nearly all of the attributes that would make it ideal for a cluster of semiconductor-related firms.

Unfortunately, the area doesn’t have the required water resources that industry needs. If it did, there is no shortage of private-sector developers that would see it as a wonderful opportunity to make a profit. The lack of interested developers is evidence of a problem.

Without apparently doing due diligence, the IEDC spent almost $1 billion dollars acquiring land on the LEAP District properties, only to discover it’d need $2 billion or $3 billion more to pipe water from neighboring communities.

One might be tempted to laugh and claim that a private business owner would never make such a mistake, but the head of IEDC is a well-known private developer who took only $1 per year for his job, and the IEDC board was wholly comprised of men and women who claimed to be successful business leaders.

It’s common to tell jokes about the judgment of college professors, and I sure wouldn’t make the claim that a random dozen humanities professors would have done a better job than this hand-picked team of business experts. But, I am certain they wouldn’t have done any worse. There is a lesson there.

Indiana now has among the lowest business taxes in the country — a policy decision that is likely to endanger much of the spending that attracts people to our cities and towns. This would be an ideal time to entirely do away with tax incentives.

Local governments can no longer afford to abate business taxes or undertake large spending efforts for new businesses. At the same time, it is clear that state government — or the IEDC, at least — cannot manage these programs without running afoul of basic ethical standards.

Tax incentives are among the most studied public finance tools in the world. The most optimistic assessment of their value is that in a really high tax environment, about three-quarters of businesses receiving abatements would’ve relocated to their new site and made similar investments anyway.

The more pessimistic view is far worse. Much of the business incentives are used for labor-saving technologies that eliminate jobs. You see, during the Holcomb administration, taxpayers spent more than $6 billion on direct payments and tax incentives to Hoosier factories. At the same time, Hoosier factory production peaked to its all-time, inflation adjusted high.

Those taxpayer dollars simply cut the cost of buying robotics and other automation-killing jobs. It is time to think through this whole enterprise from top to bottom.