An Unimpressive Win for the State of Ohio

Ohio government officials and legislators are unreasonably nearly giddy over this news from about a week ago:

COLUMBUS - Just a week after a major Wall Street credit-rating agency expressed serious doubts about the health of Ohio’s economy, Site Selection, a national economic magazine, ranked the state first in the nation when it comes to private investment in business expansion.

Legislative leaders were quick to jump on the ranking as validation that recent economic reforms have placed the state on the right track, even as the state’s jobs picture continues to trail the national average.

The Governor’s Cup was awarded for 2006, the last year of Gov. Bob Taft’s administration. It noted the state had 431 facilities that invested at least $1 million, created at least 50 new jobs, or added at least 20,000 square feet of new floor area.

I regret to report my belief that getting to Number 1 on the Site Selection list is NOT necessarily a good thing. It pales in importance relative to the state’s Business Tax Climate ranking (#49 in 2007), or when Tax Freedom Day takes place (Ohio’s was April 25 in 2006, which is the 16th worst, i.e., 34th best).

The Site Selection list should be seen as a list of which states are the best at giving tax, infrastructure, and other breaks to those new and existing companies that can best navigate the various bureaucracies. If a state is really good at helping such companies, it won’t necessarily translate to improving the statewide economy all that much. Being too good at it may actually hurt the state, as the rest of the tax burden has to be borne by individuals, families, and existing businesses not “playing the game.”

So being #1 with Site Selection may actually contribute to the poor rankings in the areas above that really count. The credit-rating agency mentioned in the first paragraph of the excerpt surely has not been fooled.