Cap and Trade Makes Industrial Recruitment Even Less Logical

I've long been convinced that industrial recruitment, that is a strategy that tried to grow our economy by convincing a factory to locate in an industrial park, is a losing strategy, generally speaking. There just aren't too many Toyota's lining up to locate here, and the companies within the United States, well, they're already American based and why should we use our tax dollars to steal them from another community? It just makes more sense to try to grow the economy overall than to fight the tide pulling these ventures south and east, to China and Mexico.

Soon, there may be yet another reason why industrial recruitment is a losing strategy: Carbon Cap and Trade. This will be a federally imposed tax on the production of CO2 emissions. Factories utilize large amounts of electricity generated by coal and other fossil fuels. Frequently, they burn their own fuels to make energy. In a day not too far into the future, the costs of doing this will increase. When it does, the costs of manufacturing will go up. Here's how CNBC's Larry Kudlow describes it: "[The coming] cap-and-trade program will be a huge across-the-board tax increase on blue-collar workers, including unionized workers. Industrial production is plunging, but new carbon taxes will prevent production from ever recovering. While the country wants more fuel and power, cap-and-trade will deliver less."

At this point I think it will be impossible to stop the cap and trade steamroller. From my standpoint, as a practitioner of economic development, I have to take the laws as they are, not necessarily as I would want them- and I do have reservations about cap and trade. So too do communities.

This means local communities have one more reason to think beyond their industrial recruitment dogmas and realize that entrepreneurship and improving small business efficiency makes more sense than adding onto your inventory of assets for a future factory that just ain't coming.