The Next Big Handout: An “Aerotropolis” near you?

posted at 10:33 am on May 19, 2011 by Patrick Ishmael

The prospect of “Big Idea” economic development makes politicians do strange, contradictory things.

On the stump, candidates rail against corporate giveaways and crony capitalism. In town halls they opine about “backroom deals,” preferential treatment and earmarks. But when it comes to a whole host of issues — sports teams, convention centers, hotels, and many other developments — too many politicians find their inner Nancy Pelosi and — Eureka! — discover that this latest project they’ve stumbled upon is about one thing, and one thing only: “Jobs, jobs, jobs, jobs.”

So what’s the latest and greatest form of state-supported “economic development”? Introducing the Aerotropolis, the theoretical airport-centered city of the future.

The idea is that decades from now, the animating appendage to the most successful cities will be massive international transit hubs combining air, rail and wheels that can get product from manufacturers in, say, China to buyers around the United States. It requires massive inventories of warehouses around the airport to store the product, massive improvements in the airport itself to handle the air carriers, and predictably, massive, massive public subsidies, at least if you’re going to build the thing from scratch on the backs of taxpayers.

And as you’d imagine, the promises made to hawk a project like this aren’t a far cry from the days of travelling salesmen and their talismanic tonics. Need your cattle flown to China overnight? Aerotropolis. Want your city to “seize the opportunity” and act on this “vision” before it “passes us by“? Aerotropolis. Want your hair darkened, your teeth whitened, your wife to love you and your children to praise you in song?

Point being, there’s no shortage of promises made for a project like this, nor does there seem to be a shortage of willing elected officials prepared to throw money after those sweet, sweet nothings whispered in the name of government-created “markets.” This session the Missouri legislature took up an Aerotropolis bill that would have given millions in tax breaks to the private sector, primarily to warehouse developers in Saint Louis. But for the fact that the chambers ran out of time on a compromise, a bill with a reduced price tag would have been signed into law, and still may be; a coalition of both Democrats and Republicans are lobbying hard to bring the legislature back into a special session and pass the bill once and for all.

The problem for Saint Louis and other cities is that the marketplace for freight has been making its decisions about transnational hubs for years, long before the word “Aerotropolis” was even imagined.

• To Saint Louis’s north, Chicago and Detroit are both well-into the international passenger and shipping game.
• To Saint Louis’s east, Louisville hubs for super-carrier UPS.
• And only four hours to Saint Louis’s south, Memphis — the mother of all Aerotropoli — hosts mega freighter and overnighter FedEx. And that’s to say nothing of Milwaukee, which is also looking to create yet another “Aerotropolis” of its own. Or DFW. Or ATL. And others.

Indeed, Saint Louis is only the latest proposed entrant into the “Aerotropolis” game in a region rife with competitiors. Which, really, is the problem. Subsidizing projects whose market-crystallizing stages passed years and sometimes decades before is not a recipe for sustainable economic growth, but it is absolutely the M.O. of typical, undisciplined Big Idea public spending, even here in the Show-Me State.

What makes the situation in Missouri particularly strange and disheartening, though, is that substantial conservative (and arguably tea party) majorities exist in both legislative chambers, and yet… nearly $400 million of special tax breaks is still on the table here for the project, a high stakes experiment based on highly dubious economics. It’s hard to shake the disturbing reality that in even one of the most tea party-friendly states in the country, this sort of legislation could get “aye” votes from over 94% of a legislative chamber.

Which is, of course, to say nothing about the legislation itself, which ultimately has little to do with encouraging international trade and everything to do with awarding taxpayer money to the politically-connected business elite. My colleagues at the Show-Me Institute found that there were more than 18 million square feet in warehouse space available around the airport already, yet the Aerotropolis tax credits would go to subsidize construction of even more. That hurts business owners who took on the risk of building without the lure of Aerotropolis’ lucrative tax breaks.

But whether you’re talking about hurting existing local businesses through preferential tax credits or about chasing after yet another “economic development” comet, the list of reasons not to put public money behind a project like an Aerotropolis are wide and dispositive. We all want our cities to grow, but to do that, governments should be relying on the free market to make those decisions and not the wrong-headed and expensive big ideas of its politicians, however well-meaning those politicians may be.

Cross-posted at Show-Me Daily, The Show-Me Institute‘s daily blog.

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