All investment is risky. What better way to avoid that risk than to use other people’s money? Federal, state, and local governments dispense gifts, grants, and loans to private companies, generously funded by taxpayers and usually with vague promises of economic development in return. While politicians say they don’t like to pick winners and losers, even the “winners” sometimes turn out to be losers for taxpayers.

General Motors I.T.
Innovation Center
Chandler, Arizona
General Motors announced in 2013 that it had picked Chandler for the site of its fourth Information Technology Innovation Center, an internal software development facility. The company would invest $21 million and create 1,000 jobs, and in return Chandler promised over $1 million in economic incentives between 2015 and 2017. In August 2023, G.M. announced that it would close the facility, laying off 940 out of 1,029 workers by the end of October. Chandler’s development director told local news that the announcement “came as a complete surprise.”

Lordstown Motors
Lordstown, Ohio
Amid the financial crisis in 2009, General Motors (G.M.) received $60 million in tax breaks to expand its Lordstown plant. All the company had to do was keep the plant open through at least 2039; instead, G.M. closed the plant in 2019. Rather than claw back the full amount, the Ohio government settled for a $20 million repayment. G.M. then sold the factory to upstart electric vehicle–maker Lordstown Motors, which received another $24.5 million in grants and tax credits. In June 2023, after delivering fewer than 40 vehicles to customers, Lordstown Motors filed for bankruptcy.