JobsOhio, Good Idea or Bad Idea?

Recently the Ohio Legislature sent a bill to Gov. John Kasich's desk that would privatize the Department of Development into the proposed JobsOhio.  The bill was passed because of Ohio's hemorrhaging of jobs that have left the state with a 9.6% unemployment rate.  Ohio has lost 613,000 private sector jobs since 2000, 2nd worse in the country.  The question is, is this JobsOhio bill the answer? Another question you may ask is why is someone from Michigan commenting on a proposal in Ohio?  The answer for both of these questions is that Ohio is only 2nd on that list because Michigan comes in first with 791,000 private sector job losses.

Currently in Michigan, we have the Michigan Economic Development Corporation (MEDC) that functions almost exactly like the proposed JobsOhio program.  The only problem is that the MEDC has been a colossal failure.  Since it's inception, Michigan has fallen from 16th to 41st among states in per capita GDP and is the only state with a negative GDP growth. Per capita personal income among the states has fallen from 16th to 34th and is now 11.2 percent below the national average, the lowest point it has been since the Great Depression.

One of the programs the MEDC oversaw was the Michigan Film Office, which gave subsidies to film makers in exchange for making movies in the state of Michigan.  This controversial and ultimately failed program had several flaws.  First, in order to pay for these subsidies, the government must rob Peter (the taxpayer) to pay Paul (Steven Spielberg).  Second, programs such as these lead to the problem of moral hazard, where tax credit recipients spend the credits unwisely and just end up asking for more and more money from the government without having to worry about their own losses since it isn't their money.  Lastly, programs such as the MEDC, the Michigan Film Office and JobsOhio redistributing tax revenues that costs taxpayers money (hmm... sounds kinda like redistributing wealth, huh). The officials who run these programs don't work for free. For example, Michigan Film Office Director Janet Lockwood alone makes more than $95,000 annually plus benefits, and members of the MEDC who work with the film program are well-compensated, too. One published report indicates that the Michigan Film Office also received $2 million for "marketing efforts." This is money taken first from Michigan employers who might otherwise use it to create jobs in the private sector.  There have also been several cases of fraud and abuse including one case that cost the state $9 million in taxpayer dollars. 

Instead of creating a quasi-government agency (even though the governor calls it private, it still gets taxpayer dollars) the governor needs to simply cut taxes, cut regulations and pass a Right-to-Work that would allow businesses to create jobs in their state without government bribing businesses from out of state to come in the state in exchange for tax credits.

UPDATE: Governor Kasich signs JobsOhio Bill
http://www.cleveland.com/open/index.ssf/2011/02/jobsohio_bill_clears_general_a.html