Editor’s note: Prof. John Quinterno is the Visiting Professor of the Practice in the Sanford School of Public Policy at Duke University, and also the founder and principal of South by North Strategies Ltd., a research consultancy specializing in economic and social policy. The first section of this story introduces a column authored by Quinterno and lightly edited, for clarity, by WRAL TechWire.
RESEARCH TRIANGLE PARK – Tuesday’s announcement that automaker VinFast would locate a $4 billion facility in Chatham County is a big economic development “win” for the state of North Carolina, following a blockbuster 2021. But with approximately $1.25 billion in total economic incentives tied to the deal, will it be worth it?
Duke University Professor John Quinterno says it is really hard to answer that question, because there is still a lot that is unknown.
“Is this company going to get to the job total that they’re talking about,” asked Quinterno. “Maybe. But we are talking about a brand new company, or a very new company, with no locations in the United States, and they don’t have any cars available on the market, at least not here.”
Future of EVs is also uncertain
Plus, there’s still mixed perspectives on the future of electric vehicles. There’s not yet proof that there is a huge market for electric vehicles in the United States, said Quinterno. And even if there is a market, or a market emerges, there is uncertainty about whether vehicles will be affordable at a time where the automotive industry is still combatting a shortage in the global supply of semiconductor chips and issues in the nickel market.
Another unknown—whether there will be infrastructure in place, though there is a new $5 billion federal program.
“I would like to see this company successful,” said Quinterno. “But there is still uncertainty about whether this company will be able to achieve its goals.”
So are the tax incentives worth it? While the overall economic pie may become bigger, noted Quinterno, forgone tax revenue is money that could otherwise be invested into “our schools, our courts, our parks, our health and human services programs.”
When tax incentive packages are offered to firms, who would otherwise choose to locate in the geography anyway, the tax subsidy may not be allocated optimally, said Quinterno.
“For a society that prioritizes private-sector economic activity, we’ve become very comfortable with socializing some of the costs of the most lucrative companies and firms in the world,” said Quinterno. “In a way, we’ve become comfortable with socializing these firms costs, but allowing them to privatize the benefits.”