Question

You are special assistant to the governor of a southeastern U.S. state in which unemployment (especially in rural areas) is well above the national average. After nearly three years in office and elected on a pledge to create jobs, the governor is concerned. Because he respects your moral stance on big issues, the governor is seeking your insight. An Asian automobile maker has just told the governor that your state is on its short list of potential sites for a new manufacturing facility. The facility is expected to employ about 1,500 people, with plenty of spillover effects for the wider economy. The governor informs you that the Asian automaker expects significant incentives and concessions. The governor would like to offer some $300 million in tax breaks and subsidies in an effort to bring the new plant to the state.

1. a. What plan of action do you advise the governor to take?

b. Would the outlay be appropriate use of taxpayer money? Explain.

c.Would you feel comfortable defending your advice if it were to become public? Explain.

Answer 1

1. a) I would advise the governor to go ahead with the manufacturing facility with the Asian automaker. Creating 1500 jobs and other spillover effects will be good for the general population and its benefits will have long-term effects for the local economy.

b) Yes, I believe the outlay would be an appropriate use of taxpayer money. ultimately, the subsidies ad tax breaks will benefit society by creating employment in the region and stabilizing the local economy. The effects will be positive and will be long-lasting.

c) Yes, I would be comfortable in defending my advice as I didn't have any selfish ulterior motives in my decision and it was taken for the combined benefit of the society. I can explain to the public what will be the benefits of such a plan and how everyone will be getting something out it due to its spillover effects.