On Tuesday of this week New Jersey Policy Perspective (NJPP) released Mapping the Route to Dollars: AAA Mid-Atlantic's Four-State Tour (see their Inquirer op-ed ) a report which tells the story behind the departure of the headquarters of the auto club from Philadelphia.

The headquarters of AAA Mid-Atlantic (formerly the American Automobile Association) located in Philadelphia since 1901 moved in 2005 to Wilmington, Delaware taking with it more than 500 jobs. Although only 30 miles from Philadelphia AAA Mid-Atlantic maintained that a major reason for its move was Wilmington’s more central location in the region.

NJPP tells the rest of the story behind the move. AAA Mid-Atlantic went subsidy shopping eventually securing $8.1 million in state and local subsidies to move its headquarters from Pennsylvania to Delaware, a technology office from Pennsylvania to New Jersey and a call center from Maryland to Delaware.

AAA Mid-Atlantic was clearly the big winner, Philadelphia and Maryland were the big losers but what about New Jersey and Delaware? Each did gain jobs but only at a high cost to their taxpayers. And the more troubling question is whether AAA Mid-Atlantic’s move occurred because of the incentives? Or did they play economic development officials in the region against one another to extract a financial windfall for moves they were going to make anyway?

This story highlights the need for regional cooperation on economic development practice because all the taxpayers in the Mid-Atlantic region lose when their governments play the business subsidy game. In general economic development practice in Pennsylvania is in need of serious reform. What public dollars that we decide to spend need to be better targeted at public goods like transportation, education and training rather than delivered exclusively to individual firms. For a discussion of key reforms here is a link to Good Jobs First .

Mark Price in his day job is a Labor Economist at the Keystone Research Center (http://www.keystoneresearch.org) a research and policy development institute, which was created to broaden public discussion on strategies to achieve a more prosperous and equitable Pennsylvania economy. However the views expressed here are his alone.