Corporate America has perverted economic development, using "job blackmail" (the threat of relocation), dubious "business climate" studies and secretive site location consultants to win subsidies from states and cities that often exceed $100,000 per job. The result: corporate tax rates have been slashed, shifting a higher tax burden onto working families. But the special favors often come with few strings attached, so corporations remain free to lay workers off, run away or outsource. Less tax revenue also means crowded schools, crumbling infrastructure, and poorer public services. And special tax breaks for big-box retailers like Wal-Mart fuel suburban sprawl, cannibalizing sales from small merchants and even killing regional malls. Meanwhile, America has neglected the two things that are proven winners in economic development: skills and infrastructure. The U.S. faces a looming skilled-labor crisis due to the baby boom generation’s approaching mass retirement; it...

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