YOU CAN AFFORD to regard the Reagan administration's plan for enterprise zones with profound detachment. It won't cost much, because it won't do much. As the administration cuts renewal and welfare funds, the cities bitterly charge it with a heartless disregard of their troubles. The administration feels a need to respond, and that's why it now puts forward--in principle, with details to come later--the enterprise zone.
The idea is to provide an irresistible array of federal tax exemptions and credits to employers who locate plants in the blighted urban neighborhoods that are to be the designated zones. One proposal, for example, is to offer the employer a tax credit of perhaps $1,500 a year for each worker. You may recall that the Carter administration provided a substantially larger amount in what it called the Targeted Jobs Tax Credit; last spring the Reagan administration denounced that credit, with justification, as ineffectual. The enterprise zone would also give the employer special tax credits for investment in plant and equipment, but the new tax law already has investors awash with special breaks and benefits.
Local governments have had a lot of experience over the years with tax breaks as bait for industrial development. On the whole, it has not been happy experience. Companies--especially strong companies capable of providing stable and well-paid jobs --do not generally give a high priority to tax inducements when they locate their plants. Typically the first consideration is the quality of the labor supply. The general character of the surroundings usually counts heavily.
Or, to put it the other way, there are usually substantial reasons why blighted neighborhoods stay blighted. They are expenive and unattractive places in which to try to carry on businesses. Cities have also had a lot of experience with renewal. It's possible, as hundreds of projects have demonstrated, but it's extremely expensive and, in all but the rarest of circumstances, requires direct federal subsidies. The tax breaks offered by the enterprise zones are very modest in comparison with the real costs of urban redevelopment.
The enterprise zone proposal is a get-well-soon card from the White House to run-down and hard- pressed cities. It assures them of much sympathy and concern. But there's no mention of anything more tangible.