Apropos the previous post, there are some areas in which we are the victims of a sort of perverse creeping loser socialism. It’s a national disgrace, but rarely mentioned. One of those rare mentions occurred today. The New York Times is now running a multipart series about the fiscal impact of tax “incentives” that are being doled out by the billions to corporations that routinely play one part of the country; one part of a state; or one community against another. This is a peculiarly American form of socialism. The state invests in these corporations, but gets nothing but empty, non-binding promises in return. As the Times has documented, there is very often no demonstrable return. It is a race to the bottom, the futility of which is captured perfectly in this quote from a man whose job it is to run in the race:
Soon after Kansas recruited AMC Entertainment with a $36 million award last year, the state cut its education budget by $104 million. AMC was moving only a few miles, across the border from Missouri. Workers saw little change other than in commuting times and office décor. A few months later, Missouri lured Applebee’s headquarters from Kansas.
“I just shake my head every time it happens, it just gives me a sick feeling in the pit of my stomach,” said Sean O’Byrne, the vice president of the Downtown Council of Kansas City. “It sounds like I’m talking myself out of a job, but there ought to be a law against what I’m doing.”
(via NYTimes.com)
Indeed, there should.
I’ve written about this subject before, having come up against it a couple of times when I served briefly on the Groton Town Council. That experience gave a special salience to this quote:
Even big retailers and hotels, whose business depends on being in specific locations, bargain for incentives as if they can move anywhere. The same can be said for many movie productions, which almost never come to town without local subsidies.
(via NYTimes.com)
Mystic, for those unfamiliar, is merely a placename, and is partly in Groton and partly in Stonington. The “Mystic” Marriot is not in Mystic, but close enough. I don’t know if we are still waiting for the magic year when their tax break runs out, but if we’ve arrived, it’s only recently. We couldn’t have kept them out of Groton with a team of lawyers working overtime. Yet we paid them to come. I’ve also mentioned the even more egregious example of our fair town incentivizing a hotel that was already built, because it wouldn’t be fair not to give a tax break to a developer who forgot to ask beforehand. But hey, think of all those high wage jobs hotels create. Yes, think of them. What is the ability to fantasize for?
The Times article demonstrates pretty convincingly that Groton is no outlier; that what we may have lost by extreme foolishness we gain by not having had the opportunity to pass out truly huge bucks, as have some towns and states. The returns cannot be demonstrated, but the impact on the country can. The same states and towns that give out corporate welfare are cutting spending on schools and other needed services. We are throwing away our future at the behest of corporate shakedown artists and con men.
The Times isn’t finished, but at least in today’s article, there was no attempt to suggest a solution to the problem. That solution is clearly a federal one. The situation is akin to the tragedy of the commons; everyone knows these breaks make no sense, but the players perceive, though the perception is often erroneous, that it is in their self interests to play as long as everyone else does. Even our present Supreme Court would likely agree that these tax breaks have an impact on interstate commerce, though given the gang of five’s enthusiasm for corporations, one can never truly know.
In any event, the solution is quite simple. A federal ban would do the trick, and would probably be welcome by most states and cities. However, this is a form of socialism with which our corporate friendly Congress has no problem. It scarcely needs saying that if there is a giant problem in this country the problem normally goes undiscussed and the obvious solution goes unconsidered. Look for this Times series, which should set off alarms in Washington, to cause scarcely a ripple.
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