A public constantly played for suckers
A blistering editorial in Investor’s Business Daily (IBD) takes to task cities that bid for the Internet retailing giant Amazon’s second headquarters.
It notes that government “efforts to bribe businesses” with all manner of public subsidies “don’t do taxpayers, or state economies, any good.”
“A study by the Upjohn Institute for Employment Research found that states offered a total of $45 billion in various types of business incentives, but the incentive deals didn’t correlate with ‘current or past unemployment or income levels, or with future economic growth.’”
Or, more simply, put: “The deals themselves rarely live up to the hype, and typically cost a fortune for each job created.”
IBD also reminds that the “tax-incentive game is … hugely unfair to existing businesses,” noting, as one example, how Michigan spends almost as much in tax incentives as it brings in through corporate income taxes.
“That means that most businesses in the state are, in effect, subsidizing the lucky few,” the business newspaper says.
It all boils down to this fundamental premise that pols and supposed public policy “experts” refuse to accept:
“State governments would do their taxpayers and their economies much better if, instead of offering up special tax breaks for a select few big companies, they cut taxes across the board and created a climate that was welcoming to all business, big and small,” the IBD editorial reiterated.
That is, stopping this inane (if not insane) practice of, with great hubris, insisting they can pick winners but only perverting the marketplace, molesting taxpayer pockets and assaulting with impunity the basic tenets of economics.
Of course, that’s obviously too much to ask of such recidivist manipulators and interventionists. Witness a recent Post-Gazette story detailing another proposed Amazon subsidy that, likely for many, flew under the radar.
The newspaper recounts that in 2016, with Amazon pledging to expand its fulfillment and distribution operations at multiple new sites in Pennsylvania, the commonwealth pledged $22.25 million in taxpayer subsidies.
Amazon had promised 5,000 full-time jobs and investments of at least $150 million over three years.
But as the P-G’s Mark Belko reports, it was a year ago, “just before Amazon would set off an economic development arms race for a second headquarters that Pennsylvania officials have eagerly chased, the Seattle retailer quietly pulled out of an earlier deal to expand distribution space here.”
No taxpayer “incentives” – a combination of a grant, tax credits and employee training funding – ever were disbursed.
But it yet again raises the question why Amazon, an incredibly profitable concern – or any company, for that matter – should be given a leg up by stepping in taxpayer pockets.
Speaking of diving into the public’s pockets, it’s been a year since the Allegheny County Airport Authority cut an incredibly dubious deal to pay Qatar Airways a million dollars-plus to establish cargo service out of Pittsburgh International Airport.
So, where’s the report on first-year results?
At last report, the results had been hilariously bad. But there’s nothing hilarious about this deal – which, incredibly, incentivizes Qatar to fail.
There certainly hasn’t been much happy talk of late; certainly nothing like a year ago when this “deal” first was announced.
“It’s a game-changer for the region,” Airport Authority CEO Christina Cassotis told the media in September 2017.
“We’re definitely going to use it as a recruiting tool,” she also said. “This benefits the region in a big way.”
“This goes way beyond the airport,” she added 14 months ago.
Well, let’s see the full-year results. Let’s see if it was, as one consultant put it then, a “real coup” for Pittsburgh.
By the way, this same consultant is the same one who, also in September 2017, said the Qatar Airways deal “puts Pittsburgh on the map” and says “someone is pretty savvy in the way they do business (who) thinks this is a good place for international logistics operations.”
“Someone is voting with their feet and pocketbook to do this,” the same consultant said.
If, one supposes, it is savvy for a foreign airline to play Pittsburgh airport officials for suckers. And, indeed, Qatar officials did vote with a pocketbook to do this deal – the public’s.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (firstname.lastname@example.org).