Thursday, July 13, 2006

More: Justifying Corporate Welfare

I've been exchanging emails with an elected official regarding the Iowa Values Fund (which is back in the news today, July 13) and other gifts of public money to private business. He favors such programs (for the most part). This morning I wrote him along these lines:

I still can't wrap my head around an ideology and algorithm that would enable me to (a) come up with a rationale as to why tax money ever ought to be given to private individuals
for their own personal business and profit, and, if it is to be done (b) an algorithm or analysis for concluding which, among all requests, should be granted or denied.

I treat as a separate issue social programs for those who, for a variety of reasons, are without
basic human services. I'm not, now, arguing for or against such programs. It's just that they are created and evaluated more (though not exclusively) from a perspective of considerations relevant to religions, humanitarianism or the basics of a civilized society than economic analysis.

And I acknowledge that if one is ideologically committed to fascism (the blending of corporate and state power and economics) or socialism one would have less difficulty with the ideological side of this. I'm looking at it from the perspective of the capitalist, marketplace-driven, free private enterprise ideology/economy which I have always assumed most Republican/conservative/business-oriented public officials believe in.

The algorithm. How can one be enabled to say, "this particular grant was the result of a thorough prior analysis, and subsequent detailed monitoring, that demonstrate the public received a benefit well beyond its investment and one that, but for the grant, we can prove beyond any question would not have occurred," or "this other grant was the result of good-old-boy-ism, or campaign contributions, wasn't necessary (because the investment would have taken place anyway), was not thoroughly researched or monitored, and is going to cost the public much more than it will ever receive by way of benefits."

Even if those two problems [(a) and (b) in the second paragraph] could be solved, I don't see the formula for explaining the basic fairness (politically and economically) of giving public moneys to one business while denying it to that business's competitors. Basic fairness aside, doesn't this constitute the very kind of interference with market forces that a system of marketplace competition should want to avoid?

Putting aside basic fair and equal treatment of competitors within an industry, how do we justify not applying this philosophy of government involvement in the economy to everyone?

For example, what do we say to the high school graduate who offers, "If, for the next five or ten years, until I can get going economically, you will forgive my obligation to pay taxes, and provide a fully funded college education (so I won't have student loans to pay off), I will more than return the government's investment in me with the increased income, property, sales and various excise taxes I will pay over the course of my lifetime"? What is wrong with this student's argument (on the assumption the student can meet the challenges of (a) and (b) in the second paragraph)? To what extent might it be the result of the fact that high school students are notoriously miserly when it comes to making $10,000 campaign contributions to influential public officials?

As a footnote, while there may be analogous questions regarding the public funding of infrastructure that has a substantial economic benefit for business -- the "gift" of facilities that, but for the public expenditure the business would have to pay for-- they have the benefit of being (a) equally (more or less, but not always) available to all businesses, rather than a single competitor, and (b) public alike. Examples: community college (not to mention K-12) training of future employees, roads and bridges, water and sewer systems (and, in progressive communities, municipally owned electric power, broadband wireless Internet, or cable television), fire and police protection, etc. To which can be added recreational facilities and amenities that help attract business persons, professionals -- and tourists, for the motels and restaurants. I'd mention in this connection, parks, trails, the theater in the park, downtown concerts, etc.

On the other hand, having property tax payers foot the bill for cleaning up the vomit outside the bars on Sunday morning that is seemingly a necessary byproduct of the way the bars conduct their very profitable businesses is a more marginal matter. On the one hand, it can be thought of as a cost of doing business that they should pay for; on the other hand one can argue it's also of benefit to any member of the public walking around the downtown area on a Sunday morning.

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