The multibillion-dollar duopoly game known as “economic development” is steadily shifting wealth from taxpayers to large corporations, state by state.
Democrat and Republican politicians bargain with “targeting investments” that purport to pick “winning” companies. Democrats, contrary to their rhetoric, are all in for this style of trickle-down economics — even when winners become losers.
Shrewd and rootless corporations spark bidding wars between states — reaping special tax breaks and handouts, which disadvantage local, usually smaller, companies that stay put.
Statist media outlets ballyhoo groundbreakings, ribbon cuttings, job announcements and all the attendant political grandstanding. But reporters rarely track corporatism’s downstream effects, which are mixed at best.
Study after study show this is a fool’s game for states and taxpayers. New research by George Mason University’s Mercatus Center reports:
- As of 2013, Walmart had received at least 260 special state benefits worth more than $1.2 billion. For every 100 new Walmart jobs, an average of 50 existing jobs disappear as other retailers are crowded out.
- Apple got $370 million in state tax breaks for setting up in North Carolina. With just 50 jobs created, that’s $7.4 million per job.
- New York granted aluminum giant Alcoa free electricity for more than 30 years (estimated value: $5.6 billion). In return, Alcoa pledged to make a $600 million investment and promised not to fire more than 165 workers. Subsequently, New York raised taxes multiple times on its citizens.
Why do these dubious deals persist? Why keep dispensing public funds to pad private profits in ways that would make big-spending John Maynard Keynes cringe?