Government Subsidies of Business Vehemently Criticized

A press release from one of Jim Tobin’s organization, Taxpayers United of America:

Gov. Pat Quinn, U.S. Sen. Durbin: Corporate Welfare Whores

Chicago – “Corporate welfare handouts are not only the antithesis of free markets, but the enduring legacy of state-provided subsidies are the numerous short-term unseen costs and long-term unintended negative consequences that develop from politicization,” said Jared Labell from Taxpayers United of America (TUA).

Politicians are uniquely skilled at giving away other people’s money – that is, the taxpayer’s money.

Your money.

If independent PACs decide Dick Durbin is worth taking on, the U.S. Senator might want to keep wearing these safety glasses.

If independent PACs decide Dick Durbin is worth taking on, the U.S. Senator might want to keep wearing these safety glasses.

As the much anticipated bread and circuses otherwise known as the November 4th election approaches, for the taxpayer’s of Illinois, it also means that bureaucrats like Gov. Pat Quinn and U.S. Sen. Dick Durbin are expropriating more taxpayers’ wealth on behalf of some of the most profitable businesses in the country, and to the detriment of everyone else.

“Targeted-benefit policies are damaging for a variety of reasons. Such policies encourage businesses to misallocate resources and incentivizes them to engage in what is referred to as rent-seeking behavior. In their attempt to obtain benefits by tipping the balance of competition through political means, rent-seeking businesses handicap competitors with the force of the state. Nothing yields more cronyism like financial connections between those that beg for corporate welfare and the bureaucrats and the political class who enable them.”

As the news broke earlier this week that Amazon.com, the largest U.S. e-commerce retailer, is planning to open its first facilities in Illinois, it didn’t take long for skeptical onlookers to wonder just how much of the bill they would be paying with their tax dollars and to what benefit.

Joe Cahill of Crain’s Chicago Business immediately scolded Gov. Quinn and U.S. Sen. Durbin for perpetuating the cronyism of state-subsidization, detailing multiple recent accounts of millions of taxpayer dollars being transferred to politically connected corporations, many of whom already had logistical reasons to be in, or remain in, Illinois. Mr. Cahill put it well when he said that, “Mr. Quinn spent taxpayer money to get something Illinois would in all likelihood have gotten anyway. I don’t know if it will get him re-elected. But I do know it’s bad policy.”

“Corporate welfare is absolutely bad policy,” said Labell, “as economists Christopher Coyne and Lotta Moberg explained in their working paper The Political Economy of State-Provided Targeted Benefits earlier this year for George Mason University’s Mercatus Center.

“They open with the observation that, “The governments of American states often attempt to incentivize businesses to locate within their borders by offering targeted benefits to particular industries and companies. These benefits come in many forms, including business tax credits for investments, property tax abatements, and reductions in the sales tax.”

The unforeseen costs of such government intervention is apparently lost upon politicians like Quinn and Durbin,” added Labell.

“A system of cronyism cannot be institutionalized instantaneously. People respond slowly to labor-market demand, and it may take many years for rent-seeking to become professionalized. Once it is in place, however, cronyism is hard to root out precisely because those involved in it have an incentive to perpetuate it,” Coyne and Moberg continued.

These practices are increasingly resembling those of other countries with historically corrupt systems. Coyne and Moberg conclude that, “The best we can do to prevent that from happening is to detect the policies in our political system that are contributing to this negative trend and end them.”

“Politicians like Quinn and Durbin propagate the demonization of the free market while they perpetually act in every manner possible to undermine it with their cronyism and corporate welfare handouts, said Labell. “The taxpayers of Illinois should reject these two political hacks, or ‘corporate welfare whores,’ and demand that the government stop intervening in the economy on behalf of politically well-connected corporations so that we can begin to have something even approaching a truly free market.”


Comments

Government Subsidies of Business Vehemently Criticized — 8 Comments

  1. Governor Walker of Wisconsin and other republican governors have given huge tax breaks to big busineeses like Koch Industries while slashing education and things for the middle class so it seems like both parties do this.

  2. Can’t remember ever hearing a Republican howling, about how business isn’t taxed enough.

    You know, like the non stop populist drivel Dems spew, for a vote.

    Think, Warren Buffets secretary is taxed at a hirer rate than he is.

    Rediculous, but legions of Dem.

    idiots believe it.

  3. Let’s parse Karma’s comment. “Governor Walker of Wisconsin and other republican governors have given huge tax breaks” is a true statement, cronism knows no party.

    “… to big busineeses like Koch Industries”: Perhaps big businesses *like* Koch Industries but not
    *to* Koch Industries because the Koch brothers are libertarians who hate rent-seeking.

    “… while slashing education and things for the middle class”: If only Republicans actually did this instead of talking about it our nation would be wealthier.

    “…so it seems like both parties do this.”:

    Yep, they sure do.

  4. I never have.

    When Chrysler came begging for, I think, a $20 million loan in the 1970’s, the Belvidere plant was in my five-county district.

    I made the deal better by having language inserted that would give ownership to the plant if Chrysler defaulted on the loan.

    But I didn’t vote for the bill.

  5. Karma, would you please provide specific references regarding your Walker Administration comments, and links to their sources. Thank you.

  6. Before you vote for anyone, check their voting record on grants, subsidies, and other forms of wealth redistribution.

    Why do so many Republicans support government grants, illegal aliens, business subsidies and other forms of wealth distribution?

    Simple: GREED!

    Yes.

    Illegal aliens are a major source of wealth redistribution.

    In 2012 $123,273,000,000 left our country in the form of remittances by immigrants and illegal aliens. http://www.pewsocialtrends.org/2014/02/20/remittance-map/

    While this means your local sales tax collections were zero for these dollars, guess who gained?

    The banks and companies which concentrate on sending out of the country.

    Average remittance cost to Latin America is %7.3.
    http://www.workingimmigrants.com/2013/02/remittances_from_the_united_st_1.html
    http://www.voxeu.org/article/what-explains-cost-remittances
    http://www.utsandiego.com/news/2013/dec/26/Quippi-Aleles-remittance-immigrants-shopping-card/
    Another source of wealth redistribution is the system of farm subsidies.

    In 2012, $8,567,603 was received by farmers in McHenry County. http://farm.ewg.org/progdetail.php?fips=17000&progcode=total&page=county&yr=2012&regionname=Illinois

    As long as we have both Democrats and Republicans supporting grants, subsidies and open borders, the shrinking of the Middle Class in the U.S.A. will continue unabated.

    The number of people who receive some form of OTHER government assistance (subsidized healthcare, daycare, food, utilities, school lunches, agricultural production, rent, etc. etc.) was at 48% in 2012! http://conservativesunited.com/shocking-48-percent-americans-now-receiving-government-assistance/

    http://www.washingtonpost.com/business/economy/poverty-was-flat-in-2011-percentage-without-health-insurance-fell/2012/09/12/0e04632c-fc29-11e1-8adc-499661afe377_story.html

  7. I have to question the judgment of a small-government supporter who calls Democrat candidates “whores” during an election cycle where the Democrats are trying to make the War on Women thing happen.

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