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Tax breaks for companies hurt the citizens

A recent report by The St. Petersburg Times highlights the problems that occur when government starts subsidizing.

In a July 5 article, the Times reported that taxpayers, for more than 30 years, have been subsidizing Motorola Inc. through tax breaks, contracts and other incentives. The reasoning has been that Motorola would bring economic growth and more good quality jobs to Florida. The results: mixed to say the best.

Although jobs were created, many have also been lost. According to the story, the company has “slashed its state work force from a high of 6,500 in 1995 to 3,000.” The story also reported that other results have included suburban sprawl, congested roads and more children for crowded schools.

Such results make up the long list of unintended consequences that often come from government redistribution programs that are aimed at bettering things.

Redistribution, however good its ends may be, involves means which involve taking from one person and giving to another. In this case, and in the U.S. Supreme Court’s recent ruling on eminent domain, the end is “economic development;” in other cases it is ideals like “equality” or “social justice.” But in all cases the means used to achieve the end involves forcibly taking money from one person and giving it to another.

Besides the problem of redistribution is the problem of market forces.

The Times story said Greg LeRoy, director of Good Jobs First, a group that tracks incentive deals, claims that “jobs come and go because of the economy and the market, not because of incentives.” He was quoted saying, “States perpetuate a fiction that incentives create jobs. But they often subsidize companies for doing what they would have done anyway.”

Artificially playing around with the market and the factors contributing to which businesses succeed or fail often leads nowhere. Economic incentives and favoritism by government toward a business, while claiming to support competition, only decrease the type of competition that leads to the lower prices and better quality service that consumers desire. Such manipulation only creates inequality between the businesses favored by government and those that are not.

Central to both the problems of redistribution and market manipulation that occur in such policies that are aimed at goals like economic development, equality or social justice is the idea that government, through technocrats, can manipulate naturally-occurring human tendencies and behaviors to achieve a positive change. History is replete with examples to the contrary of how such tampering can lead to less than desirable results.

The Soviet Union, so often an example of bad government action, is a prime example in this case. Seeking to create equality and social justice, the communist state’s big-government meddling in the lives of its citizens and the economy only led to more poverty. Their meddling did achieve a sense of equality though; just about everyone (except for the technocrats who were part of the power structure) was equal in their share of the misery that resulted.

In this country, welfare programs like Aid to Families with Dependent Children, aimed at relieving poverty, often had the reverse effect, encouraging the very behaviors and attitudes that led people to poverty in the first place.

The Motorola incident is just a further example of government once again tampering with things and making them worse.

The Times reported that an analysis done by the paper showed that the bill to the state government for economic development initiatives, exemplified in the longstanding relationship with Motorola, could reach $956 million for the fiscal year starting this month.

Despite the negative consequences of Motorola’s relationship with the state government, Scott Openshaw, of the governor’s Office of Tourism, Trade and Economic Development, told The Times, “Without question, these incentives (to Motorola) have been a good investment for the state.”

Such is the attitude of many government technocrats and politicians who, with their belief that government can actually improve things, fail to see the downside to their meddling. Whether attempting to achieve economic development and prosperity through subsidizing big businesses or low-income individuals, government officials never seem to get the message that their efforts often leave the citizenry with more problems than it had before the government meddling began.

Adam Fowler is a USF