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Re: Govs. Perry and Sanford
Joseph Lawler notes as one of today's "Must Reads" that in a Wall Street Journal piece, Republican Govs. Mark Sanford (S.C.) and Rick Perry (Texas) are "putting their money where their mouth is." Unfortunately in some ways they do not put their actions where their mouths are, primarily when it comes to taxpayer subsidies for individual businesses. The two state executives co-write:
The bailout mentality threatens Americans' sense of personal responsibility.
In a free-market system, competition and one's own personal stake motivate people to do their best. In this process, the winners create wealth, jobs and new investment, while others go back to the drawing board better prepared to try again.
To an unprecedented degree, government is currently picking winners and losers in the private marketplace, and throwing good money after bad. A prudent investor takes money from low-yield investments and puts them in those that yield better returns. Recent government intervention is doing the opposite -- taking capital generated from productive activities and throwing it at enterprises that in many cases need to reorganize their business model.
Too bad that Govs. Sanford and Perry fail to follow their own advice, as their states have doled out millions (maybe billions) of dollars-worth of tax breaks and incentives to specific companies, ostensibly to attract "investment" to their states. South Carolina is very proud that it attracted BMW to the state in the early 1990s, and still periodically subsidizes plant expansions -- even as recently as this year. The Palmetto State (as do just about all states) regularly announces new plant expansions, relocations of businesses, new job creation, etc., many of which politicians take credit for because of the targeted incentive programs. Almost none are as big as BMW but many smaller companies get tax breaks and credits that their competitors are often not entitled to. Big business has figured out how to maximize this scam to their benefit, as I reported a few years ago.
So, good times or bad times, whether it's a "bailout" or an "incentive," government is still picking the winners and losers. Govs. Sanford and Perry ought not to pretend like they are above it all.
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Eric| 12.2.08 @ 5:06PM
Paul,
I am not sure it is fair to tie Sanford in with an expansion that happened in 2002 when he did not become a governor until 2003. On top of that, the second article has no mention of tax benefits given to BMW for their expansion plans this year. I would expect better journalism to take this article seriously, otherwise I question the authenticity of the claims.
RAB| 12.3.08 @ 9:00AM
It seems Mr. Chesser can't tell the difference between rewarding bad business practices with a federal bail-out i.e. pouring more money down the drain, and the initative of tax abatements and incentives of creating new jobs, and new expanded tax revenues for the states. And that's the problem with the liberals(Democrats)......they don't know the difference!
Paul| 12.3.08 @ 10:01AM
Eric, you are right in that those details were not included and perhaps BMW is not the best example for the purposes of my critique of Sanford. Unlike my home state of North Carolina where Gov. Mike Easley routinely identifies the amount of government breaks handed out in incentives deals, Gov. Sanford and the South Carolina Department of Commerce are not transparent about those details. But the fact remains that SC and Gov. Sanford, as does just about every state, engages in these practices and is in the business of "picking winners and losers." You can see it in the long list of incentives programs at the SC Commerce Web site.
Another example that might be better illustrative, in the case of SC: the state just lured Starbucks last year to set up a coffee roasting plant in the state. Having watched the company's performance for at least the past year and looking at the revenue model of $4 lattes in our current economic situation, would you say that is a good (or appropriate) bet for government to make with taxpayers' money? And why should Starbucks gain such a benefit when undoubtedly thousands of their competitors in the coffee shop business do not?
Why should government even be involved in "rewarding business practices" period, RAB? Tax breaks/rebates, infrastructure decisions, and other subsidies ought to be available on an equal basis and not based on the popularity or favor they gain from politicians and bureaucrats.
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