Government Cheese

Posted by on Dec 06 2010 | Citizens' Budget, Economics, Economy, Government Largess, PPC, Property Rights

Not only will any economist worth their salt advise against it, our state constitution prohibits it: corporate welfare. It truly is the crown jewel of state granted political favors. It accomplishes two distinct ends simultaneously. First is the obvious direct payment (or tax break) to the private firm receiving the welfare. They enjoy the subsidy and the politicians enjoy the loyalty and the scratch on their future backs. Secondly, the voters mistakenly believe that the government just created something out of nothing. All of the sudden, a private firm offering new jobs shows up in town that wasn’t there the day before. Hooray! The government just made everyone better off right?

Wrong.

The truth is that corporate welfare is one of many exercises in the “broken window fallacy.” By only focusing on the seen (new jobs), the unseen lurks in the background, casting a giant shadow of costs (jobs unrealized, wealth stolen and transferred, diminished productivity, diminished standard of living). We hope that our Corporate Welfare section in our Citizens’ Budget shines a light on that nasty and costly shadow.

Your job, if you choose to accept it, is to read the Corporate Welfare section of our Citizens’ Budget, then apply the knowledge you learned the next time you read the newspaper or watch the news. Words that you used to accept at face value suddenly have new meaning: “incentive,” “stimulus,” “financial package,” “public-private partnership,” and so on. These terms are largely euphemisms for corporate welfare. They are just ways to transfer wealth from one part of the state to another – from one person to another. No new wealth is created. Indeed, the act of transferring the wealth dries some of it up. It’s like grating cheese – you’re always going to lose some of your cheese stuck in the holes.

We want our cheese, state legislators. All of it.

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