Brian4Liberty
05-29-2014, 01:20 PM
Cronyism only getting worse.
Multibillion-dollar “economic development” deals are steadily shifting wealth from taxpayers to large corporations, state by state, according to a new study.
Researchers from George Mason University’s Mercatus Center reveal this is a fool’s game for states and taxpayers. The study 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 even the biggest of big spenders cringe?
Lotta Moberg, co-author of the Mercatus report, says crony behavior pays off for politicians … literally.
“As cronyism grows, the benefits that policymakers get from crony relations become increasingly lucrative, which creates a problem of adverse incentives,” Moberg said.
“Even if policymakers understand that targeted benefits are not good for the economy, they have the incentive to keep providing them as they benefit from it personally.”
...
More:
http://blog.heritage.org/2014/05/28/cronyism-increasingly-lucrative-politicians-businesses-study-reveals/
Multibillion-dollar “economic development” deals are steadily shifting wealth from taxpayers to large corporations, state by state, according to a new study.
Researchers from George Mason University’s Mercatus Center reveal this is a fool’s game for states and taxpayers. The study 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 even the biggest of big spenders cringe?
Lotta Moberg, co-author of the Mercatus report, says crony behavior pays off for politicians … literally.
“As cronyism grows, the benefits that policymakers get from crony relations become increasingly lucrative, which creates a problem of adverse incentives,” Moberg said.
“Even if policymakers understand that targeted benefits are not good for the economy, they have the incentive to keep providing them as they benefit from it personally.”
...
More:
http://blog.heritage.org/2014/05/28/cronyism-increasingly-lucrative-politicians-businesses-study-reveals/