I wonder if it is possible not to subsidize industries you do like
and to ignore or penalize industies you don't like. To me, this the
nature of politics - whose interests count when interests conflict.
Gov't is not neutral in these matters, nor can it be, in my view.
For example, if the powers that be in the community (w/ community
support) decide that they will provide incentives to small,
environmentally beneign, good paying, good corporate citizens type
companies, then what is to stop them? Alternatively, if they decide
to do nothing, gov't implicitly supports the status quo distribution
of rights and interests.
Ec theory? Not in my view. "subsidies" are just property rights
that come in two basic flavors, in-cash and in-kind. All businesses have the
government's support of their property rights through gov't's willingness to
provide and/or protect either or both types of "subsidies."
An example of an in-kind "subsidy" is the gov't's protection of business's
property rights, eg., patent or copyright protections. These are
in-kind contributions to business and are
every bit as valuable to them as in-cash assistance - even more
so when you consider how few people
question the use of in-kind contributions as a subsidy.
As for in-cash subsidies, our tax code is full of tax credits for
businesses. The ability of business to avoid paying taxes, is the
typical way the US helps to promote business through in-cash
contributions.
Therefore, communities are neither helpless in nor theory bound from
actively promoting the business and industry development they deem
to be in their community's best interest. It seems to me that
citizens buying into promoting the well being of businesses of their
community is similar to buying into the interests of the arts, education,
the environoment, local government decision making, etc.
This is our community and we get to decide. If we don't,
then someone else will decide for us.
My question is: Would Moscow really be better served by only
letting the financially robust companies settle in Moscow?
WalMart is finacially robust; First Step Research, less so. We can
let the "market" decide, i.e., the status quo distribution of
property rights and interests, or we can take responsibility for our
own future. The choice seems clear to me.
Steve Cooke
Greg Brown is expressing some of the same concerns I came away from
the last BP meeting with. As a researcher on community development,
this is NOT an issue of pro or anti-business to me, but one of public subsidy
of yet another sector of the economy.
The question I will be asking at the next BP meeting
is a simple one: If the demand for a business park is great enough to build
one, why isn't the private sector willing to step up and invest in
it? For example, like the Palouse Mall owners and many other small business
owners, the Bennetts are willing to finance buildings and other capital
development across the highway from the BP site, bear those costs, and profit
from their capital development investments and lease revenues -- so why not
a business park? On the other hand, why can't these high-tech, small businesses
provide for their own infrastructure and superstructure needs themselves?
It would appear to come down to a matter of assuming financial risk. Should the
taxpayers assume the risk that the private sector is now unwilling to take? This
raises other questions that Greg Burton might research: How successful
have other business parks in the region been -- in other words, how
big a risk is it? Aren't there business parks elsewhere funded by
the private sector -- if not, why not? Why can't the development go
into the industrial slum that qualifies Moscow for the proposed finance scheme?
As a fiscal conservative, I would want to know the real risks and
likely benefits of the park, and I would then want to be able to vote on
it, given that the costs and benefits of this industry subsidy would directly
affect me -- just as major infrastructure development bonds are debated and
voted on. To handle it otherwise -- say, the decisionmaking of some unelected
"nonprofit" (Won't a segment of local businesspeople profit??) council --
smacks of the very Soviet-style central planning and socialism (i.e.,
nonrepresentative, governmental intrusion into private enterprise) that
political and economic conservatives decry.
I will be asking the panel on Thursday to address these concerns.