On Tue, 23 Jan 1996, Steve Cooke wrote:
> Dear Chuck,
>
> 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.
>
>