March 21, 2005

Iowa lege set to battle over state aid to businesses

"The Iowa Values Fund", the measure which provides state aid to businesses who say they'll create jobs is set to be argued soon. This debate pits two different visions of how such aid should be applied against each other.

Republicans feel that loan guarantees and tax credits should be given to businesses who say that they'll create jobs. Dems feel that this amounts to straight business welfare, noting that in almost all cases, the jobs would have been created with or without large handouts from the state and feel that such aid should be limited to those companies which will add jobs that increase the state's average hourly wage.

This is an issue that deserves a close look, especially in light of the often stunning hypocrisy from business leaders on the right who rail against welfare for individuals and feel such programs should be cut to the bone or totally eliminated, and begrudge even the very low taxe rate (compared to other developed countries) they now enjoy, yet line up enthusiastically to accept millions of public tax dollars in what amounts to corporate welfare.

These same people are the first to extol with almost religious fervor their belief in the supremacy of a strict market economy, yet are indignant if they don't receive subsidies from the public. Apparently it's sink or swim when it comes to others, but they're more than willing to embrace an uneven playing field if it serves their purposes.

This problem has been around and won't go away anytime soon. The fact remains that large businesses and corporations have long ago realized that they have the ability to in essense blackmail local and state goverments into giving them large subsidies from public funds.
The most well-known of these situations is when a major league team owner demands a new stadium be built or he'll move the team to another town. This puts several cities in the unenviable position of bidding to see who can give away the most to this business owner, who is only too happy to reap the benefits.

Anyone see any possible solution for this dilema? Businesses have a perfect right to locate where they feel they can maximize their profits, but is there any way to prevent the wide-spread practice where businesses have come to expect government handouts everytime they have need of capital and using government and quasi-governmental agencies as bankers to give them unbelievably favorable terms which they'd never find in the open market?

3 Comments:

At 3/21/2005 1:24 PM, Blogger Fly-on-the-wall said...

Q: Anyone see any possible solution for this dilema?

A: The righteous indignation of an aroused populace.

Odds of that happening: 10,000 to 1.

 
At 3/21/2005 1:47 PM, Blogger The Inside Dope said...

Fly, I agree with one diference, I think your odds are too low.

To be aroused, people must first be informed. Odds of that happening in today's media climate: 10^9 to 1

And even when the information is reported, the fraction of people that A. read it, and B. give a damn, are very very very tiny.

As long as they can't connect it or imagine it to be connected to their tax bill, gays, guns, or "morality", people are docile sheep.

 
At 3/26/2005 7:55 AM, Anonymous Anonymous said...

Agee. What makes our latest Bush a successful politicial is that he connects his message to guns, gays and morality. Why increase taxes when he can just run up the deficit.

 

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