Oh, the hypocrisies of the socialist left, which argues that the free market is not self-sustaining even while it blasts any big business that has accepted help from government. The latest attack on Wal-Mart is an example.
In an item sure to get lots of play in the press, a group called Good Jobs First (predictably “progressive”) says that Wal-Mart has enjoyed $1 billion in government subsidies, as if this alone would discredit the company—which it would in the mind only of libertarian purists like us. But since when has the left been so moralizing about the need for all institutions in society to be self-supporting?
In any case, a close look at the study shows that the supposed subsidies are mostly about many forms of tax breaks, which are not subsidies at all but refraining-from-stealing policies. Also involved here are reduced land prices (why not consider this a form of privatization?) and infrastructure development (all for privatizing that but surely GJF disagrees). It turns out too that GJF is actually against such subsidies but only wants them used in conjunction with living-wage policies. In any case, the report is interesting to read for a look into local development schemes. The real cost is all the political capital Wal-Mart must expend in exchange for being tolerated.
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The hypocrisy’s on both sides, though. I’ve seen some alleged “libertarian purists” who lionize the corporate welfare whore of Bentonville (aka Wal-Mart) as some kind of Randian hero. For every state socialist who gets all moralistic about subsidies, there’s a “free marketer” whose idea of the “free market” is whatever big business happens to be doing at the moment.
Well, Wal-Mart is certainly no Randian hero. But they are caught in a paradox: If they don’t play the lobbying game and seek favors, their enemies (or competitors) will. Look what happened when Microsoft focused on their business rather than lobbying — a massive antitrust lawsuit that’s now eaten up billions in cash.
Microsoft didn’t focus on business, unless you consider planting logic bombs to literally crash the competition “business”. (e.g. the Win 3.1 beta that said DR DOS was not compatible – it was, except for the logic bomb as the Caldera lawsuit brought to light – then there’s Java which MS felt free to violate the license). If that is “fair”, lets see if the Opensource community or the programmers in Redmond or Bangalore can do a better job of literally crashing the competition.
Same thing with Walmart. Play Humpty-Dumpty semantics all you want, but a local shop usually can’t get a tax break, and has trouble having the pot-holes fixed on the front street. You would have a point if these “whatever they are if they aren’t subsidies” were available to any entrepenuer.
Corporatism is not Libertarianism, and the corruption of the corporations should be condemned, not lauded. And a key reason we have big corporations is because we have big government – it is easier for them to play together to destroy the free merket and other liberties for everyone else. The government would rather have 1 walmart than 10,000 local stores to regulate. And walmart doesn’t mind the regulation since there tend to be big economies of scale and it is expensive so the smaller stores can’t afford it.
The last thing that either Microsoft or Walmart want is a truly free market. They couldn’t compete.
The attack might be hypocritical (we want welfare for us, not Walmart) but the root of the problem is the desire for and provision of welfare in the first place.
tz’s post parallels my own. As a candidate for the State House in North Carolina, my research has shown increasing evidence that state government spends millions on luring corporations into depressed areas and losing millions because the corporations “grabbed the money and ran”. Yet small businesses in the state have accounted for an astounding 80 percent increase in new jobs as textiles and industry leave the state. What is the state government’s answer to that? Raise personal income tax to ever higher levels, which small unincorporated businesses pay, while increasing corporate welfare to large corporations under the guise that government is creating jobs. Government works best with corporations because corporations make control of the citizens easier, as well as control of taxation. Yet in spite of myself, I do like Wal-Mart for its basic treatment of employees, even if it does take advantage of subsidies.
Where I live, Northwest Arkansas, there’s a regional airport (actually a barely disguised cargo port) paid for with taxpayer money. The main impetus behind it was the so-called Northwest Arkansas Council, a shadow-government of local business leaders (Alice Walton chief among them) whose main purpose was to lobby for big infrastructure projects.
I have a hard time seeing corporate welfare queens as passive victims, reluctantly forced into lobbying the government only because “all the other kids do it.” The state, rather, functions as an executive committee of organized corporate interests who deliberately act through the state. Big business is no more a passive beneficiary of the interventionist state, than were the landlords of a thousand years ago. Like the landed aristocracy under feudalism, they ARE the state.
tz, I did not intend to endorse all of Microsoft’s business practices. I freely admit that I lack more than a superficial understanding of the software industry. My reference was to the government’s antitrust lawsuit, which was in fact based on political lobbying by Microsoft opponents, not any objective illegal acts the company may have committed. I concur with other comments posted above regarding the inherent evil of corporate welfare and corporate statism.
And on that subject, let me add another example: A few years ago, Oklahoma City officials (flush with federal cash they received as “compensation” for the bombing of the Murrah Building) decided to “redevelop” the city’s Bricktown Canal area. The centerpiece of the development was an outlet of the national Bass Pro Stores chain, a sporting goods retailer. City leaders said the store was needed to generate revenue, and thus Bass Pro was given a sweetheart lease on a city-built building. But what officials deliberately ignored was their own economic analysis, which said Bass Pro would merely shift sales from existing retailers in the city, rather then generating new revenue. And as a postscript, Bass Pro has since opened up additional stores within driving distance of Oklahoma City (something they promised the city they wouldn’t do when seeking their welfare lease for Bricktown), which will only further dilute any anticipated revenue growth.
These are the type of deals that form the backbone of corporate welfare, yet they’re the most difficult (politically) to stop, because most voters still look to local government as a source of “economic development,” thus they’ll reward politicians who make deals like Bass Pro.
What people have been describing here is basically fascism, which is not surprising, given that the US has been on a march towards fascism for some time now. What I mean by that is State-Corporativism. However, simply because a corporation manages to convince The State to steal less money does not mean that it is doing anything wrong, via the non-aggression axiom. Consider if there’s a sytematic robber/thieve (which is what The State is) that steals from all of us. If I convince him not to steal as much money from me as he does from the rest of you, I have not initiated aggression against anyone. I wrote relatively systematically on the matter at http://tinyurl.com/37svu :
The non-aggression axiom states that it should be illegal — preventable and punishable by coercive force — to initiate aggression against anyone else. This axiom is supported by Rothbard’s reasoning from the nature of man, and Hoppe’s argumentation ethics.
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