Sign-up to receive our free newsletter.
Iowa Governor Terry Branstad has recently awarded $475.5 million to two companies promising to create a total of 254 jobs, an amount just shy of the $500 million loan guarantee the Obama Administration gave to Solyndra and its 1,000 employees. Apparently, the establishment of both political parties really do believe that “you didn’t build that,” the government did.
In September, Governor Branstad proudly announced that his administration had lured Orascom Construction to build a $1.4 billion fertilizer plant in Lee County rather than Illinois. All it took was the largest tax incentive package in Iowa history, totaling $243 million in state and local aid. That comes to $2.58 million for each of the 154 permanent new jobs Branstad “created.”
Then last week the Branstad Administration announced that it had landed the “single largest capital investment” in Iowa history when it persuaded CF Industries to build a $1.7 billion expansion in Woodbury County. Again, all it took was the second largest tax incentive package in Iowa history, totaling $232.5 million in state and local aid. Slightly more economical than the Lee County project, this one only costs $2.33 million per each of the 100 new permanent jobs Branstad will take credit for.
This stimulus package is paid for by individual taxpayers, whose income, sales, and property tax rates are kept artificially inflated in order to provide all manner of rebates, deductions, credits, and exemptions for those bestowed by government favor. This is no less a form of legal plunder than if Branstad had directly handed these two companies your half-a-billion dollars outright.
Universal justice, Frederic Bastiat explains in Justice and Fraternity, is “the protection of all persons, all products of labor, all property, all rights, all interests.” Therefore, he notes in The Law, “the mission of the law is not to oppress persons and plunder them of their property, even though the law may be acting in a philanthropic spirit. Its mission is to protect property.”
Nor does the legal plunder become any more justifiable when committed by one pretending to be an investment banker “acting in a [job creating] spirit.” Such robbery is premised in the statist belief that some rights must be sacrificed for the collective economic interest. It is nothing less than a desire to produce an equalization of outcomes—a job for B subsidized by Taxpayer A—by government intervention.
By redistributing the wealth, the “benevolent” politician actually acts in his own self-interest—seeking praise (and votes) by boasting to the electorate that he has “created or saved” X number of jobs. What he doesn’t tell them is that these illusionary trophies on his reelection mantel are subsidized by them—the Forgotten Taxpayer who remains without his money.
But while politicians brag about what they, not the free market, built, they forget the fundamental rule of capitalism—government cannot grow the economy, it can only stifle it. Government can only redistribute wealth from the productive to the unproductive, the efficient to the inefficient. This disruption of supply and demand in turn leads to slowed productivity, innovations, wages, and employment.
Central planning is no more successful when practiced by democratic elites managing a mixed economy than by socialists in a communist dictatorship. At least the later has the “inherent virtue [of] the equal sharing of miseries,” while the former leads to crony capitalism in which only those predestined by government receive economic blessings.
As Governor Branstad himself recently stated:
In Iowa, we know a thing or two about building success with our own two hands. Hard work is in our blood. It’s our way of life. We don’t look at our farms or our factories or our businesses and say, “Look what the government built.” But government is at the center of President Obama’s world view. He believes that the American economy should be directed, to some large degree, by Washington. “If you’ve got a business,” he recently said, “you didn’t build that. Somebody else made that happen.” By “somebody else,” he meant government….
Obama also has a penchant for trying to pick winners and losers in the marketplace, though his investment strategy leaves something to be desired. Billions of taxpayer dollars were wasted on a bungled energy program, with the now bankrupt Solyndra serving as the most famous of the program’s failures…
It is long past due for Republicans to do more than just hypocritically preach the good news of capitalism, but to actually practice it.