by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
If anyone thought that a change in political party in the governor’s mansion would produce a change in the belief that government is actually the state’s real job creator, that poor naif is surely disillusioned now that new Commerce Secretary Sharon Decker is sharing the McCrory administration’s vision of economic development.
There was talk in the administration of getting the private sector more involved in economic development, but that wound up being euphemism for turning businessmen into political appointees to help decide who gets state incentives. It didn’t mean leaving economic growth in the hands of, to borrow a forgotten phrase from the North Carolina Constitution, "the genius of a free state."
"Economic development" by incentives is cronyism at its finest, which is to say, worst. Ask not what your state has taken from you, ask only what benefits it gives the favored few. Government from the people, for the pals, by the politicians. I regret that I have but one citizenry to fleece for my lobbyist friends.
Dissenters who object to this nonsense try to expose the folly as "robbing Peter to pay Paul," which, though accurate, isn’t quite sufficient. If the theft and transfer were equivalent, Peter would have the same motivation as Paul to make sure lawmakers heard from him. They’re not, however.
What it really amounts to is petty larceny from Peter, James, John, Mary, Martha, and everyone else to pay Paul. With so much at stake for Paul, you can bet he’s making sure lawmakers hear from him. Meanwhile, it’s just not worth everyone else’s time to organize and go to the legislature.
Here’s the ugly secret: although the pain of the theft is dispersed among the many, it’s still painful to the economy. Politicians expect positive effects to circulate through the economy because of their "gift" to Paul. They don’t realize they just canceled out all the positive effects of that wealth already circulating through the economy by taking it out, just for Paul.
Fail to understand that, and you’ll start thinking that the lack of economic growth post payment of Paul means there must be a better way … to take from everybody to pay Paul. Vote us. We have the solution to the Paul-paying problem. Paul must be paid this way, not that.
As Decker put it:
"Although we’ve spent a lot of money and we’ve done a lot of good work, the needle isn’t moving, so it says to me we’ve got to do things differently."
Do things differently? OK, then, let’s go. A trio of House Republicans — Rep. Chris Millis, Rep. Dana Bumgardner, and Rep. Jeff Collins — challenged Decker over her embrace of incentives. WRAL reported that Collins "asked if eliminating the corporate tax rate wouldn’t make North Carolina better off than it is today in terms of job recruiting."
Her answer? "I don’t know if it’s better. It’s different."
It would be different. But not we’ve got to do things differently "different," however.
Doing things differently, Decker makes sure everyone knows, doesn’t mean giving up on the idea that politicians direct economic growth. Nevertheless, at the heart of every incentives scheme, there is an admission by politicians that they fully know that lower taxes and regulations would attract more industry to the state.
If they know that, why don’t they lower taxes and regulations for every industry? Simple: because then they couldn’t hog the credit for the subsequent economic growth. They’d have to give up their illusion of being all-wise masters of the economy.
Besides, Mom & Pop rarely stage big media to-dos when they decide to take on a couple new employees. Hundreds upon hundreds of small businesses across the state individually deciding to expand without holding big to-dos definitely "moves the needle," but it can leave politicians feeling empty. Just as a road might feel empty if it fatuously believed itself to be the driver.
On the other hand, if state leaders lower taxes and regulations just for this industry and that company, then they get invited to the ribbon-cutting ceremonies, they get to talk about how their policies created these visible jobs right here, and their industry pals who got sweetheart deals not given the business across the street will gratefully give them the glory.
So here is how the Republican Commerce Secretary envisions government paying Paul differently, as summed up by The News & Observer:
Eliminating the corporate income tax — in other words, an all-inclusive, across-the-board economic incentive for every business and industry — would have strong, positive, permanent effects on the state’s economy. That’d be different, but having all those entrepreneurs chasing their own best interests and creating growth irrespective of arbitrarily drawn political boundaries?
No, we’ve got to split the state into multiple "prosperity zones" and have political appointees "coordinate" with other political appointees in order to "target" "job creation efforts." Then at least it will sound as if the government is actually directing the economy instead of clogging up the works … differently.
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