A couple recent conversations have led me to believe I need to elaborate my position on corporate welfare.
- Most people are influenced by incentives. That is why governments give companies money or tax breaks to locate within their jurisdictions.
- Economists used to understand that people voluntarily enter into exchanges both find mutually valuable. Adam Smith’s invisible hand functions because, in free markets, people must produce something valued by society if they wish to survive.
- Government gets the money it gives away by taxing, printing, and borrowing. Taxation is a disincentive for productivity. The more one works, the more one must forfeit. Printing lowers the value of the dollar, and borrowing leads to higher tax rates to pay interest. Both decrease the value of the earnings of the productive.
- My aggravation is, too many businesses want to take money from successful producers, through government. They give no thought to producing goods or services. They only talk about creating jobs.
- Ventures that exist to create jobs and subsist off of government donations rather than satisfying consumer demand are not viable, but will always be dependent on handouts.
- Subsidizing non-viable businesses with the earnings of successful businesses leads to erosion on the margin between businesses that produce goods society wants and those that don’t. It serves as an incentive to enter the realm of producing un-tradable commodities while sponging off the efforts of those who are now working extra-hard to meet consumer demand.
- All the while, government, which is power, demands more money and more administrators to fuel its erosion of the economy.
Nuff said?
