by Brian Balfour
Senior Vice President of Research, John Locke Foundation
Gov. Roy Cooper’s COVID lockdown orders forcibly closed down thousands of small businesses across North Carolina – many of which will have to close their doors forever.
So imagine their reaction to the news yesterday that Apple – the largest corporation on the planet – is receiving a tax break worth up to nearly a billion dollars over 39 years to locate its new “high tech campus” in the Research Triangle.
While conservative reforms to state taxes, spending and regulation over the past decade have made North Carolina more competitive for jobs, a transition that likely played a role in Apple’s decision, the celebration of big business and big government in bed together is still cause for concern.
Several come to mind, including:
1). Cronyism. A system whereby politicians are hand picking which large corporations will get competitive advantages via government privileges and handouts creates an atmosphere ripe for political corruption.
2). Consolidation of political and economic power. Lockdowns in North Carolina, and across the country, have destroyed small businesses, while the already massive corporations have not only survived, but thrived. This enables the biggest corporations to not only wield outsized power over the marketplace, but also in the political arena as well. Recall how in 2016 Apple was a leading critic of North Carolina’s HB2 law, as their economic power was leveraged to serve political interests. As big corporations grow bigger courtesy of government favors, expect them to become even more politically involved to help advance the agenda of those politicians doling out those favors. Progressives used to warn about corporations’ outsized political influence, but now that the biggest companies are ‘woke,’ they embrace it.
3.) Promises, promises. The Apple announcement is promising the “creation” of 3,000 new jobs. But, as I wrote about a few years ago, a WRAL analysis found “grants from the state’s two largest incentive programs, the Job Development Investment Grant and the One North Carolina Fund, shows that more than one-third of the companies that announced relocations and expansions failed to hire a single worker.” Indeed, the analysis also found that only about 57 percent of the promised jobs ever materialized.
4.) Centralized planning. A free market economy is one in which entrepreneurs attempt to anticipate consumer desires. Ultimately, it is consumers – through their buying decisions – that decide which businesses succeed or fail. We the people, as consumers, have the power to shape the economy. When government interferes with this process by granting privileges or hurdles to certain companies or industries, however, power over the economy is shifted from the masses to the hands of the political class. Rather than a freely adjusting, competitive economy, the economy begins to more and more resemble an economy centrally directed by government planners. History proves the track record of centrally planned economies is nothing short of tragic.
5.) Cooper’s hypocrisy. The Apple deal serves as yet another reminder of Gov. Cooper’s hypocrisy when it comes to “corporate tax giveaways.” It’s been well documented how Cooper has repeatedly railed against “corporate tax breaks,” while supporting corporate tax giveaways to hand-picked corporations. When Cooper says he’s against “corporate tax cuts,” he’s lying. What he really means is that he’s against cutting taxes across the board for businesses. He is more than happy to grant tax cuts – and taxpayer handouts – to select corporations in a game of blatant cronyism.
6.) The rich get richer. The Job Development Investment Grant (JDIG), which is the program used for the bulk of Apple’s incentives, is supposed to provide help to North Carolina’s economically distressed counties. In this case, however, we see the world’s richest company receiving breaks to locate in one of North Carolina’s wealthiest communities. Recent research shows that Wake and Mecklenburg, North Carolina’s two wealthiest counties, have received 60 percent of the funds pledged by JDIG through 2019.
7.) Apple a champion of human rights? Progressive groups like Equality NC celebrated Apple’s alleged role as a “pro-equality company” that serves as a “champion of equality and the needs of LGBTQ Americans.” It’s downright baffling, however, how Apple is celebrated by such groups and given a pass for its horrific labor practices in China, with recent reports of its suppliers using forced labor. Indeed, the mere fact that Apple has such a cozy relationship with the Chinese government should itself give one pause about Apple’s political posturing about “human rights” and “equality”.