Paine’s Island
Two articles, one from the Competitive Enterprise Institute and the other from Reason, illustrate what can happen when government tries to pick winners and losers. The unintended consequences spare neither Republican nor Democratic administrations. In the first case the Commonwealth of Massachusetts gave the film industry so much free cheese they ended up selling most of it to other industries.
When is a market not a real market? When it trades in fake goods — products or services that could not exist if government didn’t bring them into being. A case in point is transferable targeted tax credits, which state and local governments routinely offer to attract businesses. …
The Boston Globe reports:
At least 96 percent of the $265 million in tax credits used to attract movie and television productions to Massachusetts were sold by the film companies between 2006 and 2010, according to the state Department of Revenue.
The incentives are so generous – rebates of up to 25 percent of production costs in the state – that most film companies do not end up owing nearly enough in taxes to use the credits. So they sell them at a discount, fueling a booming industry for brokers, accountants, and savvy taxpayers.
Here’s how it works:
A production company that is awarded $10 million in tax credits might sell them to a broker for $8.7 million. The broker then sells the credits to a financial company that owes state incomes taxes for a bit more – say for $9 million, earning the broker a $300,000 profit. The financial firm can then claim the full $10 million in credits on its tax return, saving $1 million.
These credits would not exist if not for government favoritism toward certain industries, and film production is far being from the only industry that benefits from this targeted largess.
What a waste, you may say. Maybe the Republicans can do better. But the other story involves a Republican governor, Sonny Perdue, who added sugar on top of the ice cream and honey after that to attract ants to Georgia.
In 2006 the Korean car maker Kia decided to build a $1.2 billion plant in West Point, Georgia. To land the project, the state offered a $420 million incentive package that included free land (bought from the previous owners at about 2.5 times the market value), tax-funded employee training, and a new $30 million Interstate interchange. Altogether, the subsidies amounted to roughly $168,000 for each of the 2,500 jobs at the plant.
The story might sound outrageous. Actually, it’s typical of Southern corporate hospitality:
* After Hurricane Katrina destroyed CSX train tracks along the Mississippi coast, the state’s U.S. senators, Republicans Trent Lott and Thad Cochran, arranged the allocation of $200 million in federal money to rebuild the railway. Then CSX asked for another $750 million to move the tracks less than 10 miles north. Lott and Cochran attached that money to an emergency spending bill for military operations in Iraq and Afghanistan.
The justification for the gifts to CSX was “economic development,” plus the weak argument that moving the tracks a few miles would protect them from another hurricane. Critics, such as Sen. Tom Coburn (R-Okla.), charge that Cochran and Lott were carrying water for the developers and casino operators who now can build along the coastal land where the tracks originally ran.
Why does this bipartisan waste happen? The essential problem is that once there’s a warehouse sufficiently full of government cheese rats eventually find a way to gnaw on it. That’s what rats do. They can’t help themselves. Politicians are as a species, apparently addicted to making deals and it matters less than we think that the addict is Democrat or Republican. Addicts are fundamentally cut from the same cloth.
The problem of government has long occupied political writers. Thomas Paine, tried to think the dilemmas through and concluded that certain things were better left to arrangements by barter or the market than they were to government. Government’s would only make a mess of the economy. Its proper role, he argued, was to stand on guard to let people labor in peace. As he put it, “society is produced by our wants, and government by wickedness; the former promotes our happiness positively by uniting our affections, the latter negatively by restraining our vices.”
Paine suggested a thought experiment. Suppose you were stranded in a wilderness, which we may call for drama’s sake, Paine’s Island, just as the reality contestants on TV surival shows supposedly are; would your first act be to elect a President, Senator, Congressman, Governor? Or would you trade skills to ease the task of producing food? Paine argues that necessity would impel people to set to work with the minimum regulatory burden.
Let us suppose a small number of persons settled in some sequestered part of the earth … Four or five united would be able to raise a tolerable dwelling in the midst of a wilderness, but one man might labour out the common period of life without accomplishing any thing; when he had felled his timber he could not remove it, nor erect it after it was removed; hunger in the mean time would urge him from his work, and every different want call him a different way. Disease, nay even misfortune would be death, for though neither might be mortal, yet either would disable him from living, and reduce him to a state in which he might rather be said to perish than to die.
So they would work until their immediate needs were met. But inevitably, Paine argues, someone would emerge to say “you didn’t build that, someone else built that for you” and start welshing on the deals and buying allies with what he seized. Then a council would have to be called to settle things. Force would be employed in the Garden. Paradise will have ended and fallen state begun.
This … reciprocal blessing of which, would supersede, and render the obligations of law and government unnecessary while they remained perfectly just to each other; but as nothing but heaven is impregnable to vice, it will unavoidably happen, that … they will begin to relax in their duty and attachment to each other; and this remissness, will point out the necessity, of establishing some form of government to supply the defect of moral virtue …
Government, like dress, is the badge of lost innocence; the palaces of kings are built on the ruins of the bowers of paradise. For were the impulses of conscience clear, uniform, and irresistibly obeyed, man would need no other lawgiver; but that not being the case, he finds it necessary to surrender up a part of his property to furnish means for the protection of the rest; and this he is induced to do by the same prudence which in every other case advises him out of two evils to choose the least.
Paine’s famous words sum up his argument. “Society in every state is a blessing, but government even in its best state is but a necessary evil; in its worst state an intolerable one”.
It’s interesting to remark how far from Paine’s conception modern society has journeyed. Most men educated today are taught that the more government, the better. And if asked about its proper role many would readily say that its purpose was to supply more and more government cheese. Government is no longer a guardian of man against the vices of man. It’s the distributor of largesse, the picker of winners and losers.
This is what Western Europe has literally become, a continent of ceremonial regiments and armies of welfare workers. A British National Health Service proudly proclaims that it rials the Chinese People’s Liberation Army in size.
As to protecting the citizens of Fallen Paradise from serpents and enemies foreign and domestic, it has exited that business. Protection has now been outsourced to the United Nations or the international community. On the Island, efforts are moving to a world without nuclear weapons, one unencumbered by unproven missile defense systems or lumbered with advanced combat systems.
In place of society on Paine’s Island, you’d have the cheese and the cheese dolers. It would be interesting to ask government’s cheese dolers how they have fared these last four years.
President Barack Obama’s regulatory czar Cass Sunstein is resigning his position in the Obama administration, the White House announced on Friday …
Sunstein and Obama first met when they both taught at the University of Chicago Law School. Sunstein is viewed as a progressive number cruncher who was supposed to rejuvenate regulation to maximize benefit and minimize cost. Essentially, his role was to economically facilitate the Obama administration’s big government plans.
In a statement accompanying the announcement of Sunstein’s resignation, Obama said the man who was supposed to orchestrate his big government initiatives “has helped drive a series of historic accomplishments on behalf of the American people.”
Today things done on one’s behalf. The world has moved on from Paine’s Island. Get with the program.
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survival shows
So it seems the race is on to see if Cheese Station DC can avoid running out of cheese before November, eh?
DC is a boom town. The Bureaucrats are booming. Instead of talking about the top 1 percent let’s talk about the top ten counties — Seven of them are around DC.
The Democrat’s hope to win by being the party of the Government Job. If that’s cheese it is well aged and comes with fine wine. Expanding government means more government jobs and more loan forgiveness for college grads. The money for this will come from the stash of the rich — the great money hoard. Will it work? It depends on what you mean by work. It may well win for the Democrats in November. Will it fail after that? It depends what you mean by fail. In other words, yes.
As I mentioned a few discussions ago, the Democrats want to set themselves up as the defenders of core government activities — even as they promote wild expansion. Hence, the talk of roads and bridges rather than the exponential expansion of regulation.
Well, Wretchard, as Margaret Thatcher pointed out: “The problem with socialism is that sooner or later you run out of other peoples money.” The problem is that giving people cheese at the expense of a shrinking tax base is economically unsustainable, as we can see by Obamas own congressional budget office figures, which predict economic collapse in 15 years at the rate we are going. Of course, gutting defense and borrowing massive amounts will enable Obama and the Democrats to buy votes, which is why I do not expect a republican victory this November. A second Obama term will make things worse, but the receipients of government cheese can be counted on to vote themselves more cheese – and that is exactly the problem.
As a wise man who name escapes me pointed out:”democracy cannot endure as a permanent form of government. Democracy only endures until the people learn to vote themselves largess from the public treasury. After that, the people will always vote for whomever promises them the most largess. The result is always the same, economic collapse followed by dictatorship.”
Battle:
I think that quote was de Toqaville or it sure sounds like him anyway. Jefferson: The best government is the least govt. comes to mind.
The last 10 yrs. has been a hellish swirl of Democratic crap and I want them gone and over with. All the statest (rep. and Dem.) need to disappear from the face of the earth. Oh please tooth fairy, make it so.
All this deal-making is a form of breaking the rules or laws that have been implemented which, in turn, go against the dictates of human nature and market forces to begin with. The same underlying dynamics of the state incentives for certain businesses also guide the Obama administration to issue waivers for anything from Obamacare to No Child Left Behind.
Someday, maybe, the powers-that-be will figure out that the best plan is no “plan.” But that can really happen only when that group’s power is greatly diminished.
Jefferson: The best government is the least govt. comes to mind.
“The best government is that which governs least.”
Nice, short, and succinct — but a bit simplistic, I think. My view is that the best government is the one that understands and abides by human nature, and governs accordingly. More often than not, a society governed in such a manner tends to be a free one.
Senor Rodrigo, If you can put yourself into Jefferson’s mindset and his time in history, his statement isn’t simplistic at all. What he is saying and had said with this quote was in the context of a conversation upon the powers of the Federal govt. He wasn’t advocating for Anarchy or anything remotely close to that. He was saying that in all forms of govt, but most importantly at the Federal level, that govt which governs least, governs best. He was deeply distrustful of centralized govt and did advocate for a agrarian society with almost all politics being local.
All the best to you,
Jim
Rejoice you ingrates! Our Savior Buraq is workin’ hard to protect us from the evils of Capitalism. The National Association of Independent Business says our Savior has already annointed 4,000 new regulations for his second term, so we can feel safe from those Capitalist Roaders exploiting our workers with new jobs!
Look at this fine work he has done for us – and you selfish people complain about his time on the links – why he only spent 40% of his days playing golf during his term. With such heavy lifting and all that hellish campaigning he needs to do to keep the racists at bay, the man deservedly needs a break.
http://www.redstate.com/clarkbarrow/2012/08/02/regulation-tidal-wave/
Thomas Paine in the pamphlet Common Sense:
“Society is produced by our wants, government by our wickedness.”
Obama has the exact opposite view.
Why, or how, does it happen? Because you have geniuses like Hank “I’m worried about Guam capsizing” Johnson in the government.
That and the pigs at the trough.
“The result is always the same, economic collapse followed by dictatorship.”
Well, yes. Only it won’t take 15 years. 15 months at most. Nobody has the money for long drawn out battles. Modern weapons are extremely lethal. 300,000$ ATGM’s killing 4 million dollar tanks chews through the budget pretty quick. Then there is the logistics problem.
There aren’t that many places where ammo is made. Fuel is refined in only a few places also. Most freight moves by a combination of rail and truck. Both are easy to interdict.
The Apache (AH-64) is a fearsome war machine. Unless there is no fuel, 30MM rounds or 70MM rockets. Then it is just another hunk of Aluminum.
A new civil war will be very intense for a few months. Then all the ready stores of POL and ammo will be used up, most of the urban masses will be dead or moved into the country. With no distribution system, only those leaving the cities will be able to eat.
Naturally, the rustics will not be happy to see millions of starving city folks descend on them. Most city dwellers have no idea how to grow food. So they will be nothing but mouths to feed. Enough of them will be a threat to the rural population. There will be conflict.
That is were I expect the Army to expend most of their war stocks. Once those war stocks are gone, they die.
3 or 4 years till we are in a Mad Max state.
That is IF the Chinese don’t send weapons and advisers to Mexico. America will quickly find out what all those we passed on the way up feel about things on our way down.
All this is unthinkable of course. I wish I was the only one thinking about it.
Celer, Silens, Mortalis.
In private enterprise, the shareholders like to see the post audit of any investments made. If the results are good, typically more capital is allocated. If not, it’s reallocated. This basic process of capital discipline is one of the key reasons US businesses are many of the best in the world.
Meanwhile in DC…… Seriously, someone please show me that there is some accountability in any governmental spending activity. With Trillions of dollars per year. Exxon Mobil, the world’s largest corporation, spends less than $40 Billion/year, and that’s a lot.
How can such different approaches exist side by side? The two high level drivers that I can see are 1) the incentives for politicians are completely at odds with the breadth of their constituencies and 2) politicians tend to be lawyers, and capital discipline using isn’t something lawyers focus on.
hdgreene :”DC is a boom town. The Bureaucrats are booming. Instead of talking about the top 1 percent let’s talk about the top ten counties — Seven of them are around DC.”
Very Nice. With the right spin that could be one hell of a campaign issue – a whole new way of running against Washington, and one that just might be a way to actually slice and dice that crazy bureaucracy down to size.
“Politicians are interested in people. Not that this is always a virtue. Fleas are interested in dogs.”
- P.J. O’Rourke
It is exceptionally rare in the United States Congress for any speech by a member to receive an ovation. It is unusual for a speech on the floor to even have an audience. Most are just mentioned and then inserted in the Congressional Record when the presiding officer authorizes, without hearing an objection, that remarks “may be revised and extended for the record.” The days of scholars and great orators are gone. The XVIIth Amendment killed the Senate and the House is filled with mediocrities who can barely read beyond a liquor bottle.
stoicheion @ 12:
After I quit laughing, this is what I have been saying for a couple of years now.
“…..only those leaving the cities [functional definition of Zombies] will be able to eat.” Eat? No they won’t unless they prove useful. They will either be enslaved or used as fertilizer. There is no design margin there. Not in the country. Design margin is a city concept and it has all been used up a few years back.
“There will be conflict.” See the above. That ‘conflict’ will be short and brutal with very few survivors. Maybe pretty women will have some use.
We tried to tell ya’ll in ’07-’08 and you treated us like our hair was on fire and we were gibbering idiots. I have no sympathy at this point.
Time is short. Either Ogabe is gone one way or another in Nov. or hell is coming.
The Chinese? Go read Unrestricted Warfare: China’s Master Plan to Destroy America They will gladly chew us up. They have planning to do this for a long time.
I am not sure we have as much as 15 months. I think less.
16. R Daneel
I’m almost ready. I have caches within a days drive, 2 within a days walk from my new place that I’m closing on Tuesday. I’ll be 193 miles from Memphis and 200+ from St. Louis, so the mobs will be thinned out by the time they get to me. I’m thinking about building a san’ger only I need to figure out how to get water to it. By early October I’ll be ready for about anything.
I have an unjustifiable faith (not based on any rational data) that churches and various other groups will make efforts to create protected community gardens and storage. It will require local congregations to ignore and defy the Marxists who have infiltrated the upper administrative levels of their denominations. (Consider the positions imposed over decades upon their “flocks” by the smugly git World Council of Churches, the leaders of the Methodists, etc.)
Any “community gardens” will require 24-hour armed guards. Ditto any warehouse.
On the other hand, you can bet that wherever they briefly prevail, the Progressives will impose martial law upon populations under their thumbs, and use proclamations to confiscate any supplies they can from those who have prepared and stored up food, water, medical supplies. They will conspicuously arrest them as enemies of the state, convict them with “drum-head” tribunals, and execute them “pour encourager les autres.”