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Chicago – “Corporate welfare handouts are not only the antithesis of free markets, but the enduring legacy of state-provided subsidies are the numerous short-term unseen costs and long-term unintended negative consequences that develop from politicization,” said Jared Labell from Taxpayers United of America (TUA).
Politicians are uniquely skilled at giving away other people’s money – that is, the taxpayers’ money. Your money. As the much anticipated bread and circuses otherwise known as the November 4th election approaches, for the taxpayer’s of Illinois, it also means that bureaucrats like Gov. Pat Quinn and U.S. Sen. Dick Durbin are expropriating more taxpayers’ wealth on behalf of some of the most profitable businesses in the country, and to the detriment of everyone else.
“Targeted-benefit policies are damaging for a variety of reasons. Such policies encourage businesses to misallocate resources and incentivizes them to engage in what is referred to as rent-seeking behavior. In their attempt to obtain benefits by tipping the balance of competition through political means, rent-seeking businesses handicap competitors with the force of the state. Nothing yields more cronyism like financial connections between those that beg for corporate welfare and the bureaucrats and the political class who enable them.”
As the news broke earlier this week that Amazon.com, the largest U.S. e-commerce retailer, is planning to open its first facilities in Illinois, it didn’t take long for skeptical onlookers to wonder just how much of the bill they would be paying with their tax dollars and to what benefit.
Joe Cahill of Crain’s Chicago Business immediately scolded Gov. Quinn and U.S. Sen. Durbin for perpetuating the cronyism of state-subsidization, detailing multiple recent accounts of millions of taxpayer dollars being transferred to politically connected corporations, many of whom already had logistical reasons to be in, or remain in, Illinois. Mr. Cahill put it well when he said that, “Mr. Quinn spent taxpayer money to get something Illinois would in all likelihood have gotten anyway. I don’t know if it will get him re-elected. But I do know it’s bad policy.”
“Corporate welfare is absolutely bad policy,” said Labell, “as economists Christopher Coyne and Lotta Moberg explained in their working paper The Political Economy of State-Provided Targeted Benefits earlier this year for George Mason University’s Mercatus Center.
“They open with the observation that, “The governments of American states often attempt to incentivize businesses to locate within their borders by offering targeted benefits to particular industries and companies. These benefits come in many forms, including business tax credits for investments, property tax abatements, and reductions in the sales tax.” The unforeseen costs of such government intervention is apparently lost upon politicians like Quinn and Durbin,” added Labell.
“A system of cronyism cannot be institutionalized instantaneously. People respond slowly to labor-market demand, and it may take many years for rent-seeking to become professionalized. Once it is in place, however, cronyism is hard to root out precisely because those involved in it have an incentive to perpetuate it,” Coyne and Moberg continued.
These practices are increasingly resembling those of other countries with historically corrupt systems. Coyne and Moberg conclude that, “The best we can do to prevent that from happening is to detect the policies in our political system that are contributing to this negative trend and end them.”
“Politicians like Quinn and Durbin propagate the demonization of the free market while they perpetually act in every manner possible to undermine it with their cronyism and corporate welfare handouts, said Labell. “The taxpayers of Illinois should reject these two political hacks, or ‘corporate welfare whores,’ and demand that the government stop intervening in the economy on behalf of politically well-connected corporations so that we can begin to have something even approaching a truly free market.”
TUA President Jim Tobin was on The Tom Woods Show talking about his past and present as a tax fighter.
Very nice chat today with Jim Tobin, founder of Taxpayers United of America, who was chronicled by an admiring Murray Rothbard in 1977. He’d just finished reading volume three of Rothbard’s Conceived in Liberty (a four-volume set now available in a single volume), on the colonial period and the American Revolution, and felt inspired.
I suspected the D.C.-connected Tea Party groups would have shunned him, since he actually wants to cut taxes and has even led tax strikes. I was correct, as Tobin explains in our discussion. Have a listen!
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Chicago – “People without jobs are shaking their heads right now over how someone could risk their job to walk out for higher pay – 9% higher, just to start. Who in their right mind would risk their job in a stagnant job market with about 9% local unemployment?” asked Rae Ann McNeilly, executive director of Taxpayers United of America (TUA).
“But wait, Waukegan teachers, like all government teachers, don’t have any risk of losing their jobs do they? They don’t even have risk if they are a rotten teacher; why shouldn’t they strike?”
“We are now in the fourth week of the teachers’ strike in Waukegan and the latest news is that they have reached a tentative agreement. Illinois has some of the highest starting and average salaries in the nation and yet these teachers felt so abused by their employer – the taxpayers – that they had to shut down the schools for 3+ weeks.”
“It is unconscionable that these overpaid and underworked ‘civil servants’ can demand one more red cent from the taxpayers who employ them. Government teachers, who make more than private teachers, have nearly iron-clad job security, over 100 paid days off per year, and virtually no autonomy in the classroom, meaning they are told exactly what to teach and how, are clueless and could care less about the plight of the people they serve.”
“For every pay increase to a teacher, it is a pay decrease to the taxpayers who fund their salaries and lavish, gold-plated pensions. Teacher pay comes directly out of taxpayer pay, meaning every dollar more that they are paid is a dollar less for constituents to keep and use for their own food, housing, and transportation.”
“And let’s not forget the union thugs who negotiate on behalf of the teachers. How is it legal for a third party to hold the taxpayers of Waukegan hostage by using their children as pawns to negotiate more lavish benefits for their rank and file?”
“I am ashamed of my town right now,” stated Waukegan resident and parent, Kelly Hodge-Below. “My children are nothing but pawns in this game that the union, the board, and the administration are playing.”
“How many times have we heard, ‘it’s for the children’? In what way is this for the children”, added McNeilly
“I’ve got news for you, there are taxpayers in Waukegan who are at risk of losing their jobs because schools are closed and as working parents have no secondary long-term accommodations for their children, considering they pay so much in the form of property taxes for the schools.”
“When teachers are negotiating higher salaries and benefits, do they ever consider the kids, or the parents, or the thousands of others who are slaves to their property taxes? Do they discuss how many local people have lost their homes because they could no longer afford the ever-rising property taxes?”
“Government teachers deliver a substandard product than their counterparts in the private sector at a rate higher than their private counterparts, have Cadillac health care, gold-plated pensions starting as young as fifty-something, have over one hundred days of paid vacation, have no system of performance management, and demand more and more and more from their employers, the taxpayers.”
“It’s not for the kids and never has been. 80% of local taxes are used to pay government salaries and benefits. The pensions alone that teachers earn are phenomenal. There are currently 11,054 Illinois government pensioners collecting more than $100,000 per year and 78,526 pensioners collecting more than $50,000 a year between all five of the state pension funds.”
