I was going to write a post about the current legislation before the Senate known as the “Sembler Bill”, but Sen. Tom Davis (R-Beaufort) articulates this issue very well:
By Sen. Tom Davis || The Sembler Company recently ran a full-page ad in local newspapers in Beaufort County attempting to rally public support for its 280-acre, 1.5-million-square-foot mall in Okatie. Beneath a huge banner headline that read “NEW JOBS – EXPANDED TAX BASE – ENVIRONMENTAL PROTECTION,” the ad asked “What’s wrong with that?” before answering its own question: “Nothing’s wrong with it.”
And I agree: there is nothing wrong with Sembler building a new mall that would straddle Beaufort and Jasper Counties, especially if best management practices were employed (as promised) in its construction to protect the headwaters of the Okatie River.
Capital investment is good. Creating new jobs is good. Increasing choices for consumers is good.
But what’s not good — and what’s not mentioned in the ad — is a law now being considered by state lawmakers that would give Sembler over $100 million in taxpayer assistance to build this new mall.
This would be bad: Because it will not create any additional economic activity; and because it perpetuates our state’s failed (and corrupt) “pay to play” system of economic development.
A recent study of tax incentives for “extraordinary retail operations” by the economist Michael J. Hicks concluded that the entrance of large-scale specialty retail stores has a negligible impact on the economy of the surrounding counties. The overall economic pie does not grow; there is simply a shift in retail consumption patterns. In short, it’s a bad investment of taxpayer money.
But beyond its ineffectiveness as a means of promoting economic activity, the proposed deal is symptomatic of a larger problem – “crony capitalism.” The key to getting ahead in America used to be having a good idea and then working hard to implement it. Now the key is milking government connections in order to get special favors that provide a leg up on the competition.
Government at both the national and state levels has become a “favor factory” for those who can afford this “pay to play” game. The rules are simple: contribute money to elected officials, hire lobbyists with personal connections to committee chairmen, retain the private attorneys who actually draft the complicated tax bills, and then watch as the (taxpayer) money comes rolling in.
Politicians love doing these deals; it’s a win-win for them. They get money for their campaign coffers and credit for “doing something” to create jobs. They simply ignore the boring economic studies showing how these special deals are awaste of the taxpayers’ money. That sort of grim data simply doesn’t play well on television, but ribbon-cutting ceremonies for incentivized deals sure do.
This statist approach to “economic development” is rotten, and one reason why special tax breaks in South Carolina doled out by the General Assembly have skyrocketed in the past decade from $32 million to $254 million a year.
And the sky is the limit: There are currently 377 lobbyists representing 534 companies and organizations at the State House, and far too many are simply scratching and clawing to get favors and unfair competitive advantages for their clients.
This is “crony capitalism,” pure and simple, a corrupt merger of big business and big government. And it is the antithesis of the free market — of a system where companies are forced to improve productivity, reduce prices and innovate, and where consumers are rewarded with lower prices, higher quality and wider choice. In a system of “crony capitalism,” companies don’t achieve success in the marketplace by innovating or competing; they buy it at the State House.
I don’t blame Sembler for hiring lobbyists, lawyers and PR consultants to seek $100 million-plus in public assistance for its new mall; that’s simply good business. A study by economic professors at the University of Kansas found that for every dollar spent in lobbying, $220 worth of special favors are obtained. Sembler would be committing corporate malpractice if it didn’t play the game.
But I do blame lawmakers for providing special treatment for a select few when they should be looking out for the public good. There is a growing sense that South Carolina has a political system that is about dispensing favors, with people buying access and Columbia picking winners and losers. And I think people are sick of it.
Political favors and backroom deal-making have hurt our state enough already. We need to end the corrupt politics of favoritism and cut taxes for everyone, across the board, so that all citizens and businesses pay lower taxes, not just the politically connected. Lower taxes for everyone promotes free market entrepreneurship and discovery — the true sources of prosperity.
“NEW JOBS – EXPANDED TAX BASE – ENVIRONMENTAL PROTECTION” – what’s wrong with that? Absolutely nothing.
Just take your hand out of my pocket
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