The Rightful Ruler
By: John Michener
Will we look less redneck in the eyes of left-coast liberals? Will this give us a unique attraction? Will our Bass Pro Shop have a bigger fish tank than others? Will tourists who meant to land in San Antonio accidentally land at our canal? These are some of the utilitarian measures of success which have been posed to defend economic development (ED).
Every time government wants to promote an ED scheme, it uses a utilitarian argument to justify it. Utility means something is useful, and because utility can be measured any way the measurer decides, one can justify anything using utilitarian arguments. Some common questions of utility are: How much money will the program make? How many tax dollars will be added to state coffers? How many people will be employed?
Absent from such arguments are words like proper and improper, right and wrong, just and fair. You see, measuring the worth of a program solely on its arbitrary utility is grabbing the wrong ruler. We should not be asking if a public program is useful, we should be asking if it is proper. But to answer that question requires grabbing the right ruler; it requires a moral measure. Using a moral measure reveals that government should not be involved in ED at all.
So what is ED anyway? ED refers to the practice of government getting involved in private investment rather than public investment. Traditionally, government has been restricted to public investment, where public funds are used for proper public expenditures such as police, courts, and prisons. In recent years, however, government has increasingly invested in the private economy, which should be the domain of private citizens. Here are some common examples of modern ED strategies:
1) Incentives are given by the state to encourage a private business or person to engage in an activity that the state wants to promote. Incentives come in various forms, but always involve a publically funded financial benefit to the private sector. For example, the state subsidizes the salaries of NBA players.
2) Grants are simply giveaways. The state grants public funds to any entity it wants, including private businesses. This year the state decided to give away funds to cities, counties, nonprofit organizations, and even tribal governments to operate and improve their museums.
3) Loans at low or no interest are also provided by the state. This year the state expanded its banking business by offering loans to county governments to buy compressed natural gas powered vehicles. This is a case of the state competing against private banks.
4) Ownership of property or businesses is another way the state engages in ED. Think of city-owned conference centers or parking garages. Sometimes the state owns the land and leases it to a private enterprise.
5) Tax credits are the state giving a business credit for having paid taxes without the business actually paying the taxes. One year the state gave tax credits to those who bought electric cars.
The so-called utility of any of these schemes is not relevant. Using a moral measure reveals that government should not be involved in ED as we have defined it above. To make our case, here are five fundamental problems which invalidate the state's involvement in ED:
1) ED involves the state in improper functions. Government should only be involved in protecting life, liberty, and property. These are what we call negative rights. You have a right NOT to be killed or threatened with violence. You have a right NOT to be controlled, enslaved, or coerced. You have a right NOT to be robbed, pillaged, and plundered. The state should act defensively to protect your negative rights.
The problem comes when the state tries to take positive action. Every time the state initiates action, it disturbs the free market, creating unfair advantages and disadvantages, harming businesses, violating people's consciences, and stealing to fund it all.
2) ED is socialist. It steals resources from the many and redistributes them to benefit the few. For example, Love's Travel Stops & Country Stores Inc. has bellied up to the trough in the Marble Pork Pen at 23rd and Lincoln to pig out on up to $13.6 million worth of slops funded by the taxpayers. Love's is receiving public assistance not only from us as individuals, but also from their competitors who pay corporate income taxes.
Through the Oklahoma Quality Jobs Act, the state is forcing companies to punch themselves in the face by giving money and a competitive edge to their rivals. It is like the state is the proverbial bully on the playground who grabs Pilot, OnCue, and Shell, and shouts at each one, "Why are you hitting yourself? Stop hitting yourself!" The problem is exacerbated as other companies who want to stay competitive must also wallow at the trough alongside Love's, begging for enough taxpayer slops to keep up with the unfair advantage gained by Love's.
No matter what scheme they use to redistribute the wealth, doing so creates an unfair advantage for one business over another. Freedom and private ownership mean companies succeed or fail on their own, not because state fascists and central planners steal from one group and give to another, unfairly picking the winners and losers.
3) ED forces the people to fund activities which they oppose. Horse racing? Casinos? Museums? Lotteries? What about the drag show that was hosted by the University of Central Oklahoma? No, it had nothing to do with car racing. This public university advanced debauchery that violated the consciences of students, alumni, faculty, and parents. Why should citizens be forced to contribute to a project which violates their consciences, works against their interests, or is not a project they support?
4) The state steals private property to fund ED schemes. Proper funding of government is possible. For example, it would be proper, or at least fitting, to fund roads and bridges through user fees or taxation of activities that use roads and bridges. However, most funding methods are theft, pure and simple.
Take the income tax. Suppose I contract with my neighbor to mow his grass in exchange for a watermelon. What right has the state to a slice of my watermelon? The state says, "By virtue of working for a watermelon, we hereby seize a slice of your watermelon. Pay up or go to jail."
Or take sales tax. Suppose I decide to sell each earned watermelon for a bag of okra. The state says, "By virtue of selling watermelons for okra, we hereby seize 4.5 okra pods per watermelon sold. Pay up or go to jail." Then the city gets in on the shakedown and says, "Hey, we want 3.875 okra pods per watermelon sold. Pay up or go to jail." Do not forget, you were already taxed once on these watermelons as earned income.
What about real estate tax? Most egregious of all is having no place to call home or to lay one's head without paying rent to the state. At least with other taxes the theft occurs only once or twice each time you trade with others. In contrast, if you try to own real estate, the state will tax it every year, over and over and over. The state has effectively abolished private ownership of real estate. The state says, "Pay the rent or get off our property."
Of course, when the state wants its property, it can boot you off without your permission. The state reserves the right to take any property it wants through the false doctrine of eminent domain. For example, Moshe Tal, whose story was covered by this paper, had his property stolen from him by Oklahoma City. He was forced to accept $50,000 for his property which, it could be argued, turned out to be worth around $9 million. Part of that property now sits under Toby Keith's restaurant in Bricktown -- hardly a public use. Tal's lawsuits have been fruitless.
I am all in favor of a nice restaurant or canal in my neighborhood, but let the developer pay what the property owner asks in exchange for his private property. If the owner of the property is not willing to sell, the developer should have to pick another spot. The city does not have a moral right to steal the property on behalf of the developer.
5) The state invests in ED without responsibility. We have all heard the adage, "Everybody's job is nobody's job." Likewise, everybody's money is nobody's money. The moral principle here is private ownership. He who owns the resources is responsible to steward them.
Taking business risks is what private investors and entrepreneurs are supposed to do. They invest, or risk, their money on a business proposal. If it works out, then they make money. If it goes bust, then they lose their money, but at least they lost their money, not our money. Legislators do not feel the risk that they should when they invest public money in ED and budget to pay it back over several years, years when they will no longer be around to take responsibility for the budget shortfalls.
The best examples of what happens when we let government be irresponsible with our money are this year's museum bills. Why does the legislature keep borrowing millions to give to the American Indian Cultural Center boondoggle? Why, after all we have learned from that huge mistake, would they approve a new one just like it in Tulsa called the Museum of Popular Culture? Both of these measures, borrowing $50 million in bonds plus unspeakable interest, are an affront to fiscal responsibility and good stewardship. Private ownership and private investment are what bring about success.
In conclusion, the House has put a mild check in place against the steady flow of ED schemes coming from the legislature. They set up a new commission to review and report on the economic effects of tax credits. Speaker Jeff Hickman's comments were typical of those in support of the house bill when he said, "The legislature has been adding credits and incentives with no way to evaluate, to make sure the return on investment, the benefit to the state, is greater than the cost." In other words, the state just created a way to perform a Cost-Benefit Analysis (CBA) on any ED scheme. Of course, government officials are good at making their investments look profitable in some way.
Here is the catch. We would not need this new commission or their CBAs if our leaders would completely eliminate immoral ED schemes. CBAs only help you decide if an investment might be profitable, but they cannot tell you whether the investment is moral or immoral to make in the first place. So what if a government program is profitable by a utilitarian standard of the state's choosing? If that profit came from theft, from unfair advantage, or from unconscionable activities, would it be right? Would it be legitimate?
I am continually concerned about the lack of moral clarity coming out of our state capitol on economic development issues. We certainly want to see our economy grow and develop. Growth of the economy means that individuals are being successful, that wealth and happiness of individuals in our society are increasing. The question is how to stimulate economic growth.
The real answer is, as usual, the free market. The only moral way to grow the economy is to get the meddling state out of everybody's way. Stop stealing income and wealth through taxation. Stop stealing property through ad valorem taxes and eminent domain. Stop regulating and licensing livelihoods out of existence. And please stop competing against private citizens with their own money.
It is time to put away the utilitarian ruler and to grab the moral measure which comes from the rightful ruler.
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