Freeman

ANYTHING PEACEFUL

Special Laws for Special Friends

APRIL 29, 2013 by LAWRENCE W. REED

One of the pillars of the time-honored “fair field and no favor” view of government was equal treatment of all citizens. If a public legislative body passes a law, it shouldn’t carve out exceptions without extraordinary, compelling reasons. Nor should it write a law intended, without saying so, to benefit one person or company at the expense of everyone else.

Sound reasonable? If so, you may have a problem with this paragraph from an Associated Press story printed in The Wall Street Journal on March 25:

“As reports circulated that ‘Late Night’ host Jimmy Fallon is poised to take over for Jay Leno, New York Governor Andrew Cuomo proposed a bill that would give a 30% [tax] credit to any ‘relocated television production’ that films before a large studio audience, has a $30 million budget and has been on the air for at least five seasons.”

Why doesn’t Cuomo just spit it out? He had one and only one company in mind here—Comcast, which owns NBC. Cuomo wants Comcast to move Leno’s “Tonight” show from California to New York City.

Politicians pick winners and losers (mostly losers), carve out special breaks and privileges, and treat this group or that firm differently than they treat others with less clout and fewer connections. It happens all the time, and often in the name of “economic development.” (If this bothers you, then maybe, like me, you’re a Locofoco at heart).

In a country known for having forged the world’s highest living standard from what was wilderness scarcely 200 years ago, one would think that “economic development” is a well-understood concept. Unfortunately, it isn’t.

In recent decades, economic development has come to mean something other than the spontaneous, entrepreneurial phenomenon that built America. It is often thought of as a kind of activist, public-policy responsibility of state and local governments. Giving a special tax break to one particular firm because somebody in government thinks it’s a “good idea” is bad enough; worse yet is the growing business of doling out taxpayer cash and other forms of subsidy to specific companies and groups.

Many politicians find this approach attractive because it brings with it the pageantry of ribbon-cuttings and photo opportunities. They love to say, “Look at the jobs I created.”

But if politicians and the people they appoint claim to be good at picking winners and losers with other people’s money in the public sector, shouldn’t they have proven it first by earning trillions with their own money in the private sector? And even if they did, is there anything about the political environment that would give us reasonable hope they could duplicate that success when it’s not their own money they’re playing with?

Even when it doesn’t degenerate into a thinly disguised system of cronyism, government placing its judgment ahead of the verdicts of the marketplace is more than just a role of dubious value. It is, indeed, utterly preposterous. As Milton Friedman was fond of saying, “No one spends someone else’s money as carefully as he spends his own.” Political actors are the best and most reliable examples of this truism.

How about just getting a few basics right, like protecting the peace and punishing wrongdoers, and stopping this business of creating special privileges aimed at a select few? Is that too much to ask of government in a society that claims to be “free” and “democratic”?

At the very least, let’s stop referring to the toxic environment of special favors as “free enterprise.” It may be “enterprise,” but it isn’t “free” if it’s rigged.

ABOUT

LAWRENCE W. REED

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s. Prior to becoming FEE’s president, he served for 20 years as president of the Mackinac Center for Public Policy in Midland, Michigan. He also taught economics full-time from 1977 to 1984 at Northwood University in Michigan and chaired its department of economics from 1982 to 1984.

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