Government Role Hurts Enterprise

May 6, 2009 9:08PM

By Dr. Dale Bails State lawmakers in Nashville have joined the ranks of states willing to give away the store under the guise of economic development. A measure has amended the “Megasite Authority Act of 2007” to let the state purchase, develop and turn land over to local authorities using proceeds from government bonds. This megasite authority would also have the power to “purchase” (legalese for appropriating private property using the power of eminent domain) land for new highway ramps, rail spurs and other improvements that are needed to make megasite economic development schemes viable. Economic development programs, like these megasites, have been around for years, under a variety of names. Lawmakers usually claim these taxpayer giveaways and property takings will “create” or “save” jobs. However, virtually all scholarly research casts doubt on these claims. Elected officials unqualified There are two fundamental flaws with these economic development programs. First, no matter how well-intentioned, state and local officials simply do not understand the state’s economy in all its detail. Second, government intervention in the normal operations of the market system involves picking winners and losers. Whenever government gives to one business, it takes away from another. In addition to all of the existing businesses that suffer as a result, potential entrepreneurs are discouraged from starting competitive endeavors, since tax breaks given to a lucky few businesses mean higher taxes for all others. There is an alternative to these discriminatory state development programs. It is called free enterprise, and it provides a level playing field for all and gives special favors to none. On a somewhat personal level, a person seeking political office once asked me how to respond to a businessperson who asked, “What are you going to do for me?” The response I provided was straightforward: “As a political officeholder, I will get out of your way and let you do what you do best.” Innumerable studies have shown that states with the lowest tax and regulatory burdens and the freest markets have the highest sustained level of economic growth. Government at all levels should concentrate on what they are supposed to do and to stay out of arenas in which they are doomed to fail. ‘Not yours to give’ State lawmakers should review the legendary speech given by frontiersman and lawmaker David Crockett, which is aptly titled: “Not Yours to Give.” In it, Crockett tells of a constituent who taught him that the “power of collecting and disbursing money at pleasure is the most dangerous power that can be entrusted to man. … While you are contributing to relieve one, you are drawing it from thousands who are even worse off than he.” Crockett believed government leaders shouldn’t be in the business of taking taxpayer money and doling it out to favored groups. State government leaders today should listen to Crockett’s wise words. Quit giving away the store. It is not yours to give.