Lawmakers across the country are plotting to hand out millions of dollars to favored corporations. This is not how states succeed in attracting businesses. Taxpayers aren’t supposed to write big checks to big companies to locate a factory or office in the state. This isn’t how America was meant to function.
American policy is to set the rules and let everyone live under them. Equality under law, after all. The law shouldn’t take money from everyone to give it to select companies.
Yet lawmakers write a lot of subsidy checks, partly because they believe that corporate welfare is popular with voters. Lawmakers feel that they are doing something about jobs, and jobs tend to be the issue people care about most.
But abandoning principles to get a short-term gain is like cheating on a test. You score points with voters, but you fail to live up to basic standards of conduct. Like cheating on a test, subsidy checks are a pretense of accomplishment. They don’t actually improve the economy. They are ineffective at creating jobs.
How ineffective? In my home state of Michigan, corporate subsidy deals produced just nine percent of the jobs that were promised, according to a study of all subsidy announcements that made the front page of the Detroit Free Press from 2000 to 2020.
And that’s just counting jobs at subsidized plants. Most job gains and losses don’t involve state lawmakers. And Michigan is still not back to the number of jobs it had in 2000.
Voters should understand that special favors to select companies are all show, creating few and often no jobs. Lawmakers who cite subsidy deals as evidence that the state is doing something about the economy are in the same boat as the cheater who points to his test results to show that he knows something.
But there is a deeper problem with corporate welfare. America’s principles matter and are practical. They work. States don’t succeed when their lawmakers write the biggest checks. They succeed when they provide the most economic liberty to their residents.
This is how American government is supposed to work. We don’t want our lawmakers to favor some people at the expense of others. We want everyone to live under the same set of rules. Laws are made to benefit the public, not to benefit a few at the expense of the rest.
Governments throughout history and around the world tend to be run by the powerful for the powerful. The levers of power are used to benefit the elite, not to promote widespread prosperity. Policies are made to entrench leaders, not to ensure that everyone gets a fair shake.
American ideals, by comparison, say that everyone has an equal share of dignity, that the power of government comes from its people, and that government is supposed to work on their behalf. The mechanisms of government, its popular elections and constitutional institutions are meant to help elected officials discern the public interest and be held accountable to voters if they mess it up.
We want our lawmakers to debate what benefits the public, broadly understood. Too often, lawmakers these days lose sight of that. They promote their efforts to give benefits to politically favored groups and to punish unpopular groups.
When politically powerful groups come to the Capitol to ask for a handout, they’ve got an excuse — that they will create jobs. But the thing they sell is snake oil. It does not do the thing that lawmakers say it will do. Companies get subsidies anyway because of the politics; it’s tough to say no to the powerful when they say they are going to do something about jobs.
The American response ought to be to say no. Pay your taxes like everyone else and don’t ask for special treatment. It’s the American way.