The Buffalo News has a column today by David Robinson which ponders the wisdom of tax breaks for retail firms. I have explained elsewhere why IDAs are a scam.
But for once I disagree with the critics. New retail firms don't create new wealth? That's not true. If a Dollar Store opens up near me and allows me to buy stuff cheaper and faster and with less wear and tear on my car than if I had to go to Target, then new wealth has been created--mine. Sure, my gain is Target's loss but it's also the gain of some third party retailer who will benefit from my new-found wealth. At the end of the day, economic value is subjective and no third party can say that my new wealth is less or the same as Target's loss of my business.
Ironically, since the general position of IDAs themselves is to ignore the subjectivity of value and favor manufacturing over retail, I have just stated an argument against IDAs per se.
Robinson makes a good point that IDAs will ignore their physiocrat bias when it aids their cash flow. That shows that the prime motive of IDAs (and every other government agency) is self-interest and self-preservation. Central planners cannot actually know what will improve the economy so they default to their naked self-interest. For example, when Premier Wines got a tax break, it wasnít because the hacks on the IDA board were able to calculate that moving this company would benefit the local economy. Thatís utter liberal nonsense. Rather, they likely favored the deal because Premier has been a reliable bankroller of hack politicians for years.
(I tried to convince the tea party movement to boycott companies like Premier but was unsuccessful.)
The main flaw in IDAs is the fact that they involve central planning. Central planning fails because the planners must ignore the preferences of 6.8 billion people as expressed in free market transactions. 6.8 billion people are smarter than Chris Collins and the Boys Downtown.
IDAs are a vital part of the evil corporate welfare regime that favors the political class and screws the rest of us.
With each loan or tax break they bestow, they create yet another ally of the status quo. Even firms that havenít gotten a favor yet are reluctant to support the tax revolt lest they be denied in the future. IDAs harm the economy but increase the power of slimy politicians.
Please support our National Rally Against Corporate Welfare on October 12th in Albany.