Selective Economics

There is a curious attitude in some quarters that holds that government redistribution of wealth from taxpayers to certain business investors is somehow morally superior to skipping the redistribution but allowing businesses in general to keep more of what they earn.

In recent weeks we have seen government employee groups and union bosses characterizing a state budget deal that includes a substantial business tax cut as a sellout that does not “guarantee” a single job being created. At the same time, these same special interests constantly praise the bailout of two of the formerly “Big Three” automakers.

At the Detroit Regional Chamber’s Mackinac Policy Conference this past weekend, UAW President Bob King provided a case study of this attitude. In an interview with the Detroit Free Press, King said this about Michigan’s just-concluded business tax and budget cuts: “I think the extremism in the budget and this ideology, of giving everything to business, we’re giving $1.9 billion (in tax breaks) to business. What are we getting in return? The hope that maybe they’ll spend that money and create more jobs here in Michigan? I don’t buy that.”

In contrast, on the bailout of General Motors and Chrysler he said: “We're bringing many manufacturing jobs into this country because Democrats under the president's leadership understand the importance of manufacturing to the U.S.” Last week, King joined former Michigan Gov. Jennifer Granholm and former Ohio Gov. Ted Strickland in praising the bailout. Granholm credited the funds with creating and “saving jobs.”

In other words, it’s “good” when General Motors and Chrysler receive money from taxpayers, but “bad” when other businesses are allowed to keep more of what they earn. In this worldview, jobs are only created when government bureaucrats get to pick and choose which politically connected companies receive taxpayer money.

In this, union bosses and politicians demonstrate an implicit understanding of the job-creating impact of business investment — at least when it benefits their select group. However, their hostility to private free enterprise creates a contradiction for them, which they resolve with a preference for capital allocation by bureaucrats and politicians instead of through voluntary market processes. The result is redistributing taxpayer dollars — including taxes taken from successful private businesses —  to politically well-connected firms that may or may not have a viable business model.

This is not the American way. Government shouldn’t be a “player” in the economy, using politics to pick winners and losers. It should instead be a neutral referee, ensuring a level playing field for every business with special bailouts for none.

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