Victims of subsidies | VICTIMS OF CRONYISM

TIM CARNEY: Enterprise and business are good.
Competition and the pursuit of profit create countless benefits for workers,
consumers, communities, and society as a whole. Some politicians take the wrong
lesson from this, though, and decide that if business is good, government ought to
subsidize it. This benefits the subsidized businesses and some of its
neighbors, but as always, such handouts create plenty of victims. Federal, state,
and local governments hand out billions of dollars every year in incentives such
as grants, tax credits, and other subsidies. One
business that politicians love to subsidize is sports arenas and stadiums. SCOTT WALKER: We propose a state investment of 220 million dollars to build a new arena. TIM CARNEY: Billionaire owners and sports leagues often demand these subsidies. Politicians
also say these subsidies generate economic growth, but the money for these
subsidies doesn’t come from thin air. It comes from taxpayers. So instead of
letting the owners and fans pay for the team, subsidies shift the cost to
everyone, including the people who aren’t watching the games. For instance,
taxpayers in Illinois are still paying for old renovations made to the Bears
Soldier Field and for the White Sox subsidized stadium built in the 1980s.
Meanwhile, Illinois is ranked as one of the worst states fiscally, with tax
payers constantly saddled with tax hikes. When stadiums get special tax credits,
that shifts more burden on to the taxpayer. When they get cold hard cash
that also comes from the pockets of the taxpayer. This drain on government
coffers also hurts the public by taking up money that could be used for public
services, such as police, roads, and schools. And there are other, less obvious victims
of these subsidies. Subsidies can drive taxpayer and consumer spending to the
arena and its neighborhood, but it typically doesn’t increase total
entertainment spending in a metropolitan area. Instead, a new
stadium draws entertainment spending away from other places — restaurants, movie
theaters, bowling alleys — that are in other parts of town. And redistributing
economic activity according to politics creates one more victim: the economy of
the whole city. In a 2017 poll of economists, an overwhelming majority
agreed, quote, “Providing state and local subsidies to build stadiums for
professional sports teams is likely to cost the relevant taxpayers more than
any local economic benefits that are generated.” So direct subsidies are great
news for subsidized companies, but they harm many others. They lead to hikes on
taxpayers, they drain resources from other public services such as police and
schools, they put other businesses at a disadvantage, and they slow down the
local economy as a whole. It’s just one more example: Every time the government
tries to pick an economic winner, it creates economic losers. These are the
victims of cronyism.

6 thoughts on “Victims of subsidies | VICTIMS OF CRONYISM”

  1. There is one industry which MUST have government subsidies, because it is essential and no free market exists.

  2. I'm loving all these victims of cronyism videos y'all are doing. Its almost as if the government is bad at allocating resources lol. This is the real thing that public education should be teaching… but fat chance of that since they are the benefactors of cronyism.

  3. Cities and counties should treat major subsidies like shark tank. We'll give you the money, but we're asking for a 40% controlling stake until the debt is paid then the people have a 10% controlling stake and the people in the area get their profit check at the end of the year.

  4. Federal and State level, such as Illinois, should slash the NEA and other funding to Arts Agencies. Those are the real drains on society. Talk about trying to saddle a dead horse…

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