Tuesday, January 21, 2014

Walker's Business and Jobs failure explained by conservative MacIver Institute.

There's a reason why Scott Walker and his band of Republican pirates have failed to create jobs and attract businesses; corporate welfare doesn't work.

That's the shocking conclusion of a new report found in the most unlikely place: The MacIver Institute.

It's almost laughable the way Walker is getting played by big business. Of course corporate contributors are happy with the direction Walker has taken the state, reflected in the business survey's Scotty is all too happy to mention repeatedly. They get tax cuts and lawsuit protections with no accountability or job creation.

Despite trying to save face with reminders that lower taxes for everyone is the answer to all our problems, the MacIver Institute can't hide the fact that this study blasts the Walker administrations strategy, which has been a huge jobs and business failure from the start. Now we know why.

Give credit to the Democrats, who have been saying this all along:
Matt Mitchell, a Senior Fellow at the Mercatus Center at George Mason University, looked to see if government incentives were all they cracked up to be. He discovered that states with more incentives per capita actually have slower real economic growth.

"If local subsidies worked as advertised, we'd expect to see greater economic growth in those states that give away more subsidies. But simple analysis of [Louise] Story's data suggests that, if anything, there is a negative relationship between per capita subsidies and economic growth," Mitchell wrote for Mercatus Center.

...per capita subsidies were negatively associated with state economic growth and often the relationship was statistically significant ... Only businesses that qualify for the tax credit are rewarded, which may give them an advantage over other firms in the market. Credits also pit state against state in a competition for businesses. The State of Washington's legislature recently approved $9 billion in tax credits for Boeing, and the company still considered moving to a state with a better business climate. 

Experts argue that offering these massive incentives are actually an admission of failure. A state with a great business climate should be able to attract business without the need for extra incentives.

A PEW study argues that such incentives could also drive other firms out of the market because of higher costs. "An incentive might prompt the opening of a new meatpacking plant, driving up the price of local livestock. The new plant might be able to pay the higher prices whereas older plants without the incentive cannot," the study reads.
I know, it's all just common sense stuff Republicans have been denying for decades:
Government incentives, however, change the environment between producers and consumers. Instead of providing a product or service that consumers demand, businesses will provide whatever they are incentivized to provide. In short, a company will expend resources to gain a government incentive, rather than produce what the consumer actually wants. This is known as "rent seeking."  

Subsidies are another form of government incentives that can actually hurt economic growth. They artificially inflate the price of many items, but typically spread it over the entire country.
And guess what party is based on picking winners and losers? Hint; not the Democrats:
While it may seem like a good idea to provide incentives to businesses in a state, the data shows that it is anything but. The government picks winners and losers, creates an unstable economy, and businesses will eventually make whatever gets them the best incentive from the government.
MacIver's opposition to taxes in general ignores the maintenance and replacement costs of our surrounding infrastructure:
It is simple. Low (or non-existent) taxes that are more equitable across the board and fewer "winners and losers" incentives will lead to greater prosperity within a state. After all, the best economic development program is to not need one.

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