Imagine that you believe society’s needs are best funded via the old Marxism “From each according to his ability…” Imagine that doctrine tells you to put the heaviest taxes on the wealthiest, most capable, and most affluent (while taxing everyone else as well, in individually smaller but cumulatively as-burdensome bites). Imagine that you believe the Best-and-Brightest, who populate the marble halls of government, have the knowledge and wisdom to manage the economy and guide its biggest corporations in order to best benefit the working masses and the needy.

Now, imagine that those same Best-and-Brighest pursue that last part by giving back to the wealthiest that which they took from them (and, from everyone else, in those small-but-many bites).

Does this sound like what a Best-and-Brightest mind would consider wise?

And, yet, time and time again, that’s exactly what our left-leaning politicians do. The latest such head-scratcher is the massive giveaway to Amazon by New York City and Arlington, VA, in order to entice Amazon to build new headquarters in those locations. New York (city and state) coughed up nearly $3B in tax breaks and grants over the next 25 years, tax breaks and grants ostensibly tied to the creation of 25,000 jobs.

Governor Andrew Cuomo crowed that the Amazon offer “costs us nothing, nada, niente” and claims it’ll be a “big money-maker.” Such is the promise of every nine-figure tax break offered to billionaires by politicians (think: almost every major sports stadium in the country), and it’s a promise that routinely fails to bear fruit. Of course, by the time such promises fail, those politicians have moved on to new positions or retirement, and so aren’t around to face taxpayers’ wrath.

Taxpayers should be angry about this. The argument that the tax breaks cost “nothing” may be narrowly true, but the governments that granted them still want and need money to do what they do, and so it falls to everyone else to carry the load of those tax breaks.

There’s a word for this sort of government-business dealing: cronyism. Some call it crony capitalism, but there’s nothing capitalistic about government favoritism. The phrase suggests that this sort of thing is a variant of capitalism. It is not. It is, rather, in the category of economic fascism, i.e. government exerting close control over privately owned business.

Many New York Democrats not named Cuomo or DeBlasio are voicing their objections to this deal. They are right to do so, but their reasons for doing so are entirely backward. They don’t object to the cronyism, but instead are unhappy with the terms of the deal. They’re also claiming to be quite unhappy with the back-room nature of it all. A cynical reading of this (and I’d suggest an accurate one) is that they’re unhappy they weren’t in that back room. The NYC deal circumvents some of the house-of-horrors/Byzantium that is the New York City real estate development process, where a seemingly endless supply of malcontents, grandstanders, griefers, and self-servers have a seemingly endless supply of monkey wrenches they can throw in the way of anything new and anyone who doesn’t give them their pound of flesh.

This Amazon deal is good for a select few. It’s good for Amazon, which gets to build a hub in a city that is already a magnet for many. It’s good for the politicians who made the deal, because they get to sell it as an achievement. It’s good for the owners of the real estate that Amazon’s going to be buying or leasing. It’s good for a number of “right place right time” people. These specific “goods,” when they reach a critical mass, impel such cronyism to fruition.

Therein lies the boiler plate for big government in practice: Strong benefit that’s concentrated for a few, and diffuse detriment spread across many. The former have a lot of incentive to press for something, while the latter don’t have nearly as much motivation to resist. And, the bigger government is, and the more complex and repressive its regulations are (New York State consistently ranks at the bottom of economic competitiveness rankings), the more opportunity for this cronyism to take place. And, perversely, politicians will argue that such deals are necessary to compete.

Here’s a novel idea. No more cronyism, no more making such deals to convince big employers to locate somewhere. Instead, how about the politicians work on making the economic environment more attractive for all businesses and entrepreneurs? How about state and local governments get themselves out of the way, and reduce its baseline hostility to job creators? How about governments stop playing the double-ended game of taking away and giving back? How about not being unhappy about “missing out” on some big company’s rent-seeking ways?

Wouldn’t that be nice?

Peter Venetoklis

About Peter Venetoklis

I am twice-retired, a former rocket engineer and a former small business owner. At the very least, it makes for interesting party conversation. I'm also a life-long libertarian, I engage in an expanse of entertainments, and I squabble for sport.

Nowadays, I spend a good bit of my time arguing politics and editing this website.


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