Wednesday, February 22, 2006
On this day:

Welfare for Wal-Mart

Birmingham Mayor Bernard Kinkaid has proposed that the city help lure a new Wal-Mart to town by paying $11 million of the $21.4 million purchase price for a 50-acre site currently occupied by the all-but-empty Eastwood Mall.

I think this is a supremely bad idea, but before anyone accuses me of jumping on the left's anti-Wal-Mart bandwagon, consider this: What's being offered here is not a broad-based tax cut, nor is it a taxpayer-financed infrastructure improvement. If it were either of those things, I'd say go for it. Those are legitimate, "conservative" means for improving the overall business environment; they are consistent with principles of limited government and they do not interfere with free markets. However, Mayor Kinkaid's proposal is corporate welfare in the extreme, constituting a direct subsidy to one of the world's richest corporations.

The problem, of course, is that some other city down the road (in this case - Irondale) is likely to draw up its own "incentive package," thereby initiating a shooting match over which city's politicians are most adept at swindling the taxpayers.

There is a solution to all of this: the state could act to end corporate welfare altogether. The first step is to define "corporate welfare." I like the Cato Institute's definition:
Corporate welfare should be carefully defined as any government spending program that provides unique benefits or advantages to specific companies or industries. That includes programs that provide direct grants to businesses, programs that provide research and other services for industries, and programs that provide subsidized loans or insurance to companies.

Once we've done that, the rest should be easy, don't you think? Well, maybe not. Democrats occasionally give lip-service to ending corporate welfare, but when push comes to shove, they like big government better. Republicans - well, ditto - although that's not entirely fair: there are still quite a few libertarian, i.e. classical liberal, Republicans out there, but they aren't nearly as vocal in the age of GWB and "compassionate conservatism."

So, while prohibiting corporate welfare would save money, impede corruption, and limit the scope of government power, it wouldn't purchase many votes. This frivolous waste of money is something to keep in mind, though, the next time your mayor and city council come begging for more taxes.