Musings from Brian J. Noggle

David Nicklaus Promotes Crony Capitalism

I've often said that David Nicklaus is the best columnist in the St. Louis Post-Dispatch, which doesn't mean I cannot disagree with him, especially when he embraces crony capitalism, like in the column today entitled "Missouri seems too stingy to be slick on luring jobs". Here's the lead:

The great economic war between the states has two kinds of combatants - the stingy and the slick.

Missouri has always been among the stingy. It tries to lure employers with its low-tax environment, and it might sweeten the pot with a few tax credits.

With that table-setting, he proceeds to explain why Missouri is lacking because it doesn't dangle large incentives before companies to make them relocate here or to keep from relocating elsewhere.

Nicklaus seems to argue that the Missouri state government should spend state tax money to buy businesses' loyalty, or at least their location in Missouri. While having businesses and employers in the state does affect the citizens positively with jobs and tax revenue for the state which could provide benefits to the citizens, it's rather circular to use the increased tax revenue to provide tax incentives to businesses.

Crony capitalism occurs when government officials favor certain businesses with sweetheart deals at the expense of others, and that's what tax incentive packages do; they give certain large (and powerful) companies advantages over the rest of the field, especially the businesses too small or inconsequential to inspire the state government's lust.

So pardon me if I disagree, Mr. Nicklaus. Although other states' governments enjoy squandering their residents' tax money to benefit the few (the employees who work for the company and the state's employees who get more money to spend), I don't think that the Missouri state government should competitively transgress against us taxpayers. Although Missouri might lose a couple big fish, ultimately it will benefit from a continued low-tax environment that encourages entrepreneurs to start their businesses here and to maintain their businesses here.

Even if our only benefit as citizens comes from the satisfaction in knowing that our state understands its limitations, almost.

- posted by Brian J. @ 8:07 PM