Good Jobs First, a Washington, D.C.-based national policy resource center, has released an extensive study entitled Megadeals: The Largest Economic Development Subsidy Packages Ever Awarded by State and Local Governments in the United States.
Louisiana, with giveaways totaling $3,169,600,328, ranked sixth behind New York, Michigan, Oregon, New Mexico and Washington in the total dollar amount of so-called megadeals, the report shows, $65 million more than much-larger Texas, which had $3,104,800,000.
Louisiana, with 11, tied with Tennessee for fifth place in the number of such budget-busting deals behind Michigan’s 29, New York’s 23 and 12 each for Texas and Ohio.
The report, authored by Philip Mattera and Kasia Tarczynska, is somewhat dated in that it was published in 2013 but it still offers some valuable insights into how states, Louisiana in particular, was more than willing to give subsidies worth millions upon millions of dollars to corporations in the name of new jobs that rarely, if ever, materialized.
The subsidies included in the report, it should be noted, do not include tax incentives, which is another type of inducement. Accordingly, Wal-Mart, which has received more than $1.2 billion in total taxpayer assistance, is not included because its deals were worth less than $75 million each. Good Jobs First has documented giveaways to Wal-Mart in a separate report.
The single biggest example of corporate socialism contained in the report is the 30-year discounted-electricity deal worth an estimated $5.6 billion given by the New York Power Authority to Alcoa. In all, 16 of the Fortune 50 corporations (excluding Wal-Mart) were included as recipients of the report’s megadeals.
The biggest single deal for Louisiana—and the fifth-biggest overall—was the $1.69 billion subsidy in 2010 for Cheniere Energy in the form of property tax abatements and other subsidies for the Sabine Pass natural gas liquefaction plant. That project, the report said, created 225 new jobs—a cost to the state of more than $7,500 per job, the largest single cost-per-job project contained in the report.
Shintech, received a 2012 deal worth $187.2 million in subsidies to the company. That project was said to have created 50 new Louisiana jobs at a cost of $3,744 per job.
One of the biggest recipients of governmental largesse since the year 2000 has been General Motors with more than $529 in subsidies nationwide. Yet, it was General Motors who pulled up stakes pulled up stakes in 2012, leaving upwards of 3,000 former employees without jobs.
The megadeals cited by Good Jobs First in its report were dwarfed, however, by the seemingly insane subsidies given to banks and investment firms since 2000.
Of the top 21 recipients of bailouts by the federal government, the smallest was that of a company most probably never heard of: Norinchukin Bank, a Japanese cooperative bank serving more than 5,600 agricultural, fishing and forestry cooperatives from its headquarters in Tokyo—and it received $105 billion (with a “B”).
That’s nothing when compared with the heavy hitters. In all, 12 foreign corporations received loans, loan guarantees or bailout assistance from a generous federal U.S. government, led by the $942.7 billion received by the United Kingdom’s Barclays.
But Barclays ranked only fifth in terms of subsidies received in the form of federal bailouts:
Consider, if you will, the top four:
- Bank of America $3.5 trillion;
- Citigroup $2.6 trillion;
- Morgan Stanley $2.1 trillion;
- JPMorgan Chase $1.3 trillion.
All of this, of course, was the direct result of deregulation pushed by a congress whose members were supported by generous campaign contributions from CEOs, officers and stockholders of those very firms.
And yet we have elected officials—and citizens—who dare to rail against so-called welfare cheats, the costs of illegal immigrants, and the costs of health care for the poor.
These are the same people who wring their hands at the cost of social programs yet justify the expenditure of billions of dollars per day in military contracts to campaign contributors to support wars with no apparent objective (other than political payback) and with no end in sight.
These are the same ones who look us in the eye and tell us they support free market capitalism.
But pure capitalism doesn’t give away the public bank in order to entice some company that was probably coming to your state anyway. After all, if Louisiana truly has all these rich oil and gas deposits (and it does), does anyone really believe the oil and gas companies are going to locate their refining plants and pipelines in Idaho in order to mine for Louisiana’s resources?
You can check that box “no.”
What is the logic behind subsidies to lure an industry just so it can exploit cheap labor? Wouldn’t it be smarter to invest in public education and higher education so that our citizens might be capable of demanding higher wages for their knowledge and skills? Why would we opt to perpetuate the cycle of poverty by sacrificing taxpayer dollars to the advantage of some faceless corporation who cares not one whit for our citizens?
Free market capitalism doesn’t reward corporations with these kinds of subsidies while the recipients are simultaneously sending job oversees, depriving Americans of job opportunities.
Pure capitalism would dictate that each and every business in America succeed or fail on its own merit, without having to depend on governmental handouts.
Anything else has to be considered as something akin to (gasp) ….socialism.
But insisting on capitalism for the poor and socialism for corporations and the wealthy is a formula for disaster if ever such formula existed. The two philosophies are simply not compatible
And you will never get that lesson from the disciples of Ayn Rand.