Sunday, January 13, 2008

"This isn’t about capitalism or class warfare. It’s about a gamed system."

The only economic lesson you really need: Those with the gold make the rules

January 13, 2008

by Jim Buchanan
Asheville Citizen-Times
Copyright 2008

Different things make different people angry. Paris Hilton makes a lot of people mad. Tailgaters on the interstate make other people mad. Yappy little dogs, people engaged in idle chitchat taking up aisles at the grocery store or cable TV news make people mad.

But for that sinus clearing, steam-c0ming-out-the-ears mad, I turn to David Kay Johnston.

Johnston is a Pulitzer Prize-winning reporter who probably knows more about the way the U.S. tax system works than … well, than anyone not using it to make a fortune. He has a new book out, the wordily-titled “Free Lunch: How The Wealthiest Americans Enrich Themselves At Government Expense (and Stick you With the Bill).’’

I’ve read only excerpts of the book, but interviews with Johnston on National Public Radio and at the pro-libertarian Web site ReasonOnline have provided plenty of grist for the anger mill.

A sampler box of outrages

Johnston outlines how a few powerful people, mainly lawyers and lobbyists, have warped the political system via the tax code and a system of giveaways to make a select few of the rich richer yet. A few tidbits:
  • The owners of New York’s Mets and Yankees stand to haul in $1.3 billion in public funds. (By the way, sports franchises are masters at this game.
  • Mr. Tax Cuts himself, President George W. Bush, along with his partners, made his fortune through a tax increase to build a new stadium for the Texas Rangers — on private land seized by eminent domain — and turning around and selling the franchise. For an investment mainly consisting of a loan of a half-million dollars, Bush walked away with something between $10 million and $14 million.)
I’d heard that story; one I had not is that big-box stores often get sweetheart deals when they move into a community; they not only get a pass on property taxes, they actually get to pocket sales taxes to pay for the cost of the store.

Public gets shafted

Feel free to ask any small business owner if they think that’s fair.

For that matter, ask yourself. Every such deal means money for parks, police, schools and garbage pickup is being sucked out of communities.

The tale of outdoor gear merchandiser Cabela’s in Hamburg, Penn., was an eye-opener. It received $32 million in local subsidies to locate in the small town — an amount totaling $8,000 for every resident, an amount that could fund the town’s entire budget for something like 10 years. Johnston found that in its first three years as a publicly traded entity, Cabela’s had $223 million in profits, and had received $293 million in subsidies.

The deal with Hamburg was supposed to draw in people from surrounding states and bring an economic boom, drawing 4,100 cars a day. A recent count found 308, and only 68 from out of state.

Politicians in the game

If this sort of philosophy, which has been prevalent for the last 30 years, produced real prosperity, that would be one thing. Given that as a nation we’ve spent $8 trillion we didn’t have over that time frame, it appears to be quite another.

Until we unplug politicians from the money machine necessary to buy airtime and get elected, they’ll never be unplugged from the people giving them money and asking for such favors. It’s really that simple.

This isn’t about capitalism or class warfare. It’s about a gamed system.

At ReasonOnline, Johnston said, “… I have no objection to people getting wealthy. Just get wealthy off hard work and enterprise, not getting government to pass rules no one knows about that reach into my pocket and take money out of it.’’

Sounds about right.

Readers can write Buchanan at P.O. Box 2090, Asheville, N.C. 28802; phone him at 828 232-5841; or e-mail him at

© 2008 Asheville Citizen-Times:

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE