This article originally appeared on BAMSouth.com and is published on MississippiPEP.com with the permission of the author.
BY: Danny Bedwell
The manner in which we do business in Mississippi is changing and I’m not certain it is for the better.
For thousands of years, the old adage about building a better mouse trap stood true. But unfortunately, it is no longer necessary to build a better product at a cheaper price. Businesses have found that it is much cheaper to just buy the favors of the political harlots in Jackson than it is to compete in a free and unfettered marketplace. It is because of this recent trend of coupling government with industry that the rules have changed. Cronyism and corporatism have replaced capitalism as our economic system, and this is not good.
The major players of this new centrally planned economic system are the Governor, the State Legislature and the Mississippi Development Authority. These entities guide and direct the marketplace. They provide public money to some businesses, but not all. They provide corporate tax breaks for some companies, but not all. They provide reduced utility rates for some businesses, but not all. They provide for employee training for some companies, but not all. It is in this manner that they choose who shall have a business advantage and who shall not. Market forces of competition, supply and demand, and customer service no longer decide the marketplace. These decisions are left to the wise and benevolent economic planners in our state government.
This idea of having wise and benevolent economic planners is not a new one; it has been around for centuries. Over the years, wise and benevolent planners have made all sorts of claims. Some have said that they could make the trains run on time in Milan. Some have nationalized their countries petroleum industry. Others, like our current central planners, provide tax breaks and public funds to their favorite companies. But one thing has been a constant over the years. Wherever these central planners have gotten involved, prices have soared, customer service has worsened, and the quality of the product produced has declined.
This idea of a centrally planned economy is spreading like wildfire across the state. Economic Development Councils are popping up in every county. County zoning boards are re-zoning residential and agricultural areas. County and city councils are buying up key real estate. They are spending tax payer dollars to improve internet service and utilities for these areas. They are buying up all of the rail yards for their planned industries. They create “Innovation Districts” and then give public aid to companies that will build there. The Brookings Institute defines Innovations Districts as “Geographic areas where leading-edge anchor institutions and companies cluster and connect with start-ups, business incubators, and accelerators. They are physically compact, transit-accessible, and technically wired and offer mixed use housing, office, and retail.”
Prices for real estate that have rail access have skyrocketed because of these Innovation Districts. My own company is currently seeking to expand operations here in Mississippi. Over the past several months, we have been searching for a rail yard in the Lowndes County area. I can get a discounted rate for a rail yard here as long as I go on the public dole with the MDA. But if I want our company to succeed on our own merits, then I’m going to have to pay an extremely inflated price for the rail yard.
The MDA and the “Innovation Districts” have caused these inflated rates for private rail yards. They are causing me to raise the price of my product to pay for these artificially inflated costs. If my competition were to move into one of their planned Innovation Districts, they would automatically have a business advantage over me because of their cheaper rail rate. The State Legislature and the Mississippi Development Authority are deciding who shall have a business advantage and who shall not. The businesses that will accept the corporate welfare have a business advantage over those that do not. The lesson that the state legislature and the MDA are teaching here is crystal clear: Go on corporate welfare, or lose your business.
Just last month, the KiOR bio-fuels plant in one of the Innovation Districts in Columbus filed for Chapter 11 bankruptcy. The KiOR bio-fuels plant was the brain child of the Mississippi Development Authority. The MDA invested $75 million into the project and it now appears the MDA will sell the plant at scrap metal prices. How could this happen, you ask? It is because we stepped away from market capitalism where supply and demand are the key decision makers and allowed “wise” and benevolent central planners in government to be the key decision makers. As a result, the taxpayers of Mississippi are now on the hook for $75 million.
Those wonderful central planners like to cite statistics to prove their success. They often talk about the thousands of jobs created or the millions dollars of tax revenue generated by their grand scheme. But as Frederic Bastiat pointed out in 1850, these are only things that are seen. But what about the unseen?
The hundreds of millions of dollars that the MDA graciously hands out to their friends must come from somewhere. It does not fall out of the sky. So where do they get this money? They collect it from me and you via taxes. Yes, that’s right: they collect my tax money and hand it over to my competitors. They take money out of the waitresses tip jar and hand it over to wealthy industrialists. In the case of the Yokohama tire plant in West Point, the MDA took money from the employees at Cooper Tire in Tupelo and handed it over to their competitors to build a plant a mere 45 miles away. You cannot rationalize these things by claiming that you are creating jobs or that the State coffers will benefit because of it.
If the state legislature in Mississippi is sincerely interested in creating jobs and creating wealth for people, then they need to step away from their habits of cronyism and corporatism and allow capitalism to work. They should de-fund and dismantle the entire Mississippi Development Authority and all of its tentacles. If they want to see business thrive they need to get rid of corporate taxes, inventory taxes and the plethora of business choking regulations. Implement a series of imposts and excises at the county level and businesses will flock here by the thousands.
Until these things happen, Mississippi will simply be known as the state where it is much cheaper to purchase the business decisions of the political harlots in Jackson than it is to compete in a fair and open marketplace.
Danny Bedwell retired from the military in 1995. He now lives in Columbus MS with his wife and teenage daughter. He is the State Chairman of the Libertarian Party of Mississippi, former candidate for the US House of Representatives, and a small business owner. He is a frequent speaker at community and collegiate functions across Mississippi on the topics of taxation and Constitutional governance.