Real Economy Creates 81 Jobs For Every 1 Promised by Business Subsidy Program

Michigan Capitol Confidential ^ | 2/10/2017 | James Hohman

[MichCapCon]

Every week in Lansing, big businesses lobby Michigan legislators for more and larger tax breaks and subsidies. As they do, regular taxpayers shouldn’t forget that Michigan already pays out hundreds of millions of dollars to favored firms.

Politicians justify those wealth transfers by pointing to promises of big employment gains in the future. But citizens should take note that the state’s job picture is already strong — and for reasons that have nothing to do with corporate welfare handouts for a few lucky developers and business owners.

People who watch the economy look at the numbers for employment and unemployment. Those monthly snapshots hide the significant amount of job turnover that occurs. The most recent monthly report said that in 2016, Michigan employment increased by 5,000 people from November to December. But even more people were hired, fired, retired, transferred or found employment elsewhere in those two months. A lot more.

The most recent figures show Michigan’s private sector employers added 218,793 jobs in the second quarter of 2016. They also shed 194,637 jobs. That’s a turnover of one out of every 19 jobs in a three- month span.

Compare these figures to the job announcements made by the state agency that administers the business subsidies. In the same three-month period, the agency announced subsidy agreements with companies that pledged to create 2,679 jobs.

The number of real jobs created was 81 times the number of subsidized jobs promised. The number of real jobs lost is 72 times more. And those promises need to be taken with a grain of salt: Companies rarely create all the jobs promised in the press releases that announce their subsidy agreements.

And even if they did, there is no evidence that taking money from many taxpayers and giving it to a relatively few favored firms creates more jobs than letting taxpayers keep it in the first place.

Real economic growth does not come from political deal-making. It comes from the thousands of people figuring out how to best look out for their families’ prosperity. State policies that make broad-based improvements to the business climate, like lowering taxes or decreasing the burdens of state occupational licenses, can help them.

[Mr. K]

One of the most insidious aspects of “Corporate Welfare”:

You start a business, invest time and energy and risk your own money to make it a success.

Then the government comes alone and gives someone else a tax break to start a new company doing the same thing. They promise it will ‘create jobs’

The new company gets tax breaks you didn’t get. The owner did not need to ‘risk’ anything- it was a known successful product. (thanks to you). They get up and running not having made any mistakes because they learned from your company.

The government congratulates itself on ‘creating jobs’, in the meantime your company is failing because they are undercutting your prices. You have to close, and your employees get laid off. They buy everything from you at bargain prices, and the politicians say they can’t be responsible for any under-capitalized businesses.

The new company owner (who is a good friend of someone in government who helped pass the original funding) gives a big donation to the politicians.

So, the old company goes out of business, a political crony gets a successful company at no risk, the politicians get big donations, and the original company founder goes broke.

THAT IS WHAT IS WRONG WITH GOVERNMENT INTERFERING IN ANY WAY WITH BUSINESS.

[marron]

We should avoid anything that looks like a subsidy.

Now, actions that help businesses and people across the board, that we can and should do. Lowering business and corporate taxes, reducing regulations, reducing government control, that helps everyone (especially as you remember that “corporate taxes” are paid in the end by customers).

I think we are going to see a significant expansion of manufacturing without any subsidies.