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COLUMN: Can we put an end to corporate socialism already?

Thursday, July 1, 2010 | 12:49 p.m. CDT; updated 3:04 p.m. CDT, Thursday, July 1, 2010

* New state employees will have to contribute 4 percent of their salaries to the pension program. A previous version of this story incorrectly reported which state employees will need to contribute 4 percent to the pension program.

The Ford Motor Co. reported a profit of $2.1 billion in the first quarter of 2010. The Missouri Budget Project reports that our state workers are the lowest paid in the nation.

So, of course, our governor and legislature are on their way to making those low-paid workers subsidize that billionaire company to the tune of $100 million.

IBM, which had a first-quarter profit of $2.6 billion, is into us for $31 million in state and local subsidies — a deal negotiated in secret that turns out to be a sweet one for a number of insiders, as the Missourian’s Abby Rogers reported Wednesday.

Meanwhile, in Washington, after several Republican senators balked at a provision in the financial regulation bill that would have required the biggest banks to pay for some of the new rules, the Democrats quickly agreed to move that burden to us taxpayers.

There’s nothing illegal in any of this. It’s merely immoral. And undemocratic.

Those are just the most recent examples of the corporate welfare that distorts our economy and shifts the costs of doing business from the rich and powerful to those who don’t have enough of either wealth or political power to defend ourselves.

You’ll notice I say “ourselves.” That’s because the losers in all this are you and me.

In the Ford giveaway, the losses are direct. *New state employees, most of whom will earn less than $25,000 a year, will have to start contributing 4 percent of their salaries to their pension program, which has long been one of the benefits that compensate for low-paid careers. They’ll also have to work two years longer in order to qualify for those pensions.

The House, Senate and governor all seem to be in agreement on that. What’s a lot less certain is whether Ford will keep its car-building in the Kansas City suburbs anyway. There are reports that already the decision has been made to move away the next generation of Escape vehicles.

In the case of IBM, Columbia gets the promise of several hundred good-paying new jobs. Whether those materialize or not, the agreement is already paying off for at least one of the businessmen who negotiated it and for the LeMone family and associates.

The costs to the rest of us will include the revenue lost to state and local governments from the promised tax breaks, plus the expenses of providing public services to our expected hundreds of new neighbors.

Supporters of this socialism for the rich will argue – do argue – that this is just the way the game is played these days. Cities and states compete with each other to lure or keep increasingly scarce private sector jobs. The evidence seems clear that they’re correct. Everybody’s doing it.

That doesn’t make it right. It doesn’t even make economic sense for the country as a whole. Suppose, for instance, that the Ford giveaway works. What that would mean for the nation is no net gain. Missouri wins; Kentucky loses. In the case of IBM, the jobs moving to Columbia or Dubuque are probably being taken from New York or some other higher-cost area.

The question is this: Other than grumbling, is there anything to be done? Columbia and the state of Missouri can’t unilaterally disarm.

For one thing, we can demand more oversight from our elected leaders. For another, we can insist that corporate subsidies not be funded by low-paid workers.

Beyond that, though, we citizens should stand up, catch the attention of our congressman and senators and echo the words Bill Clinton spoke so effectively in the '90s. Remember? It’s time to end welfare as we know it, he said. In 2010, just insert the word “corporate.”

George Kennedy is a former managing editor at the Missourian and professor emeritus at the Missouri School of Journalism.

 


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Comments

Gregg Bush July 1, 2010 | 2:22 p.m.

Amen.
Similarities with a national retailer.
http://www.bizjournals.com/twincities/st...

And so it goes over and over again.
Perhaps a J-student could call Eden Prairie or do some research in Richfield, Minnesota. Ms. Rogers may be up to the task.

(Report Comment)
Robert Stinnett July 2, 2010 | 11:44 a.m.

(Part 1)
Excellent column - and I couldn't agree more with what you have written. It amazes me that despite all the evidence of this going on you still have people who think this is the "right" thing to do. They don't realize that they are selling out their town, neighbors, children and themselves so that big companies can make even more profit.

Let's take a look at the auto industry. They are known for the fact that once the "incentives" dry up they leave town. Just look at the St. Louis area for an example of that taking place over the past 30 years. So any hoped for tax gains never materialize and more often than not the city/county/state is left with a huge hole which is next to impossible to fill.

We have folks who scream bloody murder because teachers ask for a cost of living increase -- the folks who are preparing our children to be the future leaders of this country -- yet they happily line up to fork over $400 to Steve Jobs for his latest defective product or pay $80 to see a baseball game. It's clear we have lost sight of what is important to society and our country. The "me" mentality has just about destroyed us.

I read a few articles not too long ago about tax breaks in other states where the local governments are simply running out of money. It's not that the poor people (you and I) aren't paying our taxes, it's that they have given away so many tax breaks to big business they simply don't even have enough money for basic necessities -- like maintaining sewer systems or public schools. People act like these tax credits don't cost anything, when in reality they are costing us dearly.
(cont..)

(Report Comment)
Robert Stinnett July 2, 2010 | 11:45 a.m.

(Part 2)
I see all the "experts" (read: the rich and Wall St.) say the economic downturn is over. Sure it is -- for them. They have profited handsomely while you and I have suffered setbacks that honestly within our lifetimes we'll never gain back. I predict this is only just the beginning -- I think it will get far worse before it gets any better. Why? Because we haven't changed. Big business and Wall St. is still allowed to take us for a ride without consequences; people are still living way beyond their means; and even though real wages are going down, prices continue to go up. You and I are living on less than our parent's did in the 1970s. Yet thanks to having the sheet pulled over our eyes we don't see this.

It used to be if someone worked hard in life they could get ahead. Today, the game is stacked against them before they even leave the gate. The laws and system are setup for those who already have the money to profit from it. Want a small business loan? Get it line with the Fortune 500 companies who have setup subsidiary companies that pretend to be small companies and drain the pot dry. It's a game -- and they all know how to play it without consequence.

What about that eager, young carpet and tile guy who does a great job in Columbia and this IBM thing could have really helped his business grow. He never had a chance of getting that job because the big players, the inside players, didn't even allow him the opportunity to do so. He was out of the game before it even started.

(Report Comment)

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