By: Richard D. Wolff
December 4th, 2012 4:00pm
The headlines blare that businesses get all sorts of very costly federal, state and local “deals” – subsidies, tax reductions, and benefits. They deliver little real social benefit in return. [http://www.nytimes.com/2012/12/03/us/winners-and-losers-in-texas.html?hp; http://nyti.ms/SzxwZI]
This is a very old story about our political economy. Corporations threaten to close shop, leave, or reduce payrolls, etc. Without access to the corporations’ real books and records, local politicians and the public cannot reliably assess corporate threats. Politicians fear public blame if “jobs are lost.” So they cave. For them, publicity now for “jobs saved” matters more than problems later from tax revenue lost when deals for corporations fail to deliver the promised benefits.
Corporate promises for jobs saved (or “jobs gained” in deals for arriving corporations) are usually wildly exaggerated. They can do that because studies to assess long-term costs and benefits of deals given corporations are rare.
The hard truth is that corporations cannot obtain deals from politicians if their purpose is higher profits. They need a rationale that sounds better. So they justify their deals as benefiting everyone: for example, “creating” or “protecting” jobs. As the articles cited above show, the promised benefits for everyone rarely occur. Meanwhile profits for corporations do get boosted. These deals are major “gifts” politicians give.
A better approach would begin by ending these corporate gifts. The billions saved would instead be used to support workers and local communities in taking over and cooperatively maintaining any factories, offices, and stores threatened with closure by corporations. The results of such a change could be remarkable. Corporations would less likely threaten abandonment of their operations. Enterprises owned and run by local workers and communities would much more reliably stay in place, survive, and grow. Taxes used in this way would yield far better social returns.
Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst and Co-founder of Democracyatwork.info. He is currently a Visiting Professor at the New School University in New York. Wolff is the author of many books, including Democracy at Work: A Cure for Capitalism, Occupy the Economy: Challenging Capitalism, and Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It. He hosts the weekly hour-long radio program Economic Update on WBAI (Pacifica Radio) and writes regularly for The Guardian, Truthout.org, and the MRZine. His appearances include the Charlie Rose Show, Democracy Now!, Al Jazeera English, Thom Hartmann, RT-TV, and NPR. His personal work can be found at rdwolff.com. Wolff lives in New York with his wife and frequent collaborate, Dr. Harriet Fraad.