How a people spend their money tells you a lot about their values. That’s true for a society and for an individual. And what pending legislation at the state and federal levels tells us about our values is not heartening.
This legislation is full of reverse RoHos, short for Robin Hood. A reverse RoHo is a government policy that takes from the poor and gives to the rich. Unfortunately, these remain all too common, even as budgets shrink.
Take a pending proposal to use tens of millions of dollars of public money to build a parking facility for the Mall of America. At a time when we are cutting health benefits for low-income children, we are contemplating a deal that would, in effect, give millions of dollars to the mall’s wealthy owners.
Yes, we hear the same old bilge about how the public money would produce additional sales tax revenue that would never materialize otherwise, and thus the facility would pay for itself.
That ignores the fact that the same amount of money spent elsewhere would stimulate the economy by an equal or greater amount. The same would be true if the money simply were left in taxpayers’ pockets.
Moreover, yet another public subsidy to the wealthy owners of a large business further tilts the playing field against all of the small retailers that must compete with their subsidized counterparts at the mall.
Elected officials like to wax eloquent about the virtues of small businesses and how their innovation and job creation benefit society as a whole. Then they vote for a measure like this that slaps hundreds of small businesses operating in the shadow of our subsidized megamall right in the face.
Tax increment financing is the economic monster that should have a stake driven through its heart. It has so mesmerized the villagers, however, that instead they drop to their knees in obeisance.
If TIF is an unkillable creature at the state level, federal disaster payments are the cockroaches of our nation’s farm policies. Just when you think you have them exterminated, they come crawling back out of some crack.
Farming has always been a risky business. Profits depend on fickle weather and volatile product prices. A drought, frost, flood or hailstorm can wipe out a year’s profit and more.
Historically, farmers had few ways of managing the risks they faced. In many areas, they could buy insurance against hail damage, but that was the only climatic risk they could insure against.
They could use commodity futures markets to hedge risks of volatile prices, but until the past couple of decades, few knew how to use futures effectively.
Instead, farmers depended on federal farm programs to reduce rural poverty and shield them from price and weather risk.
When first instituted in the 1930s, such programs had a certain logic. A third of all households still lived on farms, and average farm incomes were well below the national average.
But as agriculture and the national economy have changed, government commodity programs increasingly cause perverted outcomes. Most of the benefits go to a small fraction of all farmers, those with income and wealth well above the national average. Rather than preserve small farms, they promote concentration in agriculture.
No aspect of farm programs is more perverted than disaster payments. The government long subsidized all-risk crop insurance. But whenever there was a noteworthy drought or flood, Congress also appropriated money for direct “disaster” payments. Farmers grew to expect these whether they bought subsidized insurance or not.
Disaster payments have become so pervasive that many in Congress want to make them a permanent part of federal programs, rather than something enacted on a case-by-case basis.
Even worse, members of Congress from relatively arid states like Montana want their farmers to get ongoing compensation for the fact that they get less rain on average than colleagues further east. By this logic, landowners in the Mojave Desert ought to get whopping payments because their crop yields are poor.
The farm bill contains many other provisions that harm society as a whole, but the broadening of disaster coverage is particularly egregious.
Our country is in a growing fiscal crisis. Perpetuating unjust and wasteful programs like TIF and disaster payments is not just a quirk of our political system. It reflects a failure of our national values.
© 2008 Edward Lotterman
Chanarambie Consulting, Inc.