Government subsidies and other aid to private corporations are inefficient. They distort the market process and channel valuable resources to companies chosen by government, not by consumers. They are also subject to political influence. It’s an old story, government decisionmakers awarding contracts, loans, and grants to companies run by their relatives, friends, donors, or allies. During the Obama administration, a major Obama donor and former vice president Al Gore profited heavily from “green energy” subsidies. President Trump tried to hold the G7 Summit at his own Florida hotel, allowing him to rake in millions of dollars from the U.S. and foreign governments. Numerous similar stories can be told about state and local governments.
But now there’s a seemingly new twist: Governments rewarding or punishing companies as part of a partisan cultural war. In several recent cases, it seems that the companies in question were not so much donors or friends of policymakers, but just perceived to be on “our side” or “the other side” of some political issue. A decade ago, some Democratic politicians declared that Chick‐fil‑A wasn’t welcome in their cities because of the political views of some of its owners. That effort collapsed pretty quickly when virtually everyone pointed out any such policy would violate the First Amendment.
But look now. Gov. Ron DeSantis and other Florida Republicans are trying to punish the Walt Disney Company for expressing a political view which, as it happens, is more or less the opposite of the Chick‐fil‑A owners’ views. They weren’t dissuaded by warnings about the First Amendment, but the matter will go to court, where the Constitution is often taken seriously. In Sarasota, Florida, the Republican county commissioners awarded Rumble, a video platform popular with Trump allies, $825,000 to move its headquarters from Toronto to Sarasota County. The company promptly did so. So promptly, indeed, that it’s hard to imagine that an $825,000 grant was the deciding factor for a company that promises to invest $50 million in the area. Under pressure, the county commission ended its whole economic incentives program, including the Rumble grant. The conservative activist on the commission who had previously said that critics of the grant were “the same people who think you should be burning flags,” changed his tune: “With economic incentives, we’re picking winners and losers. As the government, I don’t really like that at all.” Hear, hear.
Meanwhile, 2500 miles away, California governor Gavin Newsom announced a new state program of tax incentives and grants for companies moving to California from “states that have enacted restrictions on reproductive rights and anti‐LGBTQ+ laws.”
In the middle of all this, Ohio Republican Senate candidate Josh Mandel tweeted, “Hobby Lobby and Chick‐fil‑A are the good guys. Disney and Twitter are the bad guys.”
I think it’s fine if a governor tells companies that his or her state offers lower taxes and less burdensome regulation or doesn’t discriminate against any of the company’s employees. All fine reasons to prefer one state to another. But governments should not be handing out subsidies and tax breaks to some companies but not all. First, because it’s inefficient and will reduce economic growth and the standard of living. Second, because it lends itself to cronyism and corruption.
But perhaps most importantly, this politicization of everything, this dragging businesses into left‐right culture wars, is corrosive to civil society and democracy. You should be able to take your kids for a movie or a chicken sandwich without making a political statement. Liberal societies flourish by keeping most of society outside of politics. Politicians should stop dragging everybody into their own red‐blue fights.
