Foxconn, Wisconsin, George Mason University discussed on Dave Ramsey
The equity initiative at the Mercatus center at George Mason University in Fairfax Virginia. Before we go any further. What exactly does the equity initiative due? Well, what we do is we explore instances of government, favoritism. So that's where the, you know, the Foxconn deal came to light. There's a great deal of evidence that economic freedom is good for prosperity that lower taxes and fewer regulations. Those types of policies tend to be good for society. But what we find is that, you know, targeted tax breaks regulatory privileges. Those types of things that that sort of undermine economic freedom that raised the burdens on everybody else are often really driven by special interests who want some sort of government assistance. So our our project really aims to better understand the causes and consequences of this type of government, favoritism, and I gather that you would see the evidence as being that in most cases. The cost benefit analysis would shoot these down. Yes. That's right. That's right. Go ahead. One thing. I wanted to point out is, you know, there's a trade off as I was saying, you know, you could think about we absent the a subsidy to one firm you could lower everybody else's taxes. The there's an interesting political economy thing going on here though as well. So when you spare particular firms from having to pay an an onerous tax, then they no longer are advocates for for lowering that tax. So as I mentioned earlier, Wisconsin, actually spares all this is a relatively new policy for the last. I think about four years Wisconsin has spared all of its manufacturers from its corporate income tax rate. So while sixteen thousand firms have to pay a corporate income tax rate some three thousand firms don't because they're manufacturers. Well, those firms are no longer advocates for reducing the states corporate income tax rate. And so what you actually find. And there's there's recent evidence where some economists looked at the relationship between economic freedom and subsidies, and they found that states. That give out more subsidies actually, have lower levels of economic freedom, which is another way of saying they have higher taxes and more regulations on everybody else. One eight six six five O JIMBO our number one eight six six five zero five four six two six as we talk with the match you Matthew Mitchell of George Mason University. It could be argued I suppose that while you could use the same expenditure of money to lower overall tax rates, but that other people aren't offering a a ton of jobs such as at least in the beginning. Foxconn was offering in other words, it could I guess from from that perspective be argued that they're more worthy of a tax break because they're breaking and all these jobs, if in fact, they had in fact, you brought in those jobs. That's certainly the argument that that they wanna make. But remember a couple of things here. Remember that the the largest driver of growth in the economy is new firms. We often hear that it's small firms. That's not quite true. It's new firms which tend to be small and new firms are typically not in the subsidy game. That's because they it takes a little while to get politically savvy and get a big government relations arm in your organization, and so really, you know, most of the dynamism most of the growth that's occurring is going to be from firms that are not the big behemoths that are able to contribute to packs and get firm get policy makers to give them subsidies. Tell us more. If you could about about Foxconn, I understand their Taiwanese mayor supplier to apple. And they are the world's largest contract maker of electronics. It really sounds like at least going into it. It looked like a Plum deal. We're bringing a big player to Wisconsin. Yeah. Again, unless you you you blanched at the three point five billion dollar price tag. You know, it's a it's a legitimate company. It's it has a it's it's sizeable one thing I'd note though, with its track record is they were lured to Pennsylvania. I believe with some subsidies, and you know, made some big offers or make made some big promises about the the facilities that they would make their and ended up having to backtrack and renege on those promises. So I I suppose, you know, you can look at the number of jobs offered and say this is a big deal, but just on a on a per cost basis and given the company's track record. I'm not sure if it even looked all that sweet from the beginning, of course, again, if you you're in areas like the industrial heart. Atlanta, the midwest like Wisconsin, and you've seen all these jobs evaporate. I think there can sometimes be a pressure that would roughly be of the following nature. Don't just sit there do something. In fact, prudence might sometimes dictate. Do you don't just do something sit there, or at least sit there and long enough to figure out what would be the right thing to do. That's right. That's right. And you know, one of the things if you look at where where the rust belt runs, you know, it's it's dominated by towns that were built around steel mills and built around auto suppliers or or manufacturers, Detroit as a, you know, a hollow shell of what it once was. And I would argue in some in in many ways what that's really sort of a a a warning sign against offering corporate subsidies. Because essentially what what happened was for the better part of a century. We offered steel subsidies. We offered terrorists and protection from foreign competitors. And we essentially shielded a lot of those businesses from the realities of the marketplace. And we thought we were doing them a favor. You know, we're helping secure jobs, but you really ultimately not doing them a favor. If you shield them from competition and don't allow them to make the right adjustments needed in order to serve, you know, a modern economy modern consumer's needs and using using modern technology and auto industry is a perfect example. You know, by the end of the by the two thousand eight when the financial crisis hit people stopped buying cars..