We’ve been reading a lot about fallout lately. The Fukushima power plant disaster is now providing a lasting legacy all over the world. This animation from the French national meteorological service, Météo-France, illustrates how the spread of the Fukushima fallout is migrating.
For the past three years, we have been living with the fallout from a financial “meltdown”, which resulted from deregulation, greed and the culture of “pervasive permissiveness” at the Federal Reserve, as discussed in the Financial Crisis Inquiry Report. The fallout from the financial meltdown has also spread across the entire world. Different countries have employed different approaches for coping with the situation. In Ireland, the banks were bailed out at taxpayer expense, crippling that nation’s economy for generations to come. As a result, the Irish citizens fought back, went to the polls and ousted the perfidious politicians who helped the banks avoid responsibility for their transgressions. On the other hand, in Portugal, the government refused to impose austerity measures on the citizens, who should not be expected to pay the price for the financial mischief that gave rise to the current economic predicament. Given the additional fact that Portugal, as a nation, was not a “player” in the risky games that nearly brought down the world economy, the recent decision by the Portuguese parliament is easy to understand.
In our own country, the various states have found it quite difficult to balance their budgets. High unemployment, which refuses to abate, and depressed real estate valuation have devastated each state’s revenue base. Because the states cannot print money, as the Federal Reserve does in order to pay the federal government’s bills, it has become necessary for the states to rely on creative gimmicks to reverse their misfortunes. Most states had previously deployed numerous “economic development projects” over the years. Such projects are taxpayer-funded subsidies to attract corporations and entice them to establish local operations. Rex Nutting of MarketWatch recently took a critical look at those programs:
And yet, study after study show that these subsidies create few, if any, net jobs. For instance, California’s Enterprise Zone program – which is supposed to boost business in 42 economically distressed communities – has cost the taxpayers $3.6 billion over 27 years, but to no avail. A legislative analyst report in 2005 found that “EZs have little if any impact on the creation of new economic activity or employment.” Read more from the legislative analyst report.
California Gov. Jerry Brown has proposed to kill the EZ program and the even-more expensive redevelopment agency program, but he faces an uphill fight in the Legislature. Such subsidies are popular with the legislators who receive boatloads of campaign contributions from businesses lucky enough to find a government teat to latch on to.
Nationwide, such giveaways from state and municipal governments amounted to more than $70 billion in 2010, according to Kenneth Thomas, a political scientist at the University of Missouri at St. Louis, who has specialized in studying these subsidies. That’s more than the states collect in corporate income taxes in a good year. Read about Thomas’s book: “Investment Incentives and the Global Competition for Capital”
And that $70 billion is twice as much money as would be required to fully fund the pensions owed to state and local government workers, the very same pensions that budget-cutting politicians across the country claim are responsible for the fiscal hole we’re in.
What Rex Nutting has suggested amounts to the elimination of a significant number of corporate welfare programs. He has also dared to challenge the corporatist mantra that corporate welfare “creates jobs”. We are supposed to believe that the only way states can balance their budgets is through the imposition of draconian austerity programs, designed to force the “little people” to – once again – pay the tab for Wall Street’s binge. Because the voters have no lobbyists to protect their own interests, venal state and local politicians have set about slashing public safety expenditures (through mass layoffs of police and firefighters), closing parks and libraries, as well as under-funding public school systems.
Never mind that state and local governments could save $70 billion by cutting just one form of corporate welfare. They would rather let you watch your house burn down. You can’t afford that house anyway.