HALL COLUMN: Corporate welfare a safe bet for now

Published 12:00 am Wednesday, June 6, 2007

Critics of yesterday&8217;s successful proposed constitutional amendment increasing the state&8217;s debt ceiling to be used to lure large corporations to Alabama charge the plan as being nothing but a wasteful expansion of government.

These critics call it corporate welfare, saying it is little more than a handout of public funds for private investment.

They decry Republicans &8212; who are supposed to be against big government &8212; for the expansion.

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They decry Democrats &8212; who are supposed to be against government&8217;s close ties to Big Business &8212; for inviting yet another corporation into the state&8217;s political bedroom.

But these critics are few and far between in yesterday&8217;s vote, because on the line is a multi-billion dollar development in Mobile County that is expected to generate thousands of new jobs and boost the economy of Southwest Alabama.

Still, one should ask, &8220;Is Amendment One an example of expanding corporate welfare?&8221;

You bet it is.

But that doesn&8217;t mean it is a bad idea.

Arguments for and against corporate welfare can be applied to social welfare, and vice versa. The key here is that until the practice passes the point of helping society and starts to cost &8212; or harm &8212; society, then it will continue.

Some would argue that our social welfare system has already made that transgression. Critics of that system say it provides nothing more than a handout to people, a large majority of whom have no desire to seek a better life for themselves so long as they can survive on government money.

Any reasonable thinking person can agree that the claims of critics are at least partially true. For certain, our social welfare system needs to be assessed and probably reformed. Our society and our economy are different today than when the welfare system was first established or last truly overhauled.

But in the end, the social welfare system provides a benefit to our society in that it helps those who are in financial straits. It provides assistance, often to people who give back to society in some way. The generalized picture of a deadbeat welfare society is grossly exaggerated according to most studies that have looked at the impact of the welfare system on our nation&8217;s social structure and economy.

And so it currently is with &8220;corporate welfare&8221; today practiced in the form of tax incentives, training programs and infrastructure upgrades offered to businesses who are willing to provide additional jobs to an area.

It is amusing when critics of this practice evoke the ideal of the free enterprise system being allowed to work through such quandaries, which is to say the strong companies (not necessarily the largest) will survive and find ways to expand. In short, it will only happen if the market will support it.

But the truth is that these &8220;corporate handouts&8221; are a result of the free enterprise system. Whereas the social welfare system was a response to a crumbling middle class during deplorable economic times, the &8220;corporate welfare system&8221; is a response of businesses using their influence to leverage assistance from government entities during difficult &8212; though not deplorable &8212; economic times.

In short, corporate America has used its ingenuity to curry favor with politicians and with state governments. They have made them business partners, of sorts.

And, so far, the companies have been correct. Investments in automotive plants throughout the South have paid off. In the twin states, Hyundai, Mercedes, Nissan and, most recently, Toyota have landed large state investments from Alabama or Mississippi to build a plant. All but Toyota are paying dividends to the states. Toyota is expected to do the same when it opens in Northeast Mississippi next year.

That&8217;s not to say we shouldn&8217;t heed the warning of Madison County Commissioner Mo Brooks, a former member of the Alabama House.

In light of yesterday&8217;s balloting, voters do not yet feel they have been fleeced. They are still seeing a return on investments, and are betting ThyssenKrupp will pay one as well.

Until a state gets burned, these incentives will be common practice. It&8217;s the free enterprise system partnering with government, and so far it is working.

Sam R. Hall is editor and

publisher of The Times. He can be reached by e-mail to sam.hall@demopolistimes.com.