Author: Rory B. Bellows
When Friedrich Hayek wrote The Road to Serfdom, it is instructive to note that the book was dedicated to the socialists of all parties. I was reminded of that when I read The Star Ledger’s piece about economic development in New Jersey. The story made the point that Governor Ed Rendell has been more aggressive in attracting new businesses to Pennsylvania by offering more economic development incentives. These incentives come in the form of tax breaks.
The Legder points out that Pennsylvania has 400 employees devoted to economic development while New Jersey has but 225. This has helped Pennsylvania land 998 economic development deals in the last 5 years, which has led to $11 billion in private investment and 105,000 new jobs.
The article has the standard quotes from academics who give Corzine a pass by laying the blame at the feet of his predecessors. Ridiculous. Businesses don’t want to come here because New Jersey is hostile to business. Despite his Wall Street background Governor Corzine is, at heart, a centralist who favors massive government intrusion into every aspect of people’s lives. This includes his economic outlook.
Offices of Economic Development are nothing more than
government picking winners and losers. Tax breaks or incentives are given to some businesses as opposed to others. The state wants to attract new industries while doing nothing for the ones that are already here. This is government manipulation of the marketplace. New Jersey could easily be a place businesses want to come, and it could be done within the boundaries of the free market. Instead of government deciding which employers will succeed in New Jersey and which will fail, the legislature coud stop enacting burdensome regulations such as paid family leave. Governor Corzine could stop raising taxes, stop pushing for affordable housing, which is paid for by inreasing property taxes and a 2.5% fee on new commercial development. Governor Corzine could stop the New Jersey tradition of judges who ignore the state constitution and treat the judiciary as an unelected policy board. The court acting as a policy board is what led to exploding property taxes to fund school construction and affordable housing with their Mt. Laurel and Abbot decisions. Governor Corzine is a central villain in the state’s economic woes because he refuses to correct whatever errors were made by past governors and compounds these errors. Any attempt by the Governor or his advocates in the media or academia to pass the buck is dishonest and misses the larger point.
Businesses favor these economic development programs because they undermine competition. Being pro corporation is not the same thing as being pro market, this is something many politicians, Republicans included, often ignore. They are socialism for big business. They are also dangerous because they ignore the root causes of the problem. If New Jersey adopted pro market policies, they wouldn’t have to bribe businesses to come here. They would flock here and you would have a true market. Now many politicians and business leaders actually abhor a free market because in a true free market there are no rulers. You sink or swim on your own merit.
Where would New Jersey rank in terms of business climate if we had 0 employees instead of 225 working on economic development and instead of being in the top 5 in terms of state and property taxes were in the bottom 5? Would businesses still want to go to Pennslyvania if there was no 2.5% tithe to paid to the central planners in government to fund affordable housing? What about if business was not required to provide 6 weeks of paid vacation that family leave regulations require?
New Jersey Republicans have got to realize that the state isn’t going out because some government program is understaffed or not high enough a priority. You cannot use government, even in the form of selected tax breaks, to spur the private sector. What spurs the private sector is getting government out of the way and letting the market work its course. As a great man once said, “Government is not the solution to our problems, government is the problem.”