The "China Hub" Bill

There are some things going around the ol' Net about a bit of Missouri state-level legislature nicknamed the "Aerotropolis" bill. Governor Jay Nixon is calling it the bill the "Missouri Bills Act". What exactly does it do? Per a letter from Campaign for Liberty (which said the bill is not finished yet):

300 million dollars in transferable tax credits to a small group of developers in St Louis who are to build warehouse space around Lambert airport. (These tax credits ARE NOT simple tax cuts – they are as good as cash subsidies.) The money is to be doled out by the mayor of St. Louis and the St. Louis county executive.

60 million dollars in subsides to freight forwarders, ostensibly to encourage Missouri exports.

Takes away 50 to 100 million dollars per year in tax credits for low-income renters and elderly provided an equal amount be spent on senior citizen programs.

State-funded venture capital programs for business startups.

There are also promises to sunset or otherwise reduce existing tax credits over the next decade. Currently, the reported cuts are less than the new tax credits. The promise of these “cuts” is deceiving, much like the baseline budget cuts of the federal debt ceiling increase.

There is surely a lot more in the bill. Last I heard it had ballooned to several hundred pages and the head of the Missouri Chamber of Commerce says it has “Something for everyone.” so he is optimistic it will pass.

Essentially, those bullet-points sum up to a subsidy for contractors to beef up the Lambert Airport in St. Louis to accept imports and funnel exports. Another set of subsidies goes to freight forwarders to encourage activity between us and other international traders.

Now, believe it or not; I attempted to keep a level head while reading this letter, then reading about this all over the interwebz (crazy, right?!). The letter screams about this making it even easier to "benefit communist-owned Chinese Airlines and manufacturing companies more than Missouri workers."!!! I know! Crazy insane (though there are legitimate connections that make this claim more valid, especially since there was direct communication between Chinese and St. Louis civic leaders)! Pure logistics speak in our relation to this issue. If we made the best products in the world, there would be less outcry as it would make exporting goods so much easier. Let's spell out the reasons that the letter from Campaign for Liberty states in favor of opposition to this bill:

First and foremost, it is against economic freedom. Government should not choose the winners and losers in Missouri. Subsidies to one person or business always takes away opportunity from others.

This sort of special subsidy violates several constitutional principles and specific clauses forbidding the enactment of “special laws” which target only certain entities or locales. It also violates a Missouri constitutional prohibition of grants of public money to private parties.

This is Soviet-style central planning rather than free markets. That economic model was tried and failed miserably in Russia and Germany. Closer to home, there is an airport on the east side of St Louis built just for this purpose; international air cargo. After over 300 million taxpayers dollars and more than 12 years, that airport has one flight per week of cargo and 0 passenger flights. Watch this 2 minute story about the MidAmerica airport located just 40 miles from the proposed China Hub. (MSNBC)

This bill allows special interests to subvert the purpose of government. As long as we continue to allow government to redistribute wealth and provide special favors--all on the backs of the people--those special interests will control the legislative process, and do so with money they get from taxpayers! Legislators bought by the special interests will not have your interest at heart--that results in liberty-stealing laws of all sorts.

This bill will result in unforeseen consequences. St Louis already has an abundance of empty warehouse space for rent. Now our government thinks the solution is to build more and subsidize it with your tax dollars? Because this project is not market driven, it will result in misallocation of resources. The subsidies will also harm other employers, who must compete for available labor and capital--that ultimately hurts even the average worker.

The first reason is completely valid. I have seen it happen all over Branson (PDF link).

The second point is a valid point, but taxpayer funded state grants have been issued to businesses and enthusiastic starters for a long time. Nothing new here, and to complain about this is also complaining about that. The only difference here is the numbers; where as these small grants end in the hundred-thousand range, this subsidy to forwarders is $60 million; doled out to more than one business I'm sure. The only thing that makes it seem gross is the big number.

The third point has a grain of truth to it; but Lambert being a piece of public property, it falls in the government's jurisdiction and maintenance. It was presented with a bit too much sensationalism for my taste. If the third point began with something like "This is a classic example of wasteful spending, because there has already been a facility built for this purpose...", then it would be completely valid.

The fourth point is one-hundred percent valid for the very reasons the paragraph states.

The fifth point, completely valid.

Op-Ed time: The way to make trading work better in our favor is not through publicly funded subsidies. The government's only (and I mean only) role in making our products more appealing to the international market is improvement of the transportation network within the country. That's it! Well, okay; that and providing guidelines for safe food growth, production, distribution; etc. Unsafe food could kill you. Let the market decide which products and product designs are the greatest and have them vote with their currency! One convenient aspect of publicly funded subsidization is the fact that the entity that doles it (the government in our case) has no interest in efficiency and aligning with what the market wants. They just do their own thing. This is wasteful and must be stopped. Also, as previously stated in the article, it counters the market forces by choosing the winners.