The quid-pro-quo cycle of Cronyism

Center for Freedom Calls for End to Corporate Welfare in RI

38 Studios–Type Cronyism Is Not Capitalism

Introduction

Put simply, crony capitalism is the transfer of public money to businesses and organizations through the peddling of influence. Cronyism gives free markets a bad name, since it can be difficult to determine whether true competition exists or the game has been rigged.

A more appropriate term might be “venture socialism” or the more familiar “corporate welfare.” Whatever its name, the concept involves a less efficient economy — making us all poorer and reducing economic opportunity for our citizens.

Download a PDF of the Policy Brief here.

Unfortunately, cronyism has defenders on both sides of the political aisle because its proponents are on the receiving end of the short-term benefits.  Politicians reward their “friends” with all kinds of publicly provided treasures, from subsidies to exemptions from regulations to loopholes in the tax code. In 2008, we witnessed hundreds of billions of dollars spent on the bailout of major Wall Street firms. A more-recent example of a half-billion dollar investment gone bad has given a name to politically correct green industry schemes: Solyndra.

Given its insulated political culture, Rhode Island is certainly not exempt from cronyist deals and boondoggles. Beginning in the 1990s, corporate giants CVS Caremark and Fidelity Investments have received a bevy of tax breaks and subsidies to build or expand national or regional headquarters.

During the last decade, debates raged about the $300-million-plus ratepayer-funded Deepwater Wind project, a Twin River casino bailout, and the $75 million loan guarantee to Curt Schilling’s 38 Studios. In the past week, Schilling’s video game company has offered a uniquely clear example of the risk that targeted public investments will never produce a positive return on investment for taxpayers.

Taxpayer or ratepayer dollars should not be randomly put at risk to finance politically connected corporate interests. It’s time to replace corporate welfare programs with a broad-based growth program.  It’s time to end the handouts and create a pro-job, pro-business structural environment for economic growth in Rhode Island.

Policy Recommendations

As just one step in reducing the size and scope of government in the Ocean State, the RI Center for Freedom & Prosperity recommends that the State of Rhode Island:

  1. End the practice of corporate welfare in the General Assembly
  2.  Defund the Economic Development Corp. (EDC), preventing it from spending or putting at risk any taxpayer dollars

One of the great mistakes to which policymakers often fall victim is judging public policy programs by their intent rather than their results. Such an approach minimizes the consideration that serious unintended consequences ought to carry in subsequent policy decisions.

Rhode Island should roll back many of its so-called economic development incentive programs, whether in the form of subsidies on the expenditures side of the ledger or loopholes on the tax side.  Any economic development program that cannot be objectively shown to create jobs that generate more in-state revenue than they cost should be repealed.

The savings from the ended programs should be used to enact across-the-board improvements of state competitiveness by reducing the Rhode Island’s stratospheric tax rates to more-competitive figures. For instance, Rhode Island’s corporate income tax rate and sales tax rate are the highest in New England, putting the state at a serious economic disadvantage.

Furthermore, ending the practice of cronyism will reduce the special interest and corporate lobbying that pervades Smith Hill and will send a message that taxpayer dollars can no longer be traded for political support and campaign contributions.

Background/Overview

A key critique of market capitalism often revolves around the undue relationship between powerful corporations and the government, resulting in policies, legislation, and regulations that appear to benefit the well-connected at the expense of the public.  This critique — though often labeled an inherent failure of capitalism — is a function of an outsized government.

The relationship is intuitive: A government with more power over the economy creates more opportunities and greater rewards for lobbying. In turn, influence over an entity with the power to regulate, tax, and police brings access to competitive weapons not available in a free market.

Indeed, the lion’s share of blame for the current economic crisis can be laid at the feet of connected business interests’ feeding on the fruits of the public commons while pushing the risk onto the public.  National examples are most prominent in our minds.

When the housing bubble popped in 2008, Washington-connected Wall Street firms won taxpayer bailouts and bonus checks while the working Americans who paid the bill received pink slips and empty promises. And by most measures, those same firms are now more profitable than ever; industry data shows that President Barack Obama’s first two and a half years in office have been more profitable for Wall Street than George W. Bush’s entire eight years in office.

This is not simply a crisis of bad banks run amok, but an unsettling symptom of cronyism. Cronyism, by its very definition, implies a situation in which the system (i.e., the government and the institutions it establishes), rather than the choices of consumers, picks the winners and losers.

While Rhode Island’s economic climate is demonstrably bad for business (Rhode Island ranks 45th in the Fraser Institute’s Economic Freedom of North America 2011 index), a number of tax credits, incentive packages, and corporate welfare programs benefit a few chosen firms while the rest are forced to languish within a suffocating structural environment.

Targeted incentives are sometimes viewed as legitimate instruments for economic development, but a genuine program for broader growth would allow the state to close many of these loopholes in favor of broader reforms that ease the economic burden across the board.

The Research

Every day, taxpayer money is being funneled to organizations and enterprises that someone in government has decided are worthy of patronage, whether they need it or not.  Worse, this kind of cronyism is not merely limited to a series of one-off deals, but is systematized on every level in the form of grants, tax credits, sweetheart loans, loan guarantees, and other preferential treatment.

According to GoodJobsFirst.org, a left-leaning economic development accountability resource, Rhode Island taxpayers paid out almost $50 million in related costs for fiscal year 2010, including:

  • Corporate income tax rate reduction for job creation
  • Enterprise zone tax credits
  • Job training tax credit
  • Manufacturing and high-performance manufacturing investment tax credit
  • Motion picture production tax credit

Worse, disclosure and reporting on these programs are well below what anyone would expect in return for $50 million.  In a series of transparency benchmarks measuring program outcomes, data availability, and accessibility, the average Rhode Island program produced a woeful score of only 36 out of a possible 100 points.

These are only a few of the higher-priced programs.  At present, a startling number of programs are on the books to divert taxpayer money to targeted businesses and industries, accounting for tens of millions in additional handouts with little or no objective standards or accountability. Some of the others include:

  • Distressed Areas Economic Revitalization Act and Enterprise Zone Program
  • Jobs Development Act
  • Rhode Island Public Rail Corporation
  • Child Day Care Facilities in Industrial Parks Grant Program
  • Jobs Training Tax Credit Act
  • Urban Infrastructure Commission
  • Mill Building and Economic Revitalization Program and Tax Credits
  • Jobs Growth Act
  • Petroleum stockpiling program
  • Small Business Advocacy Council
  • and many, many more.

While each carries a plausible justification and positive intended outcome (who could be against child care?), they are all simply variations on the crony-capitalism theme.

Discussion

John Stossel, the libertarian journalist of 20/20 fame and program host on Fox Business News, penned a provocative and compelling piece for Reason magazine in March 2004 titled “Confessions of a Welfare Queen.” Rather than documenting now-familiar stories of individual welfare abuse, as the allusion to Ronald Reagan’s famous “welfare queen” quip suggests, Stossel turned his sights on the multilayered fabric of lavish subsidies for the rich and cronyism.

From bizarre payouts to beachfront homeowners to abuses of eminent domain to unfair subsidies for agro-corporations, Stossel explains how these programs are not examples of market failure, but simply the symptoms of the increasing investiture of power into government, especially over ever-greater swaths of the economy.

Americans who decry cronyism as a betrayal of the social contract are correct: The iron triangle linking lobbyist-rich companies and organizations, campaign contributions, and government policy is a burden on our economy and a drag on our democracy. Too often missed, however, is that regulatory solutions just hand over new car keys and more drinkable money to the hooligans who repeatedly steer the economy into a ditch.

The only solution that can work is to limit the government’s ability to mismanage taxpayer funds; that means cutting back on the size, scope, and domain of government. The most vocal opponents of ending cronyism are, predictably, those who benefit most from the system. They, along with well-meaning but misguided allies, will generally contend that targeted systems of tax breaks and incentive programs are useful for directing policy mechanisms toward specific, concerted ends and that Rhode Island needs these incentive programs to be nationally competitive.

Two fallacious premises support these arguments: first, that public policy instruments are the best available means of achieving common ends and, second, that a labyrinth of programs is a suitable way to attract and develop economic activity. These fallacies, in tandem with the frenetic and sound-bite oriented nature of contemporary media, contribute to the idea that most problems have public sector solutions. This is particularly common in the realm of economics, precisely the area over which a market capitalist system would give the government the least control.

Again and again purported plans for “economic development” have been used to justify programs and incentives that ultimately do little to boost economic growth.  But because spending and special-project support create the illusion of forward movement, beneficiaries can brand the efforts as “doing something.”  What corporate welfare actually does, however, is to tip the scales toward the already rich at the direct expense of the poor and middle class.

Ultimately, government remains wedded to the language and practice of inputs — what it gives and does — because it has very little competence generating or measuring outcomes.  Advocates tend to point to inputs as measures of success — the dollars spent, the teachers hired, the police stations built. Then they trumpet or downplay economic trends, educational accomplishment, and as suits their needs.

Tax breaks and incentives may seem like positives from the input side, but their non-anecdotal outcomes show them to be generally a waste of money.

Conclusion

It’s hard to argue against economic development.  Who doesn’t want the economy to “develop”? But the sad truth is that sending public money to politically-connected organizations, interest groups, and companies on the basis of poorly measured and ill-defined goals is more of a handout than a strategy.  If Rhode Island is serious about promoting economic growth, this kind of piecemeal approach should be seen as expensive and insufficient.

Instead of using targeted tax breaks, incentive grants, and other wizards’ tools to trade away taxpayer funds, Rhode Island should focus on creating a growth-oriented structural environment.  That means replacing isolated pockets of preferential treatment with an across-the-board slate of policies to support growth:

  • Reduced tax rates
  • A more nimble and versatile education system to produce a highly trained workforce
  • Eliminated regulations, streamlined when they are absolutely necessary

Any economic development program that cannot be objectively shown to create jobs and generate more in-state revenue than they cost should be repealed. The savings should be allocated to more general improvements, especially lowering taxes.

Rhode Island’s corporate tax rate remains the highest in New England and is tied for third highest in the country, after Washington, D.C. and Illinois.

Rank in New England

Corporate Tax Rate (%)

Rhode Island

1

9.0

Maine

2

3.5–8.93

New Hampshire

3

8.5

Vermont

4

6.5–8.5

Massachusetts

5

8.25

Connecticut

6

7.5

 

Another area in which Rhode Island is uncompetitive is its state sales tax, which is the highest in the region and tied for second in the country. A study to be released shortly by the RI Center for Freedom & Prosperity will demonstrate that eliminating the sales tax would have the highest “bang for buck” of any reform, creating tens of thousands of jobs and paying for over half of its cost with the increased tax receipts of a larger economy.

Rank in New England

State Sales Tax Rate (%)

Rhode Island

1

7

Connecticut

2

6.35

Massachusetts

3

6.25

Vermont

4

6

Maine

5

5

New Hampshire

6

0

 

These are just a few of the low-threshold starting points for reform. If Rhode Island seeks to distinguish itself as a pro-growth state, it should depart from crony capitalism and unleash the true capitalistic forces in the state.  Fortunately, much of the government cost of the necessary policy changes can be borne by elimination of the special deals and crony-capitalism style programs that infest our state with false promises of a better tomorrow.

To the population more broadly — to the people of Rhode Island — there will be no cost, but rather the benefits of a thriving economy.

RI’s Problem Remains: Attracting Jobs (Sunday ProJo Op Ed)

by MIKE STENHOUSE
 
In passing historic pension reforms in November, Rhode Island took a significant step in dealing with one threat to our state’s economic well-being. However, as if on cue, new issues are now coming to light. A waiting list of critical new challenges is quickly forming: municipal pension reform, unfunded health-insurance and benefit costs, Massachusetts casinos, T.F. Green airport expansion, rising Medicaid costs, and structural state budget deficits for as far as the eye can see.How we deal with these issues will impact the future prosperity of all Rhode Islanders. However, dealing with these issues on a one-off basis will not help our state improve its standing, but can only help not worsen it.  

Currently, the Ocean State ranks at or near the bottom in a number of important national and regional indexes: last in America in overall business climate; highest unemployment rate, by far, in New England; highest corporate tax rate in New England; lowest population growth in the nation (behind only Michigan, which lost population); the list goes on.

Even if we do the yeoman’s work of addressing each of the issues above, Rhode Island will still be left in the same place: last. For example, even if we balance our forever-increasing state budget by somehow finding new revenue sources, how will that make Rhode Island more competitive ? It will not; it will only keep us where we are. We must do better.

It is time for a dose of reality. What is missing from any serious debate is the more substantial issue: How does Rhode Island regain its competitive status in New England and across the nation? Multiple studies and reports have documented how our state is losing both capital and human resources to other, more tax-friendly and business-friendly states. We cannot expect to have a vibrant economy, good jobs for our citizens, and the resources to help those in need if we do not reverse this trend.

Consider the casino issue. Recent actions by Massachusetts will put greater competitive pressure on the Ocean State, reducing tax revenues that fund core government functions. Dealing with this in a typical myopic fashion, as a one-off issue, would require us to react in-kind, by responding with some form of expanded gambling in Rhode Island, where the debate has been, and will be, fierce.

Such a solution would be reactive and would promise a magic bullet, typically resulting in a rushed plan that generally benefits the corporate special interests that drive the process.

Imagine, instead, that we consider a more comprehensive, pro-active approach, such as simplifying and reducing taxes that will spur broader economic growth by attracting human and financial capital to Rhode Island and away from Massachusetts and Connecticut. If the Yankees sign a star left-handed pitcher, must the Red Sox do the same? Or might they choose to better compete by signing a right-handed hitter, or by improving their bullpen or team speed?

To put the Ocean State on a proven path to prosperity will require a massive departure from the current culture of dependency on government and a return to taxpayer- and business-friendly policies. Special deals and one-off solutions are not the answer.

The reality is that we have spent too much, taxed too much, regulated too much, promised too much, and borrowed too much. The wreckage from this failed special-interest culture is now painfully obvious to all Rhode Islanders.

The Rhode Island Center for Freedom and Prosperity, in early 2012, will present a vision of renewal for our state. We’ll do our best to present a different path — a better path — and to stimulate debate. We’ll do so because many of us believe that Rhode Island can once again be great, and that our citizens can have hope of prospering.

But one small think tank can’t go it alone. Unexpected leadership emerged in 2011 to drive the crucial pension debate. Who will acknowledge the true realities we face as a state, and choose to step forward to lead this even more vital discussion in 2012?

Mike Stenhouse is chief executive of the Rhode Island Center for  Freedom and Prosperity, a conservative think tank.

See the actual ProJo piece here …

Occupy Phil Donohue

If you are under the illusion that the ‘Occupy’ folks are onto something new… check out this terrific video blast from the past from the Phil Donohue show …

Milton Friedman on the socialist utopia: “Where in the world are you going to find these angels who are going to organize society for us?”

 … Burnside park with the philosophy advocated below? 

Selfishness as the means to Restore Prosperity?

I attended a very interesting and thought provoking lecture at Brown University Wednesday evening (9/28/11) , featuring Dr. Yaron Brook, President of the Ayn Rand Institute. Dr. Brook, a free-market activist, provided a 30-40 minute lecture, entitled “Capitalism Without Guilt”, then took questions from the over 100 or so people in attendance, with a fair portion of them being students from Brown and other local colleges.

Here, based on my notes and personal paraphrasing, is a synopsis.

Initiating the discussion, Yaron Brook, rhetorically thanked President Obama for his plan to “fundamentally change America”. Obama’s resulting policies, he claims, have kicked off a vigorous national debate about the proper role of government, how to best create jobs, and what are free-markets and capitalism, in reality? He believes the debate will end up benefittng our country.

Brook talked about how our country is currently struggling with jobs and who creates them – the government or the private sector? He states that this issue was settled over 60 years ago; that “consumption” (as the liberals wants us to believe) is not the root of economic growth, but rather that it’s “production” and “investment”. Government stimulus programs, he says, are geared to stimulate consumption … and says this is the reason why they have never worked … anywhere, anytime for anyone. He cites the recent failed US stimulus programs that resulted in fewer jobs, and pointed to Japan, where the government re-distributed massive amounts of wealth, with the result being predictably disastrous for that once proud country.

Most stimulus created government jobs mean only in increased consumption.  They are paid for by taking money away from potential investors where the money otherwise could be used to create production as well as privae sector jobs that would also result in consumption. The beaurocracy also bleeds off its share when redistributing money. Dr. Brook claims that 2-4 private may be lost for every 1 stimulus job.

Brook then spoke about the philosophy of “free” markets … that this means, barring force or fraud, that they are  free to conduct business without excessive government regulation and that the matching of products and services with consumer demand is the best way to ensure a quality product at the lowest possible price, and to provide for steady economic activity and growth.

Excessive regulations and taxes, he claims, destroy free-markets and are the reason certain industry sectors can fail. He cited the 3 major sectors that collapsed in the US leading up to the 2009 recession – housing, banking, and automobiles. The common mantra was “See, capitalism failed, so government must step into to lend a helping hand”. WRONG says, Brook.

He asked: ‘What are the 3 most regulated industries and sectors in the US economy’? His answer: housing, banking, and automobiles. That it was because of over-regulation and government intervention that these industries failed. Fannie Mae (a government created, semi-private entity), he said, experienced the largest financial collapse of any entity in the history of the United States.

Each of these 3 industries, he stated, have their very own governmental Regulatory Agencies … proof positive that these sectors were not “free market” sectors; that it wasn’t the free-market (or capitalism) that failed, but rather government regulated markets that failed.

Government intervention interferes with normal market forces, by messing with the supply & demand mechanism, and more importantly, by removing the “risk” factor that is so important in regulating normal market activity. The risk of failure and loss of capital is a major incentive to behave prudently. With the current bailout/stimulus mentality, it is only natural that companies and industries would take on more risk than they normally would, knowing that the government will come to their rescue. This leads to economic bubbles, and then, economic collapse when these excessive risks begin to fail.

Brook then spoke about the creation of wealth as the primary measure of a successful economy. He asked us to think about the economic contrast of East vs West Berlin; or China (decades ago) vs Hong Kong … dramatic instances where capitalistic vs socialistic forces were at play, and the economic results were so dramatically opposite.

He then moved into the main theme of his lecture, the morality of capitalism. We have to overcome a psychological and emotional hurdle if we want to have a successful economy again.

GET OVER IT … BE SELFISH. He avers that markets exist for people to enhance their lives, meaning some people will make money – lots of it – and consumers will receive, in return, products and services that will make their lives better. He offers this as the definition of “selfishness” … a natural , self-preserving kind of attitude vs the evil connotation that we too often place on the term. That this is a human thing … a good thing. That in a true free-market, mutual selfishness and mutual profit transaction we choose to make. Even that “naked selfishness” is in everyone’s best self-interests.

Dr. Brook then stated what I felt was the crux of his provocative lecture: that our evolved and perverse sense of morality is what is destroying the American free-enterprise system. That in being politically correct, that people are viewed in positive way only when they put others first, instead of prioritizing their own rational self-interests. That philanthropists, for example, hold a much higher esteem in today’s society, than the wealthy. That the only way the wealthy, like Bill Gates for example, can obtain a positive public image is by giving away their money … not for risking their own capital, conceiving and producing a product that consumers demand, hiring lots of people, and yes, making a ton of money. That Bill Gates was initially derided publicly for being a successful businessman (the scorned capitalist), but is now more loved and accepted because of his Foundation (the beloved philanthropist). That if he gave up ALL of his fortune, and lived in a hut, we might even consider him a saint.

This standard of judgment, Brook says, is far too high a bar if we want free-markets to work effectively. That we must accept being “rationally selfish” and encourage risk and success for the greater public benefit.

What about Bernie Madoff? Wasn’t that selfishness? NO, says Brook. How could it possibly be in his long-term self interest to rip off his family, his friends, and many others, knowing all along that he would be caught someday? Brook referred to Madoff’s Ponzi-scheme as more of a delusional kind of near-term emotionally driven action vs a well thought-out plan to pursue self-happiness. It is this latter kind of selfishness that Brook promotes.

That pursuit of one’s own self-interests, or happiness, via mutually beneficial transactions, is a positive and necessary economic stimulus on its own. Conversely, what many believe as selfishness “at the expense” of others … is a very different thing.

He then asked us to consider the uniqueness and individuality of every single person. In what environment would a person with some wealth best be able to invest and prosper even more? In what environment could underprivileged people best find a way to climb out of the morass and pursue whatever might make them happy? A government controlled environment, where everyone is considered homogenous, and incentivized against acting on their own best judgment; or a free environment where people can determine their own futures based on their own unique dreams and capabilities?

Free-markets, Brook strongly contends, are the only way for each person to achieve their highest level of self-interest, or happiness. Happiness is not purely materialistic; it’s whatever rationally chosen goal we want it to be.

That this pursuit of self-interest is NOT immoral. That “sacrifice” is not the only way to be moral, as our society now seems to believe.

That our nation’s founding fathers wrote about pursuit of individual happiness: They did not write about sacrifice or being responsible to others; that charity is an individual choice, and that it should not be the role of our government to legislate economic equality, or even to have a position on whether or not that is a good thing.

That sacrifice, can actually be a bad thing, especially when government mandates it, by taking wealth or property from one person and giving it to another.

What is sacrifice, he asks? The act of sacrifice is giving something (time or money, for example) and getting something less in return; a win-lose scenario.

Alternatively, free-markets encourage win-win scenarios. People trade for something that has equal or greater value than what they give up. When we buy a car for $20,000, we get a car we believe has more than that much value. The car-dealer gives up a product that cost him less than that much to sell. Both sides win.

Why would our society value win-lose propositions over win-win propositions?

At this point, Dr. Brook ended his lecture and accepted questions from the crowd. Most of the questions, especially from the student attendees, challenged many of Brook’s premises with the expected angles: Why are the top-7 rated cities in terms of standard of living based in what Brook would call ‘socialist’ Europe, not the US? Didn’t the founding fathers allow slavery? Isn’t sacrifice a good thing, for instance, for our children? Didn’t the founders talk about equality for all? What about individual property rights, shouldn’t there be more of collective, common ownership? Doesn’t industry and pollution infringe on another person’s property and rights? What about the Christian values of loving your neighbor as yourself … vs Dr. Brooks’ selfishness philosophy? What about welfare, don’t we have an obligation to help the disadvantaged?

While Brook struggled for responses to only one or two very pointed questions, he provided fascinating responses to most of these queries.

Europe, he said, is a dying region. That what the economic crisis there now will only get worse as more and more of the unsustainable promises that have been made to too many workers and retirees grows in the coming years. While he questioned the standards by which those cities were rated, he also admitted that America, in his view, is no longer a true free-market economy, and that our cities and national standard of living is slowly being destroyed by the big government, anti capitalistic economy. He does not understand why many look at Europe with such admiration. It’s the past, he says, full of rich history – yes, but a doomed society. Asian economies (even China to some extent) are the future, where certain capitalistic principles have been embraced and where wealth is growing in enormous strides. America must choose which way to go.

Regarding slavery, he stated that it was the way of the world 250 years ago. That America was not alone, that the slave trade thrived in Africa, that Europe had serfs, etc

He argued THAT IS WAS INDEED THE VERY PRINCIPLES OF ‘FREEDOM’ IN OUR OWN U.S. FOUNDING DOCUMENTS THAT INVITABLY LED TO THE ABOLITION OF SLAVERY IN AMERICA! That our founders were not always perfect in practice, but they were much more so in theory.

Regarding sacrifice, Brook, said that he doesn’t sacrifice for his children. That staying home with his kids, instead of going out with his friends, is not a sacrifice, but rather, a free-market choice that enhances both him and his kids by spending time together, worth more to him (and to them) than spending time apart. Providing money or material goods to his kids is not considered a sacrifice either, any more than buying a car is a sacrifice. Why would we call something a sacrifice if we invest in our kids (with their well-being as what we receive in return), yet not consider investing in a car a sacrifice?

On the constitutional question of equality, Dr. Brook states that equality was intended only in terms of the law. That in the eyes of the law, unlike in Europe, from whence our forefathers fled, that everyone would be treated equally. That it wouldn’t matter what your race, creed, gender, status, or wealth was … that the law would treat everyone the same. This has nothing to do with equal outcomes among citizens.

Protecting individual property rights, he said is a critical component of a free-economy. That via a just court-system, that disputes and infringements of rights would be settled in a natural and moral kind of way. That contingency legal fees were created so that the poor could also have a way to bring suit if they were wronged. That the proper role of government is not to create massive amounts of new regulations in an attempt to restrict property rights so as to not potentially harm someone else or some fuzzy common good, but rather to protect property rights, and institute only those few common-sense laws that serve this purpose.

Regarding pollution of common items such as water or air, Brook gave perhaps his most provocative response: that POLLUTION SHOULD BE CELEBRATED! Pollution is a by-product of industrial progress, that it is a necessary cost to moving a society forward. He posed this scenario: think of London in the 1800’s and the huge particles of ash that most citizens inhaled from coal-powered factories. That if we applied today’s conventional solutions to that problem, we would have shut down those factories … and the INDUSTRIAL REVOLUTION WOULD NEVER HAVE OCCURRED! All of the advances in transportation and construction would never have happened.

Pollution, once industry advances and becomes wealthy enough and technologically capable of dealing with it, can be solved. Then, the next technological innovation produces a new pollution concern, which should be tolerated for a while before being solved … repeating this cycle which goes on and on. This is merely progress. And, society only improves with each cycle. He asked us, with all of our talk of pollution ruining our planet and our lives, to think about life expectancy progress: In the 1800’s, humans were expected to live not much past their forties-fifties. In the 1900’s it was sixties-seventies. Now it is seventies-eighties.

Continuing with the pollution issue, he said, people decide where to live and work, and that it’s their personal choice whether or not to put up with pollution, traffic, or any other problem in any given area. Look how many millions choose to live in LA, despite these issues. He talked about Simi Valley, right outside of LA. Before the hi-tech industry, it was nothing, just land. But because of the great job opportunities created, thousands migrated there from all over the country, putting up with LA smog and traffic, because overall, it offered them a better chance at life than where they came from. The free-market at work.

Finishing up the pollution issue, Brook asked us to think about Cambodia, for example, a country he had visited in recent years. Most of their citizens live in abject poverty, in huts in swamp areas. Brook proclaimed that the only way that Cambodia could raise itself into prosperity would be to bring on industry, and yes, the pollution that goes with it. That pollution in this case should be welcomed, if not celebrated … as a necessary transitional phase and as a sign of progress!

He dismissed the so-asked premise of Christian love for thy neighbor as thyself. He said this is unrealistic, that everyone loves themselves and their own families more than thy neighbor, and that it is nothing more than religions trying to impose “guilt” on people, as a way to have them conform with the impossible goal of ‘equal outcomes’ for everyone. He said none of us should feel guilt for loving ourselves more than our neighbors; that this kind of selfishness is natural and healthy for humans and for our economic well-being. I would personally add, that individuals freely choosing to help their neighbors, is a noble thing … but that government forcing people to help others is nothing short of tyranny.

The final session I participated in, dealt with welfare – a kind of an extension of the love thy neighbor theme. It was discussed that the way taxes and subsidies work in the real world is not a matter of debate. Laws of economics dictate that when we tax something, we get less of it (the premise behind taxing cigarettes, because society believes it is a bad thing to smoke, so therefore we should craft tax policies that discourage the activity). Conversely, when we subsidize something, we get more of it, like tax-deductions for buying a home (a good thing, society says). So, if this is the case, why do we tax work and investments when it means we will get less of each? … while at the same time we subsidize unemployment and idleness, which means we will get more of each of those?

Dr. Brook went on to claim that the biggest victims of the big government, forced responsibility for thy neighbor mentality, are the very people that the policies portend to serve. Only true freedom – to pursue their own dreams – can allow them to prosper. Welfare and other entitlement type programs condemn them to dependence and low expectations; in a way, institutionalizing them. This is not the America our founders envisioned.

In fact, Brook claims, it is IMMORAL to consider the poor as a homogeneous lot that is incapable of raising itself out of whatever morass they may be in. IT IS INSULTING!  He went on to say that all people, including the underprivileged, will be more content when they achieve something based on their own merit and work …that selfishness and the resulting self-esteem is the true measure of happiness … and the only way to achieve prosperity!

***

This was a fascinating 90-minute program, which continued after I had to leave. A few of the students were appalled at some of Dr. Brook’s assertions, while many of the adults were part of the choir. No matter your views, the issues discussed are indeed at the core of the critical debate now underway throughout our nation.

I encourage every single American to take the time and effort to think through these issues, with the goal of arriving at some economic/political philosophy that rings true to you, whether or not you agree with Mr. Brook. Then remain vigilant, stay involved, speak out, support whatever cause you believe in, and adjust your views, as necessary.

“The price of freedom is eternal vigilance” … Thomas Jefferson

Citizens vigilance is the only way our uniquely American form of government can best protect the freedoms of our citizens and allow us to pursue our own idea of happiness and to achieve prosperity.

Mike Stenhouse is the CEO for the Rhode Island Center for Freedom, the leading free-enterprise think-tank in Rhode Island.