Monday, January 21, 2008

If I could remind you of one thing... would be that firms are not the champions of free enterprise. It is the outsider, the poor, the immigrant who benefits from them. Andy -- who after this post might need a better title than ex-Mayor, perhaps Chancellor of the Apple -- discovers that organized businesses are just fine with an increase in the gas tax.
The Chamber did not side with the already over taxed and over burdened Minnesota businesses and consumers, but instead want the Government to tax and take more money out of the economy by making goods and services even more expensive.
Should this be a surprise? No. Businesses routinely engage in rent-seeking. Making roads cheaper to use, and having others pay for them, is enhancing to their bottom lines. If it raises taxes to where outside firms are not inclined to come to Minnesota, all the better. It reduces competition for their goods they sell (if they sell largely in-state) and for the labor they hire. They are happy to pay higher taxes and charge higher prices, if they do not face outside competition.

Sometimes rentseeking is easy to spot, like the Amazon story from France. Sometimes rent-seeking leads to capture of bureaucracy. There's a story in the Chronicle of Higher Education this morning (subscriber link) about an audit showing that the National Institute of Health doesn't monitor financial conflicts of interest among biomed researchers. And those researchers don't want the NIH looking at them. The NIH's response? "We're not a regulatory agency."

It isn't a matter of Minnesota being unfriendly to existing businesses that will help Minnesota consumers and taxpayers. What we want is for them to be friendly to new businesses looking to innovate and grow and employ and invest. Is there any reason why you'd expect existing businesses to do that?

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