What would Bastiat say?

The Declaration of Independence, the U.S. Constitution, and Bastiat's "What Is Seen and What Is Not Seen" -- if only our politicians read and actually believed them, we'd have the best of all possible governments. As a Christian, I'm well-acquainted with the phrase, what would Jesus do? When it comes to politics and economics, let's ask ourselves: what would Bastiat say?

Without getting into too much detail, many of us fully oppose the proposed Manhattan West Side Stadium because it isn't worth the taxpayers' share of $600 million. Sure, it will generate revenue, if you consider only the stadium and not its unseen effects on the rest of the economy. Cato and others have studied other stadiums and determined that they only transfer consumption, not create new consumption. Each dollar at the stadium is almost always a dollar taken from another business, not a new dollar spent. Furthermore, any new consumption is necessarily subtracted from savings, which means less money available for business investment elsewhere. It's all just a shift.

There's also a moral argument against the stadium. Though I'm not an NYC resident, some of my taxes would still go toward the stadium. NYC Mayor Michael Bloomberg wants city and state funding: half from NYC, half from New York State residents. Why should we in Westchester, Albany, Buffalo or have to pay for a stadium we wouldn't use as often as NYC residents? Even if 100% of NYC residents wanted the stadium, why should we non-NYC residents pay for something they'd invariably use more?

A few weeks ago, I dropped Don Luskin a little note (which he did me too much honor to print as a letter on his blog) on Bloomberg's difficulties purchasing the land. I still maintain that if the idea is to generate tax revenue for firefighters' raises and schools, the $600 million could go a long way toward those without having to build a stadium.

Today's New York Times has an article on Bloomberg's new difficulties with the stadium proposal. Page 2 of the online article says that Bloomberg now proposes using PILOT money instead of tax money. Whoa, whoa, whoa. Payments In Lieu Of Taxes is what businesses negotiate to "pay" instead of paying taxes. It's another of those tricks that government uses to lie about how much we're really taxed. Call it a PILOT, call it taxes, call it tribute -- it's still money that the government takes! Who do you think ultimately pays that money? We, the taxpayers. Businesses pay taxes only on paper, only as a matter of accounting. In reality, businesses can only pass the taxes on to the consumer.

Let's assume PILOTs aren't really taxes. Even if the city used $300 million in existing PILOTs, that's $300 million less than the city has to spend elsewhere. What will NYC do, cut $300 million in spending? Raise "real" taxes by $300 million? Negotiate $300 million more in PILOTs? One way or another, the NYC taxpayer gets socked with the $300 million. Then the other New York state residents cough up $300 million. But that $600 million still pays for new jobs, right? Yes, new jobs in one particular area, but not counting the loss of jobs elsewhere.

I've quoted this before, but Bastiat's words apply so well here:

Well, then, suppose I arrange to have a navvy dig me a ditch in my field for the sum of a hundred sous. Just as I conclude this agreement, the tax collector takes my hundred sous from me and has them passed on to the Minister of the Interior. My contract is broken, but the Minister will add another dish at his dinner. On what basis do you dare to affirm that this official expenditure is an addition to the national industry? Do you not see that it is only a simple transfer of consumption and of labor? A cabinet minister has his table more lavishly set, it is true; but a farmer has his field less well drained, and this is just as true. A Parisian caterer has gained a hundred sous, I grant you; but grant me that a provincial ditchdigger has lost five francs. All that one can say is that the official dish and the satisfied caterer are what is seen; the swampy field and the excavator out of work are what is not seen.

One can almost hear a sign in the next paragraph:

Good Lord! What a lot of trouble to prove in political economy that two and two make four; and if you succeed in doing so, people cry, "It is so clear that it is boring." Then they vote as if you had never proved anything at all.

I'm pretty certain what Bastiat would say first about the stadium proposal: he'd tell Mike Bloomberg to stop talking merde and call a tax a tax!