Shopping for Favorable Treatment
Rock Port, Mo., currently has only one grocery store — the aptly-named Rock Port Market. A group of developers thinks the time is ripe to add some competition into the mix, and is planning to build a new 10,000 square foot supermarket. But, rather than simply bearing the costs of their project, the developers have asked the city to establish a TIF district that would benefit their new venture. The owners of the Rock Port Market correctly point out that granting the TIF district would give the new business an unfair advantage, because the existing grocery store would have to shoulder expenses that the new store does not have to bear.
This is, in fact, a fundamental problem with corporate welfare schemes. The government creates a set of benefits that are only available to some market competitors, which inherently disadvantages all those who are ineligible for the benefits. A far wiser policy would be to establish even-handed rules so that ventures will succeed or fail based solely on their own ability to serve their customers, not because they received (or were denied) a competitive advantage by the government.