A version of the following commentary appeared in the Mound City Messenger.

A bad idea doesn’t get better with age. Bad ideas aren’t wine, jeans, or your high school memories. The tax subsidies for the Post-Dispatch building redevelopment in downtown St. Louis were a bad idea back in 2019 when the development was proposed, and they are a bad idea now.

Using tax subsidies for economic development rarely benefits the public. Instead, it lowers the risk and increases the returns for private investors. Under a capitalist system, the relationship between risk and reward for investors can be a wonderful thing, but in recent decades the government has somehow decided the public should get involved in private business dealings through tax subsidies and incentives. Taxpayers in St. Louis were left holding the bag for the failed St. Louis Marketplace tax increment financing (TIF) plan, the tax subsidy package for the Renaissance Hotel that was literally sold on the courthouse steps, and numerous other failed, subsidized enterprises. Most economic development schemes are like an expensive game of musical chairs in which the taxpayer is always the one with nowhere to sit.

The tax subsidy package for the old Post-Dispatch building at 900 N. Tucker on the northern edge of downtown St. Louis was approved by the Board of Aldermen in 2019. It primarily consisted of a $12 million TIF package. The summary included with the legislation featured the normal jargon required for such bills, and it included a statement that the development “will have approximately 1,250 jobs with an average salary of $76,500.”

How has that jobs promise worked out? Well, OK at first. The most recent annual TIF report (2024) filed by the developers with the state auditor repeated the same number of 1,250 estimated jobs created. It also listed 830 jobs created so far. There are two ways to look at that number, and both are accurate. The first is that, once again, developers exaggerated their job creation in order to get the subsidies they wanted. That often happens, and it may have happened here. The second is that getting to two-thirds of the promised jobs is actually better than many other subsidized developments, and maybe the developers deserve some credit. Not enough credit to justify all the subsidies in the first place, but, you know, some.

Except that recent actions indicate that the development is highly unlikely to ever get to 1,250, and it may quickly move in the other direction. The largest tenant in the redevelopment at 900 N. Tucker is Block, formerly known as Square. As you may have read, Block recently announced that it was laying off 4,000 people companywide, almost half of its total workforce. How many of those layoffs will be in St. Louis in unknown at this time, but the company previously announced much smaller layoffs in Missouri in both 2024 and 2025, so it seems unlikely that its St. Louis office will be unscathed.

I am not judging the company about the layoffs. If artificial intelligence is making some employees obsolete (the company’s stated reason for the move) then those people should be let go so they can do something else with their lives. That’s the creative destruction of capitalism. But this situation is a perfect example of why cities and counties should not give subsidies to private companies based on promises of employment, growth, renewal, or whatever the vibe of the moment is.

Numerous economic studies have disproved the belief that tax subsidies lead to economic growth. If tax subsidies worked, the City of St. Louis would already be awash in riches. Tax incentives have been piled on top of tax subsidies under every acronym under the sun for decades. None of it has worked. The city should focus on keeping tax rates level and low for everyone, not high for most and low (because of special exemptions) for the politically connected. A reliance on subsidies rewards cronyism, over-promising, and political grandstanding, but it doesn’t lead to real economic success. Just ask the Block employees who may be laid off soon.

The post Tax Subsidies Are a Mistake We Can’t Seem to Learn From appeared first on Show-Me Institute.

I think of that again because a new report by the American Enterprise Institute’s Scott Winship, “Understanding Trends in Worker Pay over the Past 50 Years,” addresses the fallacy of that chart and the broader claim that productivity and wages have not grown apace. Contrary to claims from some on both the political left and right, who argue that pay has stagnated despite economic growth, Winship presents evidence that overall compensation has grown in line with productivity when correctly measured.

The analysis begins by correcting misconceptions about wage stagnation. Winship shows that median worker pay, though not rising as dramatically as some top earners, has increased significantly when considering total compensation rather than just hourly wages.

Winship also addresses the discrepancy in pay growth between different groups. He notes that women’s pay has increased more rapidly than men’s over the past several decades.

Winship suggests that instead of accepting a gloomy narrative of failing capitalism or deteriorating worker conditions, policymakers should focus on boosting productivity and enhancing skills among middle- and working-class Americans.

The report paints a more optimistic picture of American workers’ pay trends relative to productivity over the past fifty years. While there are opportunities to enact policies that could improve workers’ economic mobility, they must be built on the solid understanding of wages that Winship advances.

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In July 2010, Missouri politicians joined the state’s economic development agency to announce the awarding of $17 million in state tax incentives, along with $39 million in local tax subsidies, to the Mamtek project in Moberly. The project called for making artificial sweetener using a process that would start in China and finish at a new plant in Moberly, creating 600 local jobs here. There was just one problem—it was all a scam.

It may seem unfair of me to criticize a government agency for falling victim to a criminal conspiracy, albeit one that really wasn’t that sophisticated, but government economic development agencies are a Catch-22 for taxpayers. When they do a bad job—as they did in Mamtek—they waste our tax money. As with the Bass Pro Shop in Independence and the Jamestown Development near Springfield, we can list plenty of private business projects government had no reason to get involved in but did to the detriment of taxpayers. But we can only wish they always did a bad job. It’s when they do their jobs right that taxpayers and average citizens really get burned.

When economic development officials do their jobs right, all they are really doing is subsidizing economic activity that likely would have happened anyway for the benefit of politically connected companies. As the old joke goes, economic development officials are great at creating jobs for other economic development officials. For everyone else, not so much. For all their skillful use of political buzzwords and claiming credit when none is deserved, it remains true that “government is a bad venture capitalist,” to quote President Obama’s economic advisor, Larry Summers. Summers was being polite. Government, in the form of local, state, and federal economic development agencies, is a terrible venture capitalist. It’s not that government officials don’t get their bets right often enough; it’s that they actively get them wrong because economic development officials are heavily influenced by the political incentives to reward supporters of the politicians who employ them. A short-term political payoff is more important than long-term success.

Late to the subsidy game but catching up fast, Springfield—having seen how St. Louis and Kansas City have operated their own subsidies and failed by every measure—has decided to follow in their footsteps. The trucking industry has long been important in Southwest Missouri, and there are numerous companies, stations, and stores in Springfield to service the various fleets. But not enough for the City of Springfield’s Department of Economic Vitality (that’s its actual name), which decided to use over $4 million in taxpayer funds (along with other subsidies) to entice an enormous new gas station company, Buc-ee’s, to locate in town.

The head of another local convenience store company, Rapid Robert’s, rightfully took issue with the plan. He didn’t object to the competition, but rather the use of tax subsidies in a field full of local companies that had grown without them. His objections fell on deaf ears, and likely would have been meaningless to the members of the city’s “economic vitality” department. They, like economic development officials everywhere, care nothing about history, propriety, or capitalist theory. They care about getting the forms marked up, the tax money spent, and the deal done so that they can claim credit, add it to their resume, and start searching for the next job.

Economist Dick Netzer mocked the exaggerated claims of success made by economic development officials when he wrote, “Who needs oil wells, when a state can be another Kuwait just by increasing the budget of a tiny agency?” Claims of subsidy successes often border on the absurd. The author once heard a Clay County economic development official claim that “All of the growth” in the town of Liberty—a fast growing, exurban community north of Kansas City, the likes of which have been growing across the nation for decades—was due to a tax-increment financing (TIF) package they passed. As if suburbanization hadn’t existed until Missouri’s TIF law was passed in the late 1980s.

Economists Alan Peters and Peter Fisher studied tax incentives closely and concluded that they work about 10 percent of the time and are simply a waste of money the other 90 percent. They added that, like the Clay County officials mentioned above, economic development officials often credit all new employment and growth to tax subsidies.

As Christmas approaches, Springfield residents could get no better Christmas gift than the elimination of state and local economic development agencies. They are a blight on capitalism and an actively harmful influence on the civic and economic life of our state.

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Mackey spoke highly of capitalism, saying, “We can’t throw out capitalism and replace it with socialism—that’ll be a disaster! Socialism has been tried 42 times in the last 100 years and 42 failures. It doesn’t work.” Mackey believes that capitalism is “the greatest thing that humanity’s ever done,” crediting capitalism with increases in life expectancy, earnings, and literacy rates. Mackey recognizes that it’s entrepreneurs who have taken scientific discoveries and operationalized them to make our lives better. He points out that “businesspeople are not the villains of the story; they’re the heroes of the story. The entrepreneurs are the ones that create great progress.”

While noting that society needs rules and regulations, he says, “[Y]ou can overly regulate business so it’s hard to do business and then the whole society becomes less wealthy and less prosperous.” This is a point often made by Show-Me Institute researchers; burdensome regulations make it harder to work and make a living, which can have negative effects on economic growth.

I can’t speak to all the actions of Whole Foods or other interviews by Mackey, but it was certainly refreshing and interesting to hear the CEO of a major company supporting markets in this instance. I tend to agree with Mackey’s statements, but you can listen here and decide for yourself.

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In one of the more memorable exchanges of the interview, Donahue asks Friedman a question many are still asking today:

When you see around the globe, the maldistribution of wealth, the desperate plight of millions of people in underdeveloped countries. When you see so few “haves” and so many “have-nots.” When you see the greed and the concentration of power. Did you ever have a moment of doubt about capitalism and whether greed is a good idea to run on?

Friedman’s reply has become standard among capitalists like me. “Is there some society you know that doesn’t run on greed?”

Friedman continued:

You think China doesn’t run on greed? What is greed? Of course, none of us are greedy, it’s only the other fellow who is greedy. The world runs on individuals pursuing their separate interests.

The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way.

In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history, are where they have had capitalism and largely free trade.

If you want to know where the masses are worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.

In the years since the Donahue interview, the free enterprise system has continued to improve the lot of ordinary people. Yet today, possibly more than in Friedman’s day, Americans are showing support for socialist policies. Shockingly, a 2019 Gallup poll found that four out of ten Americans supported some form of socialism.

What happened? How can socialism be gaining popularity even as confidence in capitalism wanes? The problem is that a defense of capitalism like Friedman’s satisfies the head but not the heart. When people—especially young people—look around the world today, many of them see it as Donahue described it. As a result, they question the morality of capitalism.

Enter Arthur Brooks.

Brooks is the past president of the American Enterprise Institute, a social scientist, a former university professor, and a former professional French horn player. Yes, you read that right. Brooks has written best-selling books such as The Conservative Heart: How to Build a Fairer, Happier, and More Prosperous America and Love Your Enemies: How Decent People Can Save America from the Culture of Contempt.

Recently, Brooks released a documentary, The Pursuit, which is now available on Netflix.

In it, he asks, “From 1970 until today, the percentage of the world’s population living at starvation’s door has decreased by 80 percent. Two billion people have been pulled out of starvation level poverty. What did that?”

His answer is the same as Friedman’s—free enterprise. Indeed, the messages of Free to Choose and The Pursuit are essentially the same: No other system has succeeded like free enterprise in allowing people to direct their own destiny and pull themselves out of poverty.

The key difference between the two is that when Brooks discusses how to help the most disadvantaged, it’s clear that he’s making not just an intellectual argument but also an emotional appeal. He cares about human flourishing.  From the very beginning, he frames the argument for capitalism as a moral one, saying “the point of the American experience is basically a moral consensus that our society should push opportunity to the people who need it most. This is our pursuit, and it’s predicated on two fundamental moral principles: human dignity and human potential.” Brooks shows us this as he walks the streets of India, once a scene of abject poverty during the days of democratic socialism. Now, after free enterprise has been released, we see progress. Hindol Sengupta, editor-at-large of Fortune India, says it like this, “Capitalism allows human beings to choose an action to fulfill their own destiny. . . . Forget per-capita GDP—we didn’t even have per-capita hope.”  

None of this is to say Friedman did not care about the poor, but his arguments can come across as those of an academic. They are for the head. Through The Pursuit, Brooks provides the answer for the heart.

Add The Pursuit to your list of required viewing. Go watch it . . . after you watch the Friedman interview.

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So, who is Ludwig von Mises and why would a donor believe it so important that students learn about him?

To answer this question, I reached out to Dr. G.P. Manish, a Mises Institute fellow and my Austrian economics professor at Troy University. He is well-versed in all things Mises and he laid out some of the main points.

Ludwig von Mises was an economist who supported free markets and economic liberty. He is most famous for fighting against socialism. He also used economic concepts to explain decision-making in non-market areas like households and government. For example, we think about opportunity cost when we decide to spend money on a sandwich instead of a salad, but we can also use this thinking when deciding whether to spend time cleaning or watching TV.

In general, Austrian economics takes a realistic view of the market. It allows for uncertainty, mistakes, and innovation while other economic theories assume these factors away.

After this mini-lesson, I asked Dr. Manish if he thinks that students should learn about Mises. Here is his response:  

I believe it is vital that students learn about the ideas of Mises. Doing so will give them a window into a different way of thinking about economic phenomena and will make them question the mainstream, Neoclassical tradition.

. . .

The free market, as Mises emphasizes time and again, benefits not only a narrow elite, but all groups in society, including the least well-off. This can be eye-opening in a world where capitalism and free markets are often charged with benefiting the rich while leaving the less fortunate masses behind.

. . .

A market economy is not devoid of error: entrepreneurs earn both profits and losses. But it is the only economic system where the production decisions of entrepreneurs and the resulting allocation of resources can be coordinated with the preferences of consumers. This vital lesson can be learnt only by studying the works of Mises.

As I’ve said before, markets work and Mises clearly understood that. The issue at Mizzou will be decided in the courts, but regardless of the outcome, many students would benefit from learning about this important thinker.

Dr. G.P. Manish is the BB&T Professor of Economic Freedom and a member of the Manuel H. Johnson Center for Political Economy at Troy University. 

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To be sure, there were different degrees of socialism. The totalitarian socialism of Mao and the Soviet Union killed people, ruined economies, and snuffed out freedoms critical to both political and personal life. The democratic socialism common in the West, softer and therefore less destructive, merely specialized in overregulating the private economy and extreme redistribution of wealth.

But even in the West, socialism manifestly failed. The democratic socialism of Great Britain reduced that country from a leading economic power to the “sick man of Europe,” and was firmly rejected by British voters during the Thatcher years.

Unfortunately, socialism has come slouching back onto our college campuses, settling itself comfortably among the students. A 2015 Reason-Rupe poll showed that 58 percent of 18- to 24-year-olds viewed socialism favorably. By contrast, only 28 percent of seniors ages 65 and above were favorable toward socialism. Several other polls say the same thing: A majority of young adults support socialism, and in fact prefer it to capitalism.

To older adults, this fact probably seems disturbing and inexplicable. How could anyone support a philosophy that has spawned evils ranging from economic stagnation to mass killing? Speaking as a 21-year-old college student, I believe that the explanation boils down to two things—discontent and ignorance. Most of today’s college students grew up during the Great Recession. They are graduating with large debts and, for many, bleak prospects for employment. They feel cheated, and believe that something is deeply wrong with our current system. Since that system is capitalist, they see socialism as an alternative.

At the same time, however, most young adults misunderstand socialism. In one study only 16 percent of millennials could define socialism as a government-managed economy. And who can blame them for their ignorance, considering what they’ve learned—or haven’t learned—in the classroom? In my experience, professors may not espouse socialism, but they seldom challenge its tenets. Most of my history classes in college have focused on the many ways America has victimized the poor and downtrodden. Professors equated capitalism with imperialism while failing to even mention the evils committed by totalitarian socialist countries or the economic destructiveness of democratic socialism. One of my professors dismissed the atrocities committed under Mao Zedong’s regime by saying, “While there were certainly many failures with Mao’s reign, during his rule China’s literacy rate went up, as did migration to cities.”

“Failures”—that is how my professor referred to the 45 million who starved to death under Mao.

I believe this same indifference to truth is what turned so many college students into enthusiastic supporters of Bernie Sanders during the last presidential campaign, giving him more youth votes in the primary than Clinton and Trump combined. While Sanders is no totalitarian, he certainly supports the same democratic socialism that emaciated Britain in the postwar years. Students loved the promises he made (free college, free healthcare, and forgiveness of debt) and were perfectly willing to believe that big and benevolent government could make almost anything “free” simply by raising taxes on the very rich.

It should be said that this support for socialism isn’t necessarily permanent. Studies find that support for socialism drops after college and goes down as people earn higher salaries. Young people aren’t stupid; they are just young, and some economic truths cannot be truly appreciated until experienced.

Of course, some college students don’t make it easier for themselves. Many refuse to listen to conservative voices and cannot stand correction—or argument. Nothing strengthens a lie quite like an echo chamber, so the lie of socialism has grown into a powerful force on campus that threatens competing (and worthier) ideas. Yes, most students are just young and will outgrow their revolutionary fervor. But right now, students are being cheated out of the best opportunity most will ever have to test competing political and economic ideas against one another. And until our colleges have the courage to break through the echo chamber, students will get—at best—only half the education they’re paying for.

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It’s a two-part idea – beginning with the proposition that the robots are coming and they are about to change all of our lives – mostly for the better. Think of having a machine that can respond to the command, “Hey, Robot, build me a house.” The upside will be greater ease and prosperity; the only downside will be massive unemployment. Says Tesla CEO Elon Musk, “There will be fewer and fewer jobs that robots can’t do better.”

The 19th-century Luddites had the same fear of automation. During the Industrial Revolution, with mechanization replacing manual labor on an unprecedented scale, their proposed solution was to smash the new machines that were taking jobs away from some people (even as they were creating new jobs for many more people).

The 21st-century Luddites – Musk, Facebook founder Mark Zuckerberg, and other big names in Silicon Valley – have a different solution. Rather than smash their own machines, they are promoting a “universal basic income” (UBI, for short) to take care of people unable to find work because of the job-destroying robots.

A UBI of, say, a couple thousand dollars a month for unemployed yet able-bodied adults would create a whole new “safe space” – freeing millions of people from the nasty necessity of having to go out and find work in order to enjoy life unencumbered by financial difficulty.

“We should have a society that measures progress not just by economic metrics like GDP, but how many of us have a role that we find meaningful,” said Zuckerberg in a recent speech at Harvard. “We should explore ideas like universal basic income to give everyone a cushion to try new things.”

Musk argues that unemployment and economic output will both rise as a result of greater automation, leaving society with “no choice but to distribute a portion of the money to everyone equally.”

Let’s try to talk a little sense here. Who is to pay the vast sum of money needed to create a new leisure class of non-workers if not the people who continue to work? And in the long history of automation, has there ever been a time when a rapid expansion in unemployment (as happened in the Great Depression) was accompanied by a still more rapid expansion in GDP. The answer is never.

More importantly, automation creates more employment than it destroys. During the Industrial Revolution, for instance, automation made weavers who worked on ancient looms obsolete. But the number of people working in textiles exploded. That is because capital investment in labor-saving devices raised productivity, lowered prices, improved quality, and left more money in people’s pockets to spend on things besides the bare necessities.

The Silicon Valley superstars promoting a UBI display an incomplete understanding of how free-market capitalism works. It depends upon human motivation no less than technological innovation. Under free-market capitalism, people compete with one another to satisfy the needs of others. Rather than living off the sweat from the brows of other people, they have the satisfaction that comes from earning their own way and living useful, purposeful lives.

On this Labor Day, let us celebrate the enduring value of work. There may be other motivations for a basic income, but a fear of robots destroying all the jobs absolutely shouldn’t be one of them.

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Ludwig von Mises, a mentor to Friedrich Hayek and a major figure in economics in his own right, set out his views on capitalism and inequality in a slender book (just 113 pages) called The Anti-Capitalistic Mentality. First published in 1954, and readily available online for less than $10, it is well worth reading today.

Mises’ treatise on why capitalism sits in the dock, falsely accused of various crimes against humanity, is a classic: bravely saying what still needs to be said. It offers a robust rebuttal to the jaundiced view of capitalism found (most recently and conspicuously) in Thomas Piketty’s Capital in the Twenty-First Century.

In The Anti-Capitalistic Mentality, Mises asks: Why do so many people “loathe” capitalism? He gives a threefold answer.

The first factor is simple ignorance. Few people credit capitalism for the fact that they “enjoy amenities that were denied to even the most prosperous people of earlier generations.” Telephones, cars, steel-making, and thousands of other advancements are all “an achievement of classical liberalism, free trade, laissez faire, and capital” — with the driving force being the profit motive and the deployment of capital used in the development of better tools and machines and the creation of new products. Take away capitalism and you wipe out most or all of the extraordinary progress that has been made in raising living standards and reducing poverty since the dawn of the Industrial Revolution.

The second factor is envy, the green-eyed monster, which causes many people to think they have gotten the short end of the stick. As Mises observes: “Capitalism grants to each the opportunity to attain the most desirable positions which, of course, can only be attained by the few … Whatever a man may have gained for himself, there are always before his eyes people who have outstripped him … Such is the attitude of the tramp against the man with the regular job, the factory hand against the foreman, the executive against the vice-president, the vice-president against the president, the man who is worth three hundred thousand dollars against the millionaire, and so on.”

And finally, the third factor is the unceasing vilification of capitalism by those who seek to constrain or destroy it. As Mises notes, the critics and anti-capitalists go on telling and re-telling the same story: saying that “capitalism is a system to make the masses suffer terribly and that the more capitalism progresses and approaches its full maturity, the more the immense majority becomes impoverished.”

Indeed, that is the story Piketty tells in his book, which has soared to the top of the New York Times and Amazon best-seller lists. Does inequality rank as the great defining issue of the twenty-first century? If you agree with Piketty, it does. He contends that disparities in income and wealth are spiraling out of control, setting the haves- against the have-nots. Without “confiscatory” taxes to create a new social and economic equilibrium, he warns, today’s democracies may ultimately collapse, taking capitalism and the capitalists down with them.

Piketty makes much of the seeming fact (some dispute his statistics) that those at the highest levels of income in the United States have claimed a sharply rising share of total U.S. national income over the past three or four decades. From there he leaps to the conclusion that the vast disparity in income between the top 1 percent and the bottom 90 percent will lead over time to the emergence of a new “patrimonial capitalism.” With nothing (save perhaps violent revolution) to worry about, the heirs to big fortunes will turn into a new class of rentiers, living off the rent they receive from owning land and other forms of capital.

In his analysis, it is set in stone that return on capital (r) outstrips economic growth (g), which means that the heirs to great fortunes stay on the fast track to even greater wealth – without even having to work – while the lower and middle class are condemned to economic stagnation or utter hopelessness. His little formula, r>g, is supposed to be one of the great takeaways from the book, but it points up one of the problems of presenting a far-too-static picture of how people behave in a competitive marketplace.

That would not have escaped Mises’ attention. Mises would have challenged Piketty’s assumption that the heirs to great fortunes would manage their money wisely, or that they would have the same success as others (more driven than they) in searching out the best investments. Mises maintained that “the dull and stolid progeny” of people who built business empires were likely to “fritter away” their heritage and “sink back into insignificance.”

Under a capitalist system worthy of the name (meaning, to Mises, a competitive market economy free of the crippling effects of state planning and controls); it is neither the powerful industrialist nor the rich investor who calls the shots; it is ordinary people in their capacity as consumers. Through their “buying or not buying,” consumers provide “a daily referendum on what is to be produced and who is to produce it.” They have the whip hand – the power to “make poor suppliers rich and rich suppliers poor.”

One may almost pity the poor capitalist portrayed by Mises. However hard he might work or fast he might run, someone is probably gaining on him. At all times, other suppliers are striving to unseat the incumbents by discovering new and better ways of serving their customers. In comes a Wal-Mart or Target and out goes a Sears or K-Mart. It is a battle fought with an unending supply of fresh recruits, and it is never the case (as Piketty claims) that “The past (i.e. wealth accumulated from previous success) devours the future.” Rather, it is the future (whatever the next big thing may be) that replaces the present with something better.

In The Anti-Capitalistic Mentality, Mises states unequivocally: “Nobody is needy in the market economy because of the fact that some people are rich. The riches of the rich are not the cause of the poverty of anybody.”

Look at the fastest-growing countries in today’s world. Is there not a natural compatibility – as opposed to an inherent contradiction – between major advances in the standard of living in some countries and the ability of their most enterprising citizens to make spectacular gains? That is what has happened in China as a result of economic liberalization: the number of Chinese billionaires has skyrocketed (and is now close to the number of U.S. billionaires), while hundreds of millions of people inside China have worked their way out of poverty.

Is it true – as Piketty contends – that we are witnessing a hyperconcentration of wealth inside the United States?

It might be true if the people with the highest incomes remained the same from one year to the next – over an extended period of time. But they are not the same people. Just as Mises would have expected, it is an ever-changing cast of characters. A recent report from the Tax Foundation data shows IRS data on people reporting a million dollars or more in income over a nine-year period. Fully half of these people made a one-time-only appearance. Only 15 percent of them reported at least a million in income two of the nine years and only 5.6 percent made it all nine years.

There is no danger of an oligarchy of the rich taking shape here to rival the power and permanence of the landed aristocracies in the pre-capitalistic France and Britain. (Note: This assumes that governments do not intervene, as they have been doing, to favor certain groups and enterprises. For more on how government increases income inequality, see Frank Hollenbeck’s article on income inequality, and Andreas Marquart’s work on this topic.)

But there is something else to worry about – something that caused Mises to lose sleep. That is the thought that the natural tendency under capitalism “towards a continuous improvement in the average standard of living” will be stymied by a growing “absence of capitalism” due to “the effects of policies sabotaging the operation of capitalism.” Among those perverse policies, Mises pointed to credit expansion, gunning the money supply, and raising minimum wage rates. Still more, he railed against progressive policies that diminish individual choice and leave more and more economic decision-making in the hands the state. Mises’ greatest fear was that people would “renounce freedom and voluntarily surrender to the suzerainty of omnipotent government.”

Ironically, the most ardent proponents of big government are those who carry on the most about inequality. Do they want nothing more (to paraphrase Churchill) than an equal sharing of misery?

Andrew B. Wilson is a resident fellow and senior writer at the Show-Me Institute, a free market think tank based in St. Louis, MO.

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So it has been with great interest that I have followed the debate in Kirkwood over the intersection of Kirkwood and Manchester Roads. Kirkwood asked for redevelopment proposals, and received two proposals without a TIF (one does have a smaller Community Improvement District), and one major development proposal using a large TIF package. In a normal world, it would be assumed the city would take the projects asking for either no subsidies or greatly reduced subsidies instead of the huge TIF, but Saint Louis does not operate under normal standards of free markets.

But, in excellent news, Kirkwood is going with the two proposals that did not ask for a TIF: a CVS pharmacy and a farmer’s market. Good for Kirkwood to say “yes” to free markets, competition, and actual capitalism.

The only good thing that would have come from the TIF is that I would have enjoyed the city having to declare “blighted” an intersection two-tenths of a mile from the richest city in America. That would have been fun to watch…

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1. To the business people on the panel, I would ask: Why, as supposed believers in capitalism and free markets, are you supporting proposals that will increase the use of centralized economic planning in Columbia? Do you believe that central economic planning by governments is desirable, because that is exactly what TIF is? Do you think it is the proper role of government to pick which companies and projects get special tax breaks, while others do not?

2. To the city officials on the panel, I would ask: Why, when Columbia is doing better than most other areas in Missouri, are you attempting to implement policies that are very expensive, have a terrible track record of creating jobs, and have a record of failure throughout the state? Although, frankly, it is probably a waste of time to ask those officials anything. TIF increases the power and involvement of government. If you are a city manager, what is not to like?

3. There are many questions to ask of former Saint Louis Mayor Vince Schoemehl. I would ask about the abject failure of Saint Louis Marketplace as a failure of TIF. I would ask about the failure of Saint Louis Center as a failure of central economic planning. I would ask, who came up with the idea for the disappearing police car? – not for any specific reason but it was a famous ad in Saint Louis political history so I would ask about it. Mostly though, I would ask why he thinks taking money and property from other people to fund things he likes can possibly be good public policy that should be imitated around the state.

TIF has been a total failure in our state, particularly in Saint Louis. Columbia should avoid expanding its use. And, yes, the panel should have included at least one person who is skeptical of the benefits of TIF and local economic planning. Finally, TIF absolutely and regularly involves the abuse of eminent domain. Unlike Enhanced Enterprise Zones, there is a track record of eminent domain abuse associated with TIF usage in Missouri.

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The post Why Capitalism? appeared first on Show-Me Institute.

As a long-time teacher of economics in Missouri, I believe that Hayek’s words are just as apt today as they were 50 years ago. Here we live in a country that has been singularly successful both in creating material prosperity and enabling more and more people to enjoy the blessings of “life, liberty, and the pursuit of happiness.” Yet despite this unrivaled record of success, many of those entrusted with the education of our children regard capitalism, the engine of the nation’s prosperity, not as something to be celebrated, but as something deplorable or shameful.

I have seen first-hand how an aversion to free markets, competition, and economic logic permeates our classrooms. To cite one example, a good friend of mine once invited a professor of education to collaborate in designing a summer curriculum on entrepreneurship for disadvantaged youth in Saint Louis. The professor, a prominent member of his university’s college of education, was aghast. He told my friend that entrepreneurship is the very antithesis of education and the teaching of good citizenship. And over the past 12 years, that is the world view that he has inculcated in hundreds if not thousands of future teachers at all levels of education.

Consider the daughter of my friend. Her teacher, while discussing the environment and the spotted owl, denounced the meat and fur industries. The daughter, parroting her teacher, told her mother that the government should ban both industries. Noticing the obvious slant to the curriculum, mom challenged her daughter to compare the benefits and costs, including the loss of jobs and income. Daughter, resorting to ideological labels in lieu of reasoned response (a sure sign of educational neglect), declared her mother a “capitalist pig.”

Why this bias? Could it be that educators identify entrepreneurial free markets as win-lose zero sum confrontations? One’s gain must be another’s loss? Perhaps they imagine the violent overthrow of kind cooperation in favor of brutal aggression and profit. Self-esteem is sacrificed to the survival of the fittest. The very thought, however fanciful, rattles the nerves of educators.

Market competition, in fact, brings people together through voluntary exchange. You satisfy your own needs by discovering ways to satisfy the needs of others. This evolution from self-sufficient individuals to interdependent beings elevates social cooperation from a generous impulse to the essential linchpin supporting our means of survival. This should warm the hearts of educators everywhere.

Now consider what happens when governments replace entrepreneurs in picking the winners and losers. For example, analyze the multitude of tax credits that Missouri government gives away to insiders with lobbyists. Here, taxpayers are coerced into financing the Taj Mahals of wellconnected developers. Far from a cooperative game of willing participants, this is favoritism for the few, which eliminates competition and promotes waste.

Competition and free markets are the best assurances of social cooperation and peaceful coexistence. That is what we should be teaching our children. Even more, it is what we should be teaching our teachers.

Gregory Aubuchon is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri Public Policy.

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For restaurateurs or aspiring chefs, the food truck can pave an easy route into the business. The capital and overhead costs are lower, and the mobility is an advantage: They can meet their customer base where they live and work.

But many “fixed” restaurants say this gives food trucks an unfair edge, siphons away business and can ultimately depress rents and erode tax bases. Some see food trucks as vultures, swooping in and stealing customers.

In New York City, a merchants association complained to a city official, who earlier this year introduced a bill that would revoke a food truck’s license if it gets three parking tickets within a year. In Los Angeles, officials are looking at limiting food trucks to certain prescribed zones or charging a kind of rental fee, in addition to vending permit fees. In Washington, lawmakers are considering a proposal that would prohibit food trucks from parking within 60 feet of a competitor.
[…]
Food truck vendors, meanwhile, say these measures would unfairly limit business.

“The issue is: Are we a capitalist society and do we believe in competition?” said Kristi Cunningham, who sells more than 1,000 cupcakes a day from her van in Washington. “… We pay sales tax, we pay a fee to be a street vendor and we pay all the other fees associated with running a business.”

Earlier in the article, Todd Waelterman, director of Saint Louis’ street department, claims that “[t]he vendors make the neighborhoods come alive. We want that kind of activity,” but “[w]e don’t want an ice cream truck in front of a Baskin-Robbins. Those bricks-and-mortar people pay taxes.” This is the wrong attitude to have about new forms of economic activity. Although brick-and-mortar restaurants pay more in property taxes than the food trucks, they both pay sales tax. Regardless, the government’s mission should not be to simply maximize its own revenues. Furthermore, there’s no reason why an ice cream truck shouldn’t be competing against Baskin-Robbins. If the truck is able to offer consumers lower prices, higher-quality ice cream, better service, or some combination of the three, it’s better for people to have the option of buying from them. Even if the ice cream truck ultimately puts Baskin-Robbins out of business, that just means that consumers no longer value Baskin-Robbins highly enough to justify its existence, and the building, capital, and labor it used should be redirected to making goods and services consumers want more.

Unfortunately, it appears that the city will attempt to “balance” the interests of the food trucks and restaurants with some new regulations on vendors:

The city of St. Louis, for years, has issued 10 vendor permits, most of them to food carts of the kind seen around Busch Stadium. Most of the permits were $25 and allowed vendors to roam in any of the city’s seven vending zones.

But earlier this year, the city instituted a new policy that will require vendors to bid on particular spots. The change caused an uproar among city vendors who had long assumed they were grandfathered in and could wander around as they wanted, Waelterman said.

On Oct. 15, the bidding will begin. Waelterman explained that his department would take bids on as many as 12 locations. But for mobile vendors, the city isn’t putting a limit yet and will assess each bid on a case-by-case basis.

“It’s not a pure high-bid deal,” he said. “It’s what you can do for the city. It’s what we’re lacking. What your truck looks like.”

In other words, politicians and bureaucrats will be directing business activity, not entrepreneurs and consumers.

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