I read David Cay Johnston‘s Free Lunch today, and it made me really angry. The subtitle of the book is, “How the wealthiest Americans enrich themselves at government expense (and stick you with the bill).” That about sums it up. It tells stories of large companies that get huge government subsidies for opening up stores. As Johnston points out, if a large sporting goods store opens in a town, there are going to be no tax revenue increases, because without such a store, people would just buy their sporting goods elsewhere. In fact, if the large sporting goods store charges less, the government will get less tax revenue. Usually the argument is made that the store will be a destination and that people will come from hundreds of miles to shop at these stores. In reality, this is never the case. What’s more, in virtually all cases, the government subsidies are much greater than any increased revenues.
He also spends time on professional sports. It turns out that none of the major sports leagues in America (baseball, football, basketball) would be profitable without government subsidies. Yes, some particular teams are profitable, but not any league taken together. This is mostly because the teams get local governments to pay for their expensive playing arenas. What’s more, since the leagues have a monopoly, ticket prices are on average $15 more than they would be in a free market. (Why are there 30 MLB teams? Because MLB says so. Why do they get to say so? Because Congress granted them the monopoly.)
The most shocking thing I learned was that many large retailers work out deals with the state and local authorities to not pay sales tax. So when you go to WalMart and buy a shirt, you are actually paying 9.25% more (in California) than you are if you bought it at a smaller place like Ross. In other words, WalMart gets to mark their prices 9.25% lower than what they are really charging you.
What really made me made about this book, however, was thinking about what my father would think of it. I told him about the sales tax scam and he was outraged. And I know if I could get him to read the whole book, he would agree with it. But he has been so poisoned by Faux News and Hate Radio that it would have a different meaning to him. He wouldn’t see that all these giveaways to the rich are the result of all these people he listens to who claim to be for free markets. He would blame exactly the politicians who are fighting this kind of theft. It would most likely make him think just what the teabaggers think: the problem with Republicans is that they aren’t conservative enough!
There is something to this. As Johnston points out, the two people in Congress who most consistently fight against this kind of thing are socialist Bernie Sanders and libertarian Ron Paul. But I’ve never known my father to really embrace libertarianism, and as much as the teabaggers claim to be libertarians, they are anything but. People of this ilk (including libertarians, but at least you can have an intelligent conversation with them) don’t understand how much their way of life depends upon the government and other people. Understanding why progressive taxation is the only morally acceptable form of taxation is a prerequisite for any real understanding of what is wrong in American politics. I am working on an essay about it, but it is harder to explain than a “flat tax,” which is simple and sounds good, but is evil incarnate.