Budget & Tax
Jonathan Small | August 8, 2022
Panasonic lessons can provide clarity
Too often, government officials assess the effectiveness of “economic development” like the guy who brags about winning $100 on a scratch-off ticket after spending $1,000 on the lottery. But this approach ignores the true cost.
Such is the case with corporate welfare as highlighted by the failure of “Project Ocean.” Advanced by officials this year, the project was a nearly $700 million corporate-welfare program. But even lavish subsidies failed to attract Panasonic. We all need to understand why.
It’s not because Oklahoma’s proposal was too modest, although Kansas apparently offered as much as $1.2 billion. (And Kansas media now report Panasonic will get its subsidies even if it never creates a single job and regardless of what it pays workers.)
Instead, Oklahoma lost for the same reason officials felt compelled to offer lavish bribes in the first place—our state has more to do from a public-policy perspective to create an environment that job creators cannot resist.
Instead of touting corporate-welfare schemes, Oklahoma needs to address the weaknesses in our state’s public-policy environment. Those weaknesses are well known and easily fixable.
To attract new businesses and grow existing companies, Oklahoma needs to end the penalty on work and eventually eliminate the state income tax, which currently deters investment.
Officials need to improve Oklahoma’s educational outcomes through reforms to public schools that focus on outcomes and universal school choice, which will generate a qualified workforce that attracts employers.
And officials need to provide regulatory certainty through judicial-selection reform, eliminating red tape, and further pension reform.
Do those things and companies will spring up across Oklahoma, all on their own. If you doubt it, look at states where businesses are moving—Florida, Tennessee, Texas. Those are all states that do not impose a personal income tax.
Some critics claim Oklahoma’s social conservatism drives away investors. That is nonsense. States like California, New York, and Illinois are hemorrhaging businesses and citizens despite being the wokest of the woke on social policy. And the states attracting new migrants, like Florida, are championing socially conservative policies.
The lure of corporate welfare is hard to resist. If such programs find a taker, politicians can hold a press conference and declare they’ve “created” jobs. But, like the lottery ticket winner, the press conference will be based on ignoring the broader reality—the fact that all other citizens, employers and workers alike, will pay taxes to maintain incentives for the select few.
As Thomas Sowell noted, “It is so easy to be wrong—and to persist in being wrong—when the costs of being wrong are paid by others.” Project Ocean got it wrong, even if other companies line up to take what Panasonic spurned.
There’s a better way to grow Oklahoma. Transformational policy reforms and not corporate welfare hold the keys to creating an Oklahoma where Oklahomans can thrive.
Jonathan Small, C.P.A., serves as President and joined the staff in December of 2010. Previously, Jonathan served as a budget analyst for the Oklahoma Office of State Finance, as a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department. Small’s work includes co-authoring “Economics 101” with Dr. Arthur Laffer and Dr. Wayne Winegarden, and his policy expertise has been referenced by The Oklahoman, the Tulsa World, National Review, the L.A. Times, The Hill, the Wall Street Journal and the Huffington Post. His weekly column “Free Market Friday” is published by the Journal Record and syndicated in 27 markets. A recipient of the American Legislative Exchange Council’s prestigious Private Sector Member of the Year award, Small is nationally recognized for his work to promote free markets, limited government and innovative public policy reforms. Jonathan holds a B.A. in Accounting from the University of Central Oklahoma and is a Certified Public Accountant.