Government meddling in the market process, courtesy of corporate welfare and targeted tax breaks, is bad economics in large part due to the “knowledge problem” confronting a small group of planners attempting to distort and control economic decisions of millions of market participants.
Worse still, as I point out in this article, is the transfer of power from the many to the few inherent in the ruling class’ ability to control scarce resources. Here’s a sliver:
Under this scenario of targeted “economic incentives,” a company can gain an advantage over its competitors by being relieved of one of its expenses (taxes). This advantage, granted courtesy of the political class, will help determine which businesses succeed or fail in the marketplace; and therefore influence who owns a greater share of the state’s means of production and how they are used.
Benefiting from this system, of course, are those businesses with the appropriate political clout receiving the tax breaks, along with the politicians eager to record public relations victories by claiming they are “creating jobs” as they dispense their political favors.
Consumers, on the other hand, are left with fewer choices and less sway over determining who controls the economy’s scarce resources and to what purposes they are applied.
In other words, power is shifted away from the masses and back to the elite class of government officials and the politically connected.