Business

Ron Bartizek

February 7, 2010

Government is just one economic force Ron Bartizek Business LOCAL

Will the Fed raise rates? Is a second stimulus package in the works? The governor hands out a million bucks to spur green jobs. Will a taxpayer bailout save Chrysler?

These and other story lines combine to give the impression that government is the key player in the United States economy. Whether you’re liberal or conservative, that’s a troubling thought, because even the best-intentions of government can be sidetracked by a change of political fortune or the pull of powerful special interests.

It’s not only D.C. and Harrisburg that exert influence; county government plays a large role. The ongoing revelations of corruption in Luzerne County show how government can harm business as much as help it. Sure, the commissioners hand out loans and grants that have helped the nascent downtown revitalization and various commercial developments. Business owners also may get tax abatements that — in theory at least — free up cash to hire more workers or pay higher salaries.

But those benefits have been negated by waste, fraud and cronyism that have built up an enormous county debt and that mark the region as a place where benefits accrue to a chosen few, while ordinary citizens suffer consequences that include a climate in which connections seem more important than merit.

What can be done?

I wouldn’t look to the private sector for relief. From North River Street to Capitol Hill, businesses and their lobbyists line up to push programs and policies they can profit from, whether that means fat contracts or special tax breaks. The quaint notion that we’re all in this together has been replaced by the rationalization of self-interest as high calling.

Large corporations go a step further, spending millions on advertising designed to influence legislators and voters, a practice likely to become more widespread following an unfortunate Supreme Court ruling that removed restrictions on their ability to spend shareholder money on advocacy.

And with the federal debt spiraling, more government intervention — even for good causes — will only add fuel to the fire. Last year’s stimulus program is widely credited with averting a second Depression but it’s beginning to look as if paying it back also condemned the economy to years of slow growth.

What government can do, but hasn’t, is tax and regulate intelligently and with broad, long-term goals in mind. Want to encourage greener cars and passenger rail? Tax petroleum until it hurts and use the proceeds to support alternatives that are deemed worthy by science and honest economics, not lobbyists. Want to rein in reckless Wall Street bankers? Instead of artificial pay curbs that can be easily sidestepped (at the expense of investors), discourage high-stakes chicanery that gives them a lifetime payout before the schemes blow up — and taxpayers pick up the pieces.

Is Toyota a victim of its own success? The avalanche of bad news for the company that for years sat on a pedestal of reliability certainly is shocking. But it’s useful to keep in mind how much better cars are than they were a generation ago, when 12-month warranties were the norm and 100,000 miles — now routine — was a milestone.

The company didn’t help its image by dragging its feet on the way to an eventual recall of 2.3 million vehicles and the government piled on with very public criticism that — no matter how genuine –— was hard to separate from its majority stake in General Motors.

Ron Bartizek, Times Leader business editor, may be reached at rbartizek@timesleader.com or (570) 970-7157.

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