Underpinnings: Conservative Philosophy Applied to the Panthers Funding Debate
Bank of America Stadium
The Philosophy
Following the national defeat of Republicans last November, all the pundits, politicians, and prognosticators chimed in to offer their two cents worth of rationale as to why our side lost. Opinions were all over the spectrum, as expected, but one common thread that seemed to unite the theories (as well as prove it’s own point) is that the Republican Party has lost its brand.
We are struggling for identity, and like the Biblical Israelites we seem to be wandering in the desert with no clear direction. Hopefully it doesn’t take us 40 years to find one.
Of all the issues before us though, of all the differences of opinion that good people can have within the greater conservative movement, there is one that speaks to me so loudly that it begs me to wonder how any self-respecting member of the GOP can possibly stray and yet continue to think themselves a Republican.
The issue has many names and faces, but it ultimately comes down to three words.
Business. Tax. Incentives.
It is not the proper role of government to directly or indirectly, through tax policy, rebates, or subsidies, benefit one privately run business enterprise exclusive of all others.
Ever. Period.
Government should be blind in its decision making. Funding for necessary services should come from taxes levied in a uniform basis. Exempting certain businesses from participating in the shared burden of civilized society is not only an insult to the rest of the taxpaying population, but is a breeding ground for corruption and poor decision making.
The official platform of the North Carolina Republican Party puts it this way in Article 2, Section 5:
“We oppose bailouts and corporate welfare. It is contrary to the free enterprise system to recruit or retain businesses with targeted tax incentives when other businesses bear the full burden of taxation. Higher tax rates on the many to provide preferential treatment for the few is unfair. The best way to promote economic growth is to reduce our overall tax burden.”
A free market system can simply not function properly when elected officials insert themselves into what should be market driven activities. They serve only to distort and manipulate the natural order of things. They are wholly unequipped, and yet continue to try, to pick and choose winners and losers. The end result being we all lose.
Tax neutrality is a principle of economics that basically states tax policy should not interfere with the natural flow of capital towards its most productive use.
Contrary to that goal, when politicians decide to fund or offer benefit to a private enterprise, they are assuming the role of the entire market and substituting their will over the natural flow of capital. They are becoming the arbiter of what is the most productive use.
How purely enlightened of them.
Government does this and the politicians joyously claim that they are bolstering the economy and supporting job creation. This is laughable.
It is the classic case of Frederick Bastiat’s notion of the “seen versus the unseen”. We can all visibly see the jobs created by a new company that decides to locate based on benefits received, but it is more difficult to see the jobs destroyed by the higher taxes on others needed to pay for it.
Ultimately, government’s proper role at a local level is to fund basic infrastructure needs. By keeping taxes and regulations low, the overall economy is more primed for the type of success that benefits everyone.
Government should not entangle itself in “economic development”. Government is not, and should not try to be, the economy. Government can not create wealth. Government is simply the least efficient vehicle by which wealth is transferred from one to another. Deciding who benefits and who pays falls outside the realm of a moral government.
How This Relates to the Panthers
In Charlotte today we have an absolutely heinous situation developing. Behind closed doors, the Charlotte City Council has voted 7 to 2 to seek an increase in the prepared food and beverage tax so that the city can fund a $125 million upgrade to the Carolina Panthers’ Bank of America Stadium.
This goes beyond simple tax incentives and enters the realm of direct welfare.
The Carolina Panthers franchise was purchased by Mr. Jerry Richardson and his ownership group for $206 million in 1993. Today the Panthers have increased in value to $1.05 billion and are ranked by Forbes as the 13th most valuable sports franchise in America.
They aren’t hurting for money.
However, unlike most other businesses that wish to build a better facility or buy a piece of equipment, the Panthers have come to the city with outstretched hands and with a straight face to request that someone else pay their bills.
Why shouldn’t they? The City Council has already set the precedent that any large company seeking a handout need only concoct some doom scenario about the consequences of not granting it. It’s nothing but political theater, and a tragedy at that, but politicians cave in and grant the special treatment.
Business owners are, for the most part, a pretty clever bunch. Lower expenses equals higher profits. I don’t necessarily blame the businesses. At fault here is the weak collection of elected officials who refuse to stand up against what is essentially extortion. Until they do, these requests will just continue to come with no end in sight.
Since philosophically it is wrong to intermix business and government, the rest of this discussion shouldn’t even be forced to happen. But since some people think it’s a wonderful idea to provide corporate welfare, let’s look at their side.
Proponents will claim that the Panthers provide an economic boost to the city and that by not granting their request we risk the team leaving Charlotte.
This team isn’t going anywhere. The Carolinas are far too valuable a market for the NFL to let that happen. If the Panthers did leave, just like the Hornets, they would be quickly replaced. This market has created the 13th most valuable sports franchise in the country. Fielding mediocre teams, the Panthers still have the 6th highest attendance in the league. They would be foolish to depart.
Furthermore, the NFL hasn’t granted a relocation for over 15 years when the Houston Oilers moved to Tennessee and became the Titans. Did Houston wither on the vine? No. They got the Houston Texans in 2002.
The claim of economic benefit is also fallacious. There are dozens of independent studies showing that sports franchises actually have no significant economic impact on the communities where they reside.
To quote one conducted by Sports economist Brad Humphreys, a UI professor of recreation, sports and tourism at the University of Illinois,
“As sport and stadium related activities increase, other spending declines because people substitute spending on sports for other spending. If the stadium simply displaces dollar-for-dollar spending that would have occurred otherwise, there are no net benefits generated.”
The Panthers represent entertainment dollars. Those dollars, if not spent on the Panthers, will be spent on other local entertainment options.
By subsidizing the Panthers, government is allowing this one particular entertainment option a chance at undercutting its competition. While the owners pocket the cash and the athletes get paid millions of dollars, other local entertainment options are forced to bare the full cost of doing business and must set their prices accordingly.
Arguments will be made that the Panthers help local restaurants by drawing crowds to the city that will dine with them.
If the Panthers were so instrumental in the success of other entertainment options, why then do we see bankruptcy filing from the Epicenter? Why is Mez closing? Why did Jillians close? Why is the Pewter Rose closing? Weren’t the Panthers supposed to be their saving grace?
I’m quite certain the farther outside of the 277 loop you get, the Panthers influence on restaurant patronage is even less significant than it is for the uptown restaurants during the ten whole days a year the Panthers operate. Customers in SouthPark should pay taxes supporting a football team and uptown restaurants they don’t visit? That’s nothing but wealth redistribution.
There is also an entire line of thought being put forth that football customers are demanding more in the way of video screens and escalators and other improvements that are “absolutely necessary” in order for the Panthers to remain profitable.
As a die hard fan of the Carolina Panthers, I don’t know where this idea comes from.
Our stadium is great as it is. I have never heard fellow fans complain. I wholeheartedly believe that these planners are taking a casual poll, finding that, “Ya, folks wouldn’t mind having a bigger video screen”, and turning that into, “If a bigger video screen isn’t built I will boycott this stadium and become an Atlanta Falcons fan!”.
Which, of course, begs the next question. Since we are the 6th highest attended stadium in the league, is a lack of escalators really hurting business any? I’d say no.
Besides, minus stadium improvements, what other options do fans have? What is the local football competition? There isn’t any. Lack of a video screen will not cause the average Panthers fan to fly to New York or Dallas every Sunday and spend their money supporting the Giants, Jets, and Cowboys.
Stadium improvements are a luxury being sold as a necessity by ownership eager to bank more taxpayer funded improvements to their bottom line.
Back to Republican Politics.
When I work tirelessly supporting Republicans during election cycles, there are a couple things I should expect in return.
Republicans should support lower taxes, not higher taxes.
Republicans should work to eliminate government interference in the private sector, not encourage its intermingling.
When Republican City Council member Andy Dulin voted to increase taxes to fund a private business, he violated a very core premise of Republicanism.
When NC House Speaker Thom Tillis, whose leadership at the state level could easily stop this new tax from being implemented, is quoted in the Charlotte Business Journal as saying, “In fact, the Panthers understood that the state would not be in a position to provide direct funding for stadium improvements and that that was something we would defer to the city and the county, if any governmental institution was going to be involved” I am a little leery.
While a positive to say the state will not provide funding, the idea that state leadership would simply “defer to the city” is rather frightening. By doing so, it is by default allowing the corporate welfare. In NC, the cities and counties are created and operate under charters granted by the General Assembly. The city should defer to NC, not the other way around. Our General Assembly, under super majority Republican control, should absolutely say “NO” to allowing this proposed tax increase.
It is vitally important that grassroots activists make it very clear to our elected officials that continuing the path of these “planned” economies where government decides what corporation or industry should be awarded “most favored status” will not be tolerated.
It is wrong both philosophically and economically. If we want to turn the tide of this depressed economic state, the People can be silent no more.
Excellent piece. The Republican argument for tax incentives always surrounds the belief that ROI will be greater than the loss incurred by the incentive. This is always shouldered on the back of the belief that exponential growth will increase forever (which, of course, is mathematically impossible). No need to repeat what you said above, but yes, we rarely hear of the damage done by the artificial shifting this causes, or the further damage done when the ROI fails to exceed the loss.
However, I think the real problem with the GOP is much broader than any single issue. Factually and statistically, conservatives are better educated, more well read, and have more skin in the game (income, wealth) than liberals. Thus, they read more, which of course leads to shifting world views. Ultimately, as conservatives become more informed I believe they will come to understand and reject the fallacies BOTH parties have operated on for decades. This will obliterate the party as we know it. Where these people end up politically remains to be seen (hopefully they coalesce around liberty) but in the meantime I would continue to expect the GOP (or at least the Establishment portion) to lose more and more elections to the Democrats who rely on their largely static and uninformed base. To put it simply, the GOP is trying to herd cats in a room full of rocking chairs.
What I failed to mention above is the reason for the gargantuan paradigm shift in conservatives’ world views versus prior decades: The Internet.
In our Declaration of Independence – the Founders stated that there was a self-evident truth that all Men (and Women) are created equal.
In the mind of some Republicans – some are more equal than others.
The GOP doesn’t have a branding problem – they have a problem in saying one thing and doing another and the grass-roots are tired of being suckered.
Which reminds me of how Democrats think everyone should have equality when what the founders believed in was being created equal. The Democrats believe government should impose equality while Constitutionalists believe in equal opportunity.
What our politicians are doing is this …. creating a class of people who will pay through the nose and another class of people who will lie cheat and steal to keep from paying any taxes at all.
From one extreme to the other, and that is always a forerunner of very bad things to come.
GOPers working raise the food tax on everyone to bribe the cowardly Jerry Richardson? (I say cowardly due to his hiding prior to and after the closed door meeting Monday night) In exchange the Panthers will agree to stay here for a few more years- Say it ain’t so!
This is nothing but a PSL holder bailout- It Richardson moves his franchise to another market, PSL owners will be screwed. Any office holder who votes to raise food taxes for the benefit of Richardson, and at the same time owns PSLs has a HUGE and obvious conflict of interest.
I wish someone would ask Richardson how a man his age avoided military service- Elvis got drafted to the Army, in the same era, wonder how Richardson dodged it?
Great piece, Christian.
As a follow up, can the residents of District 6 expect more of the same from Dulin’s replacement? And what say you PunditHouse commenters, who is in the running to replace the irreplaceable @adulin as our next city council member from District 6? I’ve not seen any names floated publicly yet.
Thanks.
I haven’t yet heard of any replacement candidates…but it will be interesting to see who voluntarily steps into the fire.
Knowing they will most likely also be part of a 9-2 board, barring miracles at the At-Large level, hopefully we can find someone unashamed of being the conservative voice on council in a way that uses the office to teach our values. Hopefully they understand that the minority voice is important and they don’t simply “go along to get along”.
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