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Scott Walker, Sports Stadiums, and Crony Capitalism

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I may have hit a nerve.

In this week’s column for National Review Online, I discussed crony capitalism and how too many supposedly free market Republicans were quick to grant favors for friends and constituencies. I particularly faulted some of the GOP presidential candidates.

http://www.cato.org/publications/commentary/republicans-crony-capitalism

One of the samples I cited was Wisconsin Governor Scott Walker, pointing out, among other things:

His support for using $250 million of Wisconsin taxpayers’ money to build a new stadium for the Milwaukee Bucks basketball team is a quintessential example of crony capitalism. Among those who will benefit from the taxpayers’ largesse is real-estate mogul Jon Hammes, a partner in the investment group that owns the NBA franchise; Hammes has agreed to serve as the national finance co-chairman for the Walker campaign.
Apparently, my comments hit a nerve with the governor’s campaign. Within hours they had rushed out a reply from Milwaukee Journal Sentinel columnist Christian Schneider defending Walker’s support for the stadium. (At least I presume that the Walker campaign was behind it, given the speed at which it was put out).

http://www.nationalreview.com/article/422452/scott-walker-milwaukee-bucks-arena-deal

Today, NRO senior editor Ramesh Ponnuru weighed in, pretty much shredding Schneider’s response.

http://www.nationalreview.com/corner/422493/walkers-stadium-subsidy-ramesh-ponnuru

Ponnuru really nails it, but I would add just a couple more points.

Schneider appears to suggest that the stadium financing will be offset by taxes paid by the Bucks and the NBA. That might be an argument if he was talking about new taxes that would be generated by an improved stadium or something. But Schneider makes a point of saying that “This isn’t expected revenue from future economic development — this is money already being paid to the state.” (His emphasis). If so, that money is already being spent on something. If it is now to be dedicated to the new stadium, won’t it have to be made up through other taxes, in which case the Wisconsin taxpayers will be indeed be footing the bill.

I suppose the lost revenue could be offset by cutting current spending, which would be a good thing. But if that spending could be easily reduced, shouldn’t it have already been eliminated and taxes correspondingly cut. Anyway you look at it; it appears Wisconsin citizens end up paying more than they should in order to benefit wealthy and connected private businessmen.

That the beneficiaries are private businessmen is also an important point. Schneider compares the stadium deal to funding for a chemistry lab at the University of Wisconsin–La Crosse. But there is an obvious difference between spending money at a state-owned university and spending it to benefit private businesses.

Walker’s camp also warns that without the stadium deal, the Buck’s owners might have taken their team and left town. This was a legitimate worry. But I thought Scott Walker’s claim to fame was that he was a tough leader who faced down the unions – Wisconsin’s version of Donald Trump, as it were, when it came to negotiations. That his spine suddenly turned to jelly when confronted by irate millionaires is less than inspiring.

Finally, on the merits of the deal itself, Cato has published several studies showing that there is little if any economic benefit from government-financed sports stadiums, including: Dennis Coates and Brad R. Humphreys, “Caught Stealing: Debunking the Economic Case for D.C. Baseball,” Cato Institute, Briefing Papers No. 89, October 27, 2004.

http://object.cato.org/sites/cato.org/files/pubs/pdf/bp89.pdf

I am not suggesting that support for the stadium disqualifies Walker for president, especially since his opponents are far from pure. But let’s not pretend this deal is something other than what it is.

PS: My colleague David Boaz has been blogging on the deal as well.

http://www.cato.org/blog/scott-walker-hands-250-million-taxpayers-money-billionaire-bucks-owners

PPS: My NRO column also criticizes Marco Rubio’s support for sugar subsidies. Jim Bovard makes the same point in yesterday’s USA today.

http://www.usatoday.com/story/opinion/2015/08/11/sugar-subsidies-political-scam-column/31467729/

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