If Boeing wants to build the 777X jetliner in the state of Missouri, the state will have to shell out $1.7 trillion, and St. Louis County possibly a similar amount. Why does Boeing ask for so much? Because they can.

Initially, Boeing preferred to build the airliners in its home base of Seattle, WA, but when they had trouble reaching a labor accord with the Machinists Union, they started shopping the massive production facility to a dozen states. The states have lined up like ducks in a row. They all seem to have a cup in hand, but at their feet is a money bag with trillions of dollars. Is this a way to run a government?

We know that Boeing, like virtually every other private corporation, will act in a rational manner to achieve its primary goal – to make money. If they can seek tax concessions from various levels of government, they will do so. If they can seek concessions from private contractors, they will do so too. But one thing they cannot do is force suppliers and vendors to sell their wares for less than cost. While it’s difficult to calculate the real costs of governmental tax concessions, we know that the taxing entity rarely comes out ahead.

Suppose that Boeing felt that the electrical rates in Missouri were too high. Could they get the local supplier, Ameren Union Electric, to give them a special rate? It is true that Boeing could likely get a concession because of the volume that they purchase. However, this rate would be not be lower than that of any other institution that size such, as a hospital complex or a large university.

A mega-company like Boeing tries to bully state and local governments because they are the weak links in the chain. They are most vulnerable to blackmail. But is this healthy for our society? Governments are forced to compete for prizes like as the location of Boeing plant with the awareness that the prize will go to the highest bidder – the state in which the highest amounts of tax breaks are conceded.

Yes, the placement of a mega-plant in their state can be a boon to the economy, with thousands of new workers earning wages and using that money to purchase homes, buy groceries, spend entertainment dollars and much more. But when trillions of dollars are lost in the transaction, the public suffers because its coffers become dry, and the taxing authority can no longer pay for needed public services.

It makes sense for any corporation to shop around. It wants to be closest to its suppliers, be in an area where they have a trained and skillful work force, and where the quality of life will be good for executives and employees alike. On a purely financial level, it makes sense for the corporation to locate in an area that has a lower cost of living. This will mean that they can pay employees less, and the cost of everything from homes to entertainment is less. That comes from a fair playing field. But today’s playing fields are hardly level, when each state is competing to see how much it can give away to a prospective new company that locates within its jurisdiction.

How can this be remedied? Only through the auspices of the federal government, including the courts. It would not be easy, but if the feds could keep states from competing against one another through tax giveaways, corporations could no longer blackmail them, and taxpayers would not be robbed. Something to think about.

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In an earlier post on the way that Missouri politicos are tripping over themselves to try to lure Boeing away from Washington, I noted that a few state legislators were resisting the pressure. In the Missouri House, 3 of these stalwarts were Democrats and 17 were Republicans. For those of us with a progressive bent, the question is why the imbalance?

We can assume that the objections on the right side of the aisle mirror those of several conservative organizations that lobbied against the Governor’s proposed tax breaks:

United for Missouri, a conservative activist group, took to social media on Monday to call on its members to “Stop the Governor’s Proposed Expansion of Corporate Welfare” […] In a post on its website, the group said the legislature should instead reallocate existing tax credits and pass “broad based” tax reform, not targeted tax credit expansion.”Does all this mean that Missouri should not try to capture the new Boeing plant? Absolutely not,” the group wrote, “[b]ut the legislature should not expand corporate welfare in doing so!”

The Show Me Institute, a conservative think-tank, also voiced their opposition to the proposal, calling it the “definition of cronyism,” and, like United for Missouri, said they were in favor of broader tax changes like they supported in House Bill 253, legislation vetoed by Nixon that would have slashed corporate taxes and provided fractional relief for individuals.

As much as I loathe what these organizations stand for, I applaud their principled stance and that of the 17 House Republicans against corporate welfare when it is applied in such an unfair and discriminatory fashion. They are right that for every Boeing that is able to throw around enough weight to get what it wants from local governments, there are thousands of small businesses that continue to pay full freight.

Nevertheless, the real issue for these folks isn’t really corporate welfare, it’s the way that it is applied. They want to exempt all businesses – and in some cases, all individuals – from taxes, cut government services to a bare minimum, and if we must have taxes, make them regressive consumption taxes. Their real objection is that tax exemptions for Boeing don’t go far enough, but should be the norm for all business and to hell with revenue to support government that serves the needs of actual people. These are rigidly ideological rather than pragmatic thinkers, espousing an ideology that has revealed itself to be rotten to the core time and time again.

Contrast this stance with that articulated by one of the Democrats, Rep. Stephen Webber, who opposed the Boeing package proposed by the Governor. Webber was aware of the fairness issue, declaring that “we have a lot of hard working business owners in Columbia and I don’t see why we should make them pay more than a multibillion dollar corporation.” He also, however, articulated pragmatic concerns. The Columbia Daily Tribune reported:

But for Webber, the bill was weak, had too many loopholes and gave away too much. “We give away billions and say ‘why can’t we fund the schools?’ ” Webber said. “The answer is right there in this bill.”

There you  have it. The difference between conservatives and liberals in a nutshell. On the one hand, rigid ideologues who will always take the “principled” stand regardless of the real-world consequences for the people who stand to lose or gain the most. In this case, they’re willing to work over one of their corporate allies, but they are just as firm – or even firmer – when the entity to be worked over is part of the 99%. On the other hand, however, we have liberals and progressives who perceive and respect issues of principle, but who are more than anything motivated by the overweening principle that they serve the needs of real, live people.

One can also assume that it is the same type of pragmatism that has led other Democrats to support the Governor’s incentive package. Of course, we know that there are always political survival considerations somewhere in the background, but I think it’s safe to assume that in contrast to Webber most of the Democrats concluded that the possibility of lots jobs outweighs the loss of tax revenue, the uncertainty about positive outcomes, as well as any reservations they may harbour about the process.

One may or may not agree about the conclusions these folks have drawn or about Rep. Webber’s rationale, but when we’re between the proverbial rock and hard place – and the pros and cons of the Boeing situation looks a lot like a rock and a hard place to me – we’ll definitely do better in the long run if the folks coming to our aid are at least willing to deal with the real world in something approximating a concrete fashion. Before you can clear your backyard of rocks and hard places you have to be able to get yourself out from in between.

[Reprinted, with permission of the author, from Show Me Progress]

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