Small Retailers Being Forced Out By Government Subsidies to Big Chains w/poll

Original article by Sherwood Ross via .

They’re all over. You can hardly drive a mile, in many areas, where you don’t run into them. They’re the big box retailers, and they’re taking money from your pocket even if you don’t buy from them!

Small retailers the nation over are being pushed out of business by government subsidies to chain competitors such as Wal-Mart and Target through a variety of “corporate socialism” schemes, taxation authority David Cay Johnston says.

Are we really surprised? Isn’t it better for the chain of supply? Don’t we get cheaper products from teh big box retailers rather than the small retailers?

Municipalities are permitting “tax increment financing” that allow the big chains “to keep the sales taxes that you are forced to pay at the tax register,” Johnston said on the television interview program Books of Our Time, sponsored by the Massachusetts School of Law at Andover and broadcast by Comcast.

Yay! Just what we need. Our taxes going into the corporate hands rather than into our communities.

“Instead of that money going to the schools and the fire department and the police department and the library, it is funneled through a mechanism of local government, usually a special authority, to finance the purchase of municipal bonds so that means that the wealthy underwriters and the lawyers and auditors all get a piece of this money to buy the land and build the store,” Johnson told TV host Lawrence Velvel, dean of the law school.

When you see those large buildings, and the land they stand on, think of your money going into their coffers. The article points out that the buildings are often leased to the big chain retailers for what amounts to free. Now, if your a small retailer, you have to pay for your building (unless you are very lucky). Your rent or property taxes raise as needed, while the big box retailers get away with not paying anything. How can you compete?

“A system in which government, whether Federal or local, picks the winners in the economy, is not capitalism, it’s not competition, it’s not free market, it is corporate socialism, it is statism, it’s the state making these choices,” Johnston said.

It’s corporatism at it’s worst. And what’s worse, it’s funding huge companies who already have a great advantage due to economies of scale. The small businessman/retailer already has a mountain to climb without the playing field being tilted by the local government in favor of the large corporations.

In his new book, Free Lunch (Portfolio) Johnston amplifies this point by noting “Sam Walton practiced corporate socialism. As much as he could, he put the public’s money to work for his benefit. Free land, long-term leases at below-market rates, pocketing sales taxes, even getting workers trained at government expense were among the ways Wal-Mart took every dollar of welfare it could get.”

And we wonder why there aren’t very many 5 and Dimes any more.  If you’re lucky, you live in a town where small retailers are still willing to make a go of it.  I try to support local retailers when I have the choice.

Johnston said in the television interview that if the public really understood what was happening they would not permit government subsidies to corporations to go forward.

It’s up to us to stop this corporate socialism.  While it’s a good thing to keep after Congress on this issue, it’s even more important that we keep after our state and local governments.  Subsidies to large corporations are rampant, and they’re the ones who can afford to pay for their buildings even more than the small retailers and businesses.

Johnston pointed out: “Subsidies to retail cannot make us wealthier. Retail is at the end of the economic line. If you want to subsidize things, first subsidize education, then subsidize basic research, then subsidize applied research and development and subsidize infrastructure – rails and canals and highways – and maybe in some cases manufacturing and mining to get something going. But the least bang for the buck, and often the negative bang for the buck, would be subsidizing retail. What’s happening is wealthy families, the richest families in America, are getting welfare and they apparently have no shame about this.”

One of the ‘successes’ of the Clinton Administration was ending welfare as we knew it.  What happened was that the welfare that was going to help individuals was switched to welfare that is helping large corporations.  Profits over people is the mantra, and we’ve gone along with it.

He said the fortune Wal-Mart is reaping is no different from what other corporate players are getting. “We are transferring enormous amounts of money to corporations and wealthy individuals,” Johnston pointed out. For example, he said, “We gave Warren Buffett’s companies a hundred million dollar gift last year.” (Buffett’s firm has a two-thirds-billion-dollar, interest-free loan from our government for more than 28 years, Johnston notes. Similarly, Donald Trump benefits from a tax enacted to help the elderly and the poor but part of which is now diverted to his casinos, Johnston says.)

I don’t know about you, but this makes me feel dirty.  You wonder why Warren Buffett is one of the richest people in the world.  We’re helping him, whether we want too or not.  Think of how that money could go to a Single Payer Health Care system.  We have to make a choice as to where our taxes are going.  This is a local and state issue for the most part.  We have a choice as to how our taxes are utilized.  We have to choose if we want those monies to go to the large corporations or for our people.

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  1. I hope Wal-Mart doesn’t get a cut!

    • frosti on March 27, 2008 at 1:54 pm

    The small pharmacies around here closed because they cannot afford to dispense high cost medications and wait several weeks (up to 3 months) for reimbursement by Medicare.  The system favors Walmarts, Walgreens and mail-in pharmacies.

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