Residents in Midtown St. Petersburg are about to lose a Sweetbay Supermarket that was built in part with tax dollars and is now collapsing in part due to government policy at the federal level: Obamacare. The predictable response is that a bunch of pandering politicians are showing up to gain votes by promising that they will use their power to force a grocery store to operate in that location. It matters not if the store is economically self-sustaining or that local consumers can afford to shop there. All that matters is that politicians find a way to steal the tax dollars from one group of citizens outside midtown and “invest” (spend) it for the benefit of another group of citizens. This is an example of continued failed approaches of local, state and federal government that typifies the elitist and condescending attitude to the black community. The only solution lies in ending government subsidies, utopian plans and political pandering and then an embrace of true market economics, freedom, property rights and the moral ingredients that will produce prosperity instead of perpetuating poverty. There are many important lessons from this event.
Lesson 1: Don’t finance private ventures with tax dollars. The Sweetbay supermarket anchored the Tangerine plaza development which cost $5.4 million and was backed by a 10 year, interest free loan of $1.35 million to finance the project. The project was part of the Dome industrial Redevelopment area which means that the city can borrow from future, not yet realized, property tax revenues to finance development. This is also how the Pier is to be financed in a separate CRA and was also the method used to finance the Dali. What has occurred here is well known outcome of risky investment: a failed enterprise based on a low risk investment. The folks that built Tangerine Plaza had an incentive to build since the risk of failure to them is relatively low as the city guarantees their loan. Now many people want to scramble to “rescue” the failed supermarket and it is a certainty that more taxpayer money will be forthcoming if the politicians get their way. This is a major problem when politicians invest “other people’s money”. That money comes from the taxpayer and essentially becomes a wealth redistribution from the poor and middle class taxpayers to the well connected and the rich. For instance, Daryl Rouson, one of the head agitators calling for a Sweetbay bailout, is reported to have benefitted greatly from the original Sweetbay deal. He reportedly had purchased much of the real estate through delinquent tax foreclosure sales and then resold them to the city for a tidy profit. Daryl Rouson is now a state Legislator but is well known as a community agitator often trading on race issues to further his own political agenda.
Lesson2: Obamacare is costing jobs and services Obamacare is heralded, especially among the black community, as a major social achievement since it will create subsidized health insurance for everyone making less than 400% of the Federal poeverty level. Yet Obamacare has its costs. Already insurance premiums are well over $3,000 higher than in 2008 even though President Obama promised insurance premiums would be $2,500 less by the end of his first term. Businesses with more than 50 employees will be forced to pay a $2,000 penalty per employee they have if even one gets the subsidized health insurance. This forces business to look for ways to shed employees and turn them from full time to part time. This also forces them to shed nonprofitable businesses. Before Obamacare, Sweetbay would likely calculate that the bad P.R. from closing midtown would not be worth the savings from closing the store. However, it is quite clear that Sweetbay has no choice but to close non-profitable stores. So will progressives recognize that Obamacare is the problem and should be abandoned in favor of more economically sensible solutions? Not likely which leads to the next lesson.
Lesson 3: People will demand that Businesses and the “Rich” be forced to lose money. Already the people living in Midtown are blaming the “greedy” owners of Sweetbay with claims they are being treated like “garbage”. This sort of class warfare is the bread and butter of the politicians who will look to tax people into submission or force them to stay in business even if they lose money. For proof that this strategy is becoming common look no further than the “1%” rhetoric of Occupy, the “Fair Share” rhetoric of President Obama used to tax “the rich” and the proposed local hiring ordinance in St. Petersburg which will force business to hire people at higher cost who are less qualified in the name of “social justice”. Poor and middle class taxpayers can expect more of this rhetoric and also to be the real source of the taxes that will be used to finance a bailout of the rich.
The Unlearned Lesson: The politicians and the community agitators will not learn the real lesson. There will be far more failures from Government subsidies and the grand central economic planning of well intentioned elitists, some of whom are really trying to scam money off the taxpayer. The real lesson is that people should embrace the market, property rights and liberty. They should turn toward the self-empowerment that comes from independence and that can never come from dependence on the failed “solutions” of politicians. The residents of midtown should reject more government bailout money. If some well-meaning folks want to keep a supermarket in that location at all costs, then they should assemble the money and do it themselves as a charity. A charity is all that this project will ever be until real economic prosperity comes from market activity, personal responsibility, property rights and liberty. Those in poverty should demand that the government stop destroying jobs, taxing them into more poverty, transferring their money to the rich and well connected and just, in general, get out of the way!