Government shouldn’t pick the winners and losers: Las Vegas arena edition

Victor Joecks

Yesterday the Clark County Commission heard proposals for three new sports arenas in Las Vegas. Now, while I’m all for sports and for businesses expanding, there’s a problem with each of the proposals – they all want government handouts.

Three rivals have detailed plans for developing state-of-the-art arenas that would cost half a billion dollars or more, seat 20,000-plus people and require some public funding.

Last month, commissioners resisted the idea of subsidizing an arena when the county is grappling with a budget crunch. A couple of commissioners said last week that they would not rule out offering public aid but that they were unsure about the timing.

“I just don’t know if it’s the right time,” Commissioner Steve Sisolak said. “I have a lot of questions. I’m still concerned with record unemployment and a huge shortfall.”

Proponents estimate that an arena would create 3,000 to 4,000 construction jobs while it was being built, and thousands of support jobs after it opens.

Well-paying construction jobs that last 18 months or more would be welcome in this economy, Sisolak said. But he questioned how much taxpayers would be on the hook for financially and whether it was worth generating short-term construction work and low-paying service jobs.

Sisolak and other commissioners are right to resist subsidizing an arena (or any business) during a recession, but they shouldn’t stop there. Taxpayers have no business subsidizing an arena (or any business) when times are good, either.

One of the problems conservatives/libertarians have with welfare and other handouts is that they reward poverty. You receive “free” money for not working. This changes the recipient’s mindset and makes him or her less likely to work. Also, it encourages other people who are working, but only earning a low level of income, to quit working and get just as much or just a little less from the government.

The same problem emerges when government gives subsidies or redevelopment money or special tax breaks to businesses. Instead of consumers rewarding a business for meeting customer demand, a business is now rewarded for its ability to lobby and impress politicians. In turn, this leads other businesses to shift their focus from satisfying customers to satisfying politicians, which means scarce resources will be used to justify political, not consumer, demand. And in a world with limited resources, this leads to less employment and wealth creation, because political dollars and tax breaks come at the expense of the private sector and become entrenched in businesses that are only profitable because of government subsidies.

And if an arena were to go through, it’s easy to see who the loser would be – the MGM Mirage, which already owns five arenas in the Vegas area.

MGM Mirage Chief Marketing Officer Bill Hornbuckle said the company is not opposed to having more arenas in the area, but giving one group public financing would be an unfair competitive advantage.

That’s exactly right. Let the marketplace, not the politicians, determine the winners and losers in the economy.

And as election session gears up, be cautious when politicians start talking about “creating jobs,” as they’re usually referring to special tax breaks or subsidies for favored businesses. Low taxes are a good thing, but only if the rate is uniformly low. Politicians shouldn’t be picking the winners and losers in the economy, even if they’re using tax breaks.

People, not politicians, create jobs.