Every time some level of government decides to pick winners and losers within an industry, the belief that there is such a thing as a free market comes into question. For some reason, it is difficult to believe that career politicians with only theoretical business experience have the ability to decide which businesses should receive government protection and/or taxpayer money to start up or remain on life support, and which businesses/industries should fall victim to excessive bureaucratic intervention in a corrupted version of survival of the fittest.
Illinois is a cesspool of bad political ideas; the perfect balance of corruption and incompetence. Despite steep increases in the state corporate and personal income taxes, politicians in Springfield are trying to make a case for more tax revenue; in other words, making the temporary increases in personal and corporate taxes permanent.
When businesses such as Sears Holdings and Motorola threaten to move part or all of their operations to another state due to high taxes, the politicians who voted for those tax increases create tax exemptions for those companies. While this process of damage control works its way through the General Assembly and Governor’s office, the politicians who created the hostile business environment hope that voters do not realize that the problem and the alleged fix for that problem have rolled off of the same assembly line.
When the leaders in Springfield are not busy trying to offer incentives, such as previous tax levels to select companies in order to keep them from leaving the state, politicians will try to restrict the operations of one industry to protect another.
There are examples of friends, as well as friends of friends of state and local lawmakers, whose private ventures with state agencies are protected from competition in the form of no-bid contracts and other favors. The biggest example of “protecting” an industry from more competition within itself to make the news during the last five years has been the debate to expand gambling.
When riverboat gambling was legalized over twenty years ago, the purpose was to assist cities and towns that have lost a considerable number of commercial, retail, and industrial businesses, such as Joliet, Elgin, Rockford and East Saint Louis.
There is a major down side to using gambling as an economic crutch: gambling is an industry that depends on the disposable income of its customers. As a result, the existing gambling industry within the state claims that the market for competition should be limited. Because of this perceived limitation by existing casino owners, their opinion is that Rockford – one of the cities that proponents of riverboat gambling had originally claimed should receive a casino, should now be denied the opportunity to receive a casino and the tax dollars that it generates, something that Joliet, Elgin, and East Saint Louis had been allowed to do.
In addition to opposing new casino operations, the casino owners are fighting any proposals to allow slot machines at race tracks. It is difficult to blame the casino owners for wanting to protect their investments. However, there should be no fear of competition if a business is willing to offer the best-possible product.
For the last three years, Illinois Governor Pat Quinn has opposed what he perceives as an expansion of gambling. He has vetoed two bills that would have allowed new casinos to open, as well as allowing slot machines at O’Hare and Midway Airports, and the state’s five race tracks. What the governor fails to mention is that he expanded statewide gambling on a bigger scale back in 2009 when he signed into law a bill that legalized video poker in just about every business from restaurants and bars, to gas stations. Also, allowing race tracks to operate slot machines technically isn’t an expansion of gambling, since the existing product of race tracks is gambling.
Telling a company that it cannot create or expand its gambling operations due to the threat of over-saturating the market in which it operates, is no different than telling Hardee’s that it cannot open a new restaurant, or add a drive-through window to an existing store out of fear of taking customers away from existing restaurants that wish to not face added competition.
Some folks may not agree with comparing fast-food to gambling. However, one has a certain stigma attached to it, while some politicians and nutrition zealots want to apply the same type of stigma to the other.
Like other larger Midwestern cities, East Saint Louis has problems such as crime, dying business districts and failing schools. However, this municipality now depends on one business for forty-two percent of its tax revenue; a business that did not exist thirty years ago: the Alton Belle casino.
The Alton Belle is facing competition from gambling on the Missouri side of the Mississippi River. One of the disadvantages that the Alton Belle has is a ban on indoor smoking – a disadvantage that is the product of an Illinois law. The most recent proposal to allow slot machines race tracks excludes Fairmount Park, a race track that is near the Alton Belle. The fear is that Fairmount, which has been in operation since 1925, will take business from East Saint Louis’ 1993-era riverboat.
This struggle between race tracks and casinos has played out before. One example involves the now defunct Detroit Race Course. The owners of that track had been asking the state of Michigan for the ability to offer casino gambling in an attempt to remain in business after an Indian casino had opened nearby. Allegedly, the response from state politicians had been “we do not want you to compete against that casino.”
What happens in Illinois is no different than what happens anywhere else. The differences are the intensity of the problems and the perceived acceptance of unethical incompetence. When the government feels the need to choke the profitability out of a private entity to protect another, odds are that some type of government incompetence may have caused the initial problem.
Image: Courtesy of: http://www.wjbc.com/common/page.php?id=81173