The Aug. 6 story on Gov. Nikki Haley's "economic development" trip to Europe accurately quoted me as saying the premise behind such trips is flawed, but didn't explain why. The flaw lies in the assumption that government can or should play the leading role in our economy. It can't and it shouldn't, not in Washington, D.C., and not in Columbia.
Government does have a role; for example, a thriving economy depends on it rendering justice, providing for public safety, enforcing contracts and protecting private property. And for the free market to flourish, government must do these things well. (The story also could have given the implication I consider "health care" to be a core function of government; in fact, that is the opposite of what I believe.)
Unfortunately, we now tolerate a much larger role for government. We permit elected officials to "steer" our economy by deciding who should get special tax breaks and subsidies. Here in South Carolina the "incentives" doled out to specific entities has ballooned from $34 million annually in 1998 to more than $1 billion in 2011.
Such corporate welfare results in higher taxes for everyone else, and it hurts our economy (our state's per capita income ranking plummeted over the referenced span of increased government intervention). An efficient allocation of capital depends on a pricing system that works within a market setting, and government "economic development" efforts distort those signals.
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State Sen. Tom Davis