the bush culture version of free enterprise

This Sunday, the Austin Statesman’s A section (which should be called, 'the scrapbook of two day old news from the Washington Post, the NYT, and Knight Rider' section, since there is very little original reporting in it) did have a nice big story about Buda’s new attraction: a Cabela’s.

Buda is a country town maybe a fifteen minute drive from Austin, in Hays County. Cabela’s is an outfitter store – but it bills itself as more than a store. It is a store experience, with aquariums, an in the store mini-mountain, and the like. The story is a good example of what the Bush culture means by free enterprise. Enterprise should free itself of costs by putting them on third parties – notably, the state.

With admirable lobbying skill, Cabela has received both positive payment from the state – in cash -- and negative inkind benefits from tax breaks. Plus, there are the agreements to extend Loop 4 for access to Cabela. Plus the various complicated clauses having to do with land use ceded to Cabela by Buda on which Cabela has the option to buy. It has been, all around, a beautiful deal.
One could put together the pieces from the Statesman article, and admire the jigsaw puzzle of corporationism, cronyism and boomerism coming together in one trifecta. First, of course, the state has to convince itself that it needs to give a corporation money. And to do that it needs a study. A study it got. This study said that Cabela’s in Buda would become the second biggest tourist attraction in Texas. That we are supposed to believe that an outfitter store in Buda will become a Disneyland like magnet, given that Texas is now starting to crawl with outfitter stores, is one of the ways that business is like poetry: the suspension of our disbelief is strongly advised.

Now, if I make a study that shows I’m going to make a heap of money and attract millions of customers to my store, according to Economics 101, I ought to be able to get money on the private markets and go ahead with my gangbuster plans. This is why Economics 101 is about useless as a map to modern capitalism. Instead, such studies are the wonderful excuse needed by state lobbyfed legislators to take the money that they can’t find for, say, healthcare and shovel it into a profitable enterprise. So Cabela’s gets a little Texas sugar right off the bat: $600,000 from the state. Just to show our appreciation. But the study implies that Cabela’s has magic powers. Anywhere a Cabela’s lands, apparently, people flock to it and how. So the Buda location has to compete. Can’t get those sweet sites without a little more sugar.

There's something a little disconcerting about this. Surely San Antonio could drum up its own outfitter destination store for half the price. And how deep, exactly, is Cabela's magic spell, given that it is setting up competition for itself all over the Southwest? In fact, this seems to be Cabela's business plan. It is the kind of business plan that could have been designed by an old fashioned leech (Hirudo medicinalis). Cabela’s, it appears, while magically attractive, does have an odd view of where its money comes from, according to SEC filings published by the Texas Observer:

“In SEC filings, the company admits that it counts on government at both the state and municipal level for “free land,” “monetary grants,” and economic development bonds for the “recapture of incremental sales, property or other taxes.” So reliant is Cabela’s on generous government handouts and tax breaks that “the failure to obtain similar economic development packages … would have an adverse impact on our cash flows and on the return on investment in these stores.”

Hays country is using an instrument called tax increment financing in order to put Cabela’s on the welfare train. This allows a local government to publicly fund “needed structural improvements.” Ah, and if those needed structural improvements happen to be a parking lot for the millions of happy tourists flocking into this destination store, so be it. There is nothing odd about any of this. The state is ordinarily used by private enterprises to amplify their profit margins, or to achieve a competitive advantage over their rivals, etc., etc. Positive externalities like this only become controversial when the state wants payback – when, for instance, the state regulates pollution. At this point, the libertarians and conservatives come pouring out of the woodwork, talking about private enterprise and state tyranny. After all, aren't all those fortune 500 ceos self-made men?

Unfortunately, Texas hasn’t yet financed a state tourist destination dedicated to its own hypocrisy. It should. It would attract millions of visitors.