Conspiracy Theorist: 11/23

City of zombies
Government subsidizes failed businesses causing stagnation and decay

Mark Luedtke

It saddened me to see Beckett Paper Mill in Hamilton recently burned down. Beckett Paper was a powerhouse manufacturing company when I was a kid. My great uncle worked there his whole life. I had an unlimited supply of paper to write or draw on or turn into projects throughout my childhood.
Hamilton was a superior manufacturing location because it’s located on the most powerful hydraulic on the Great Miami River. That drop in water level powered much of the U.S. paper industry for more than 100 years. Beckett opened its paper mill there in 1848, but as technology advanced, Beckett’s managers failed to reinvent the company to keep it profitable in the information age. It was sold in 2005 and shut down in 2012.
The fire aside, Beckett’s plight highlights the beauty of the capitalist market. Its function is to put resources to best use to meet the demands of the people. Consumers rule. Profitable companies create wealth, making everybody richer. Unprofitable companies destroy wealth, making everybody poorer. If suppliers make poor decisions with resources, their company becomes unprofitable then they declare bankruptcy. You can think of bankruptcy as an auction in which the assets of a poorly managed company are transferred to the successful suppliers who most value them and can use them to produce products consumers demand.
Change is always painful even when it’s change for the better. Bankruptcy stinks for the people who lose their business and their jobs, the transition is scary for the community, but it benefits consumers, and since we’re all consumers, society as a whole. Economist Joseph Schumpeter called it creative destruction, and it’s crucial to advancing the human condition.
In contrast, the function of government, always ruled by the super rich and powerful, is to steal money and protect the status quo. To that end, it punishes profitable businesses and rewards unprofitable ones, retarding advancement and promoting stagnation and decay.
In a recent example, the Dayton City Commission granted historic status to the newly rechristened Grant Deneau building at 40 W. Fourth St. in January. This will supposedly make the 1969 building eligible for historic tax credits. I’m all for lower taxes, but everybody should get them, not just failing businesses. The building has had less than 10 percent occupancy since 2013.
The Dayton Daily News reports four other projects hope to maintain decaying businesses through historic tax credits. Here’s how that worked out in the past: “All of the targeted properties in Dayton have sought tax credits in the past, and three previously received awards for redevelopment projects that failed to move forward,” it reported.
These businesses are commonly called zombie businesses. Zombie businesses can’t survive in the market because they fail to supply what people demand, but government keeps them alive and destroying wealth as zombies by stealing money from productive people and businesses and funneling it to their unsuccessful cronies. Our rulers have the audacity to call this crony socialism economic development, and voters are too miseducated and misinformed to stop it.
Government doesn’t limit zombie creation to failing businesses. It commonly starts zombie projects from scratch. For example, Dayton’s rulers subsidized the project to tear down the old DDN building and build student housing there. Now a DDN subheadline informs, “Funding, legal problems involving city, developer halted work at former DDN site.”
And despite overwhelming crony socialist failure and subsequent wasted real estate—government is responsible for all the underutilized and decrepit buildings in the city—rulers are funding two new housing projects in addition to subsidizing the Water Street malinvestment.
What these failing businesses and new projects have in common is they can’t be profitable without government subsidies. Nobody will voluntarily risk to keep them afloat. They’re all destroying our wealth and making us poorer. In a capitalist market, the zombies would go bankrupt, returning their assets to the market for more beneficial use, but government squanders our tax dollars to keep them alive, robbing us twice over.
With apologies to Stealers Wheel, I see zombies to the left of us. Malinvestments to the right. Here we are, stuck in the middle going broke.
Crony socialism can only increase the gap between rich and poor. It’s impossible for government to promote economic development because it first must steal money out of the economy then waste some on unproductive bureaucrats before it gives what’s left to rich cronies. They give some back to politicians, wasting more. Crony socialism is armed robbery masquerading as economic development, and all governments do it, Dayton worse than most.

The views and opinions expressed in Conspiracy Theorist are the views and/or opinions of the author and do not reflect the views and/or opinions of the Dayton City Paper or Dayton City Media and are published strictly for entertainment purposes.

Mark Luedtke is an electrical engineer with a degree from the University of Cincinnati and currently works for a Dayton attorney. He can be reached at MarkLuedtke@DaytonCityPaper.com.

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Reach DCP freelance writer Mark Luedtke at MarkLuedtke@DaytonCityPaper.com.

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