Frontier’s Success No Excuse For Crony Capitalism

Frontier-Airlines

A year ago the City of Bismarck, at the behest of the Bismarck-Mandan Chamber of Commerce, put in place a $200,000 subsidy to lure Frontier Airlines to town (about six months later Frontier Airlines was able to move into Minot about 100 miles north of Bismarck, no subsidies needed).

Now comes news that business has been pretty good for Frontier (no surprise with the state setting flight boarding records) and they haven’t had to tap into the subsidy.

So, uh, mission accomplished I guess?

It’s great that everything worked out, I’m not one to criticize a business success, but what if it hadn’t? What if Frontier couldn’t make a go of it and had to lean on that $200,000 fund? Why should the taxpayers have been on the hook?

One of the core principles of free market economic thinking – the sort of economic thinking the Chamber of Commerce is supposedly for – is that you don’t pick winners and losers in the marketplace. Yet, that’s what they did with Frontier.

Thankfully they picked a winner, not a loser, so our tax dollars are safe, but already they’re marking this exercise as a success and looking for the next one.

“[Bismarck-Mandan Chamber President Kevin] Hullet said the city would likely find chamber members to support a similar effort to improve air service in the future,” reported the Bismarck Tribune.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

Related posts

  • Bubba

    Rob,
    Please distinguish an unused economic incentive from an industry specific tax benefit, such as the production tax credit, or a decrease in longstanding royalty tax rates for oil companies that would extract without the additional incentive. Cite specific rules and avoid reciting summaries of summaries. Thanks in advance.

    • Roy_Bean

      This is a difficult concept but I’ll try to explain it. An incentive says that they will take taxes from the citizens, including elderly citizens on a fixed income and children who can’t afford milk, and give it to an airline if the airline doesn’t produce a certain level of profits. A tax credit says that the oil company will pay less in taxes but it doesn’t result is any loss of milk for kids. Reducing a tax rate means that the company still pays taxes but at a lower rate and kids still can have their milk.

      An economic incentive is a form of redistributing money from one group of people to another. Lowering taxes is a way to let people, sometimes people who have formed a corporation, to keep more of their profits.

    • http://sayanythingblog.com Rob

      It’s really pretty simple, and I’m surprised you’d need it explained to you.

      This economic incentive was other people’s money. The oil production/extraction tax is, you know, a tax. Where we’re taking money from them based on oil production/extraction.

      A subsidy is when you take money from one group of people and give it to a specific business, or industry. A tax reduction is when you reduce the taxes a specific business or industry pays.

      Reducing taxes lets a person or business keep more of their own money.

      A subsidy, again, uses other people’s money.

      Pretty simple stuff.

  • VocalYokel

    “Crony Capitalism” doesn’t think it needs any excuses.

Top