Smart. Sharp. Funny. Fearless.
Tuesday, March 26, 2019

David Cay Johnston: How Corporate Socialism Destroys


IRONDEQUOIT, N.Y. — A proposal to spend $250 million of taxpayer money on a retail project here illustrates the damage state and local subsidies do by taking from the many to benefit the already rich few.

Nationwide state and local subsidies for corporations totaled more than $70 billion in 2010, as calculated by Professor Kenneth Thomasof the University of Missouri-St. Louis

In a country of 311 million, that’s $900 taken on average from each family of four in 2010. There are no official figures, but this one is likely conservative because — as documented by Thomas, this column and Good Jobs First, a nonprofit taxpayer watchdog organization funded by Ford, Surdna and other major foundations — these upward redistributions of wealth keep increasing.

In Irondequoit, just outside Rochester, N.Y., and a few miles from where I live, developer Scott Congel wants $250 million in sales taxes to finance rebuilding the Medley Centre mall while adding condominiums and a hotel. Typically local governments issue bonds, which are paid off using sales tax receipts that are diverted from public purposes to the developer’s benefit.

Subsidies for retail businesses are the worst kind of corporate welfare because, as the end of the economic chain, retailing grows only when population and incomes increase. If population or income falls, then subsidies for new projects like Congel’s damage existing businesses, where people would otherwise be spending their money.

The mall, which struggled from the start, was built in 1990 for $140 million in today’s dollars. A Congel associate, Adam Bersin, bought it in 2005 for less than $6 million in today’s dollars. He then persuaded the Monroe County industrial development agency to issue $5.4 million in bonds and then flipped the real estate to Congel in 2007.

Today the mall is empty, its doors sealed, except for a Sears at one end and a Macy’s at the other, each with a handful of customers during my visits.

Congel promised a $260 million project, but five years on nothing is built and Congel is seeking delays in fulfilling promises for which the mall was granted property tax breaks.

That’s how corporate socialism works – taxpayers contribute when the market rejects.

  • Share this on Google+0
  • Share this on Linkedin0
  • Share this on Reddit0
  • Print this page
  • 89

15 responses to “David Cay Johnston: How Corporate Socialism Destroys”

  1. howa4x says:

    I live in NJ and Christie has just let Amazon start collecting 7% tax before they build their warehouse here. This is all for 1500 jobs. this country has always had socialism for the wealthy and capitalism for everyone else. Just look at the farm subsidys that go to agra-business or the subsidys to the oil companies to drill, or government backing of the energy sector, or the constant going to war to help the defense industry. No one says anything about this but let one black woman buy an old cadilliac and all hell breaks loose.

    • Ed says:

      HEY! You are off message. Don’t you know the UNIONS and the MIDDLE CLASS are he bad guys here? (Good show guy, but I thought you might like a bit of Chrisies bullying as topping on the cake!

  2. Eleanore Whitaker says:

    The US government under the influence of Republicans and the Tea Party funded by billionaires and foreign CEOs banking the 2012 campaign will sink our Constitutional rights. If this is allowed to happen, the Middle Class falls in on the working poor while the working poor become criminals according to the hateful, narcissistic right wing in this country. And if the poor are criminals, the Middle Class becomes the working serfdom that supports corporations. Put an end to corporate subsidies, tax breaks and tax cuts. Nothing in the US Constitution mandates that individual taxpayers keep Corporations obscenely profitable and the 1%’s wealth constantly growing.

    I also live in NJ. I didn’t vote for Chris Christie. He was a Bush-appointed US Attorney with all too many ties to North Jersey bandits of the GOP. Now, he’s proving exactly what his priorties are: Making the rich richer and the Middle Class pay for their wealth. Nertz to that.

  3. William Deutschlander says:

    David, the smell of Corporate GREED, smells to me much like PUTIN’S RUSSIA!

    The way the powerful (wealthy) are working against the principles of Democracy we soon will be morphing into a DICTATORSHIP!

    The 2000’s Republicans are not the Eisenhower Type Republicans, they trully appear to be as Ratigan states, “GREEDY BASTARDS”, interested only in PERSONAL GAIN! Sadly for them, it will result in the FINANCIAL COLLAPSE of the ENTIRE WORLD ECONOMY, there will be no consumers to generate revenue!

  4. Ed says:

    While the right keeps the spotlight (and the mud slinging) focused on the President and National Politics the Republican Governors and legislators carried to victory by the tea party looting the state and county Treasuries leads to increased taxes and the good loife for elected officials.

  5. Don B says:

    Remember years ago St. Ronnie’s (Reagan) election rant about “Welfare Queens” going to get their financial aid and foodstamps at local welfare offices in Cadillacs. Well, that proved to be false (besides the Cadillacs were propbably burnt out and 15 or more years old).

    What isn’t false these days are the “Corporate Welfare Queens”, ala Wall Street, oil and agri-subsidies, tax give-aways for “job creators” that never create any jobs (at least on our shores). If these companies can’t make it in the “real world” without all these corporate”entitlements” then they can be much of a business to begin with. Stop Corporate Welfare. Also, if new and upcoming companies that really are going to produce jobs IN THIS COUNTRY, give them a 10-year tax break to get them going. Maybe its time to sweep the old coporate dinosaurs aside to the curb and let newer, younger and, hopefully, more ethical business leaders take over.

  6. karinursula says:

    I agree with you William. I shudder to think what will happen if Romney wins in November.
    He owes so many favors to his rich friends who donated so much money to him, that
    he will be to busy kissing their A…… than to worry about the middle class and lower income

    • DurdyDawg says:

      Worry about the middle class and low income people? THAT has never been his objective, to believe otherwise is falling for his blatant lies. He’s a b’nessman, and b’nessmen do not involve themselves with the mundane.. Their goal is profit, not for the country but for the corporations that they were weened on.

  7. Elsa says:

    The rich have always robbed from those less fortunate. Until they stand up for themselves. Today that translates into voting and knowing who you are voting for. It is not enough to take your party recommendations – find out what the person stands for, check their voting record if there is one, and listen to both sides of the issue – the truth is somewhere in the middle. It also mean never listen to FOX News, radicals and anyone who seems to passing talking points along.

  8. fordneri says:

    Companies that create and produce valuable products needed and wanted by consumers do not need tax breaks ans government subsidies. Only companies that market mediocre products that must compete on price alone need special considerations. We are still in this mess because overpaid CEOs have nothing to offer a consumer except a low price. They don’t believe in their companies or products and now we don’t either. Cut CEO pay. Cut middle management in business and government. Cut subsidies and tax incentives and force government and industry to create and deliver products and services that matter and people are willing to pay for.

  9. rmarqua2921 says:

    The interesting thing for the Republicans is that when the government does something for poor people its socialism, its feeding the lazy people. However, when the government is doing something for the rich and corporations they call it “capitalism”? This is so disgusting!

  10. montanabill says:

    For a change, I’m on the side of Mr. Johnson. I don’t blame corporations for trying get public money, but I do fault any government for giving it to them. If those businesses seeking public money have a good business plan, they can get the money from private investment firms.

  11. ObozoMustGo says:

    David Cay Johnston, I cannot believe it! I have finally found an article on The Memo that I 100% completely agree with! BRAVO…. BRAVO…. BRAVO… Great job David!

    For those of you on here that like taking jabs at me (by the way, I like giving them back :-), and all the other lefties reading, this is classic case in point about why we the American poeple have been getting bamboozled all these years by politicians from BOTH parties. If you think cronyism is just a Republican problem, you are not being honest. It has become a problem that is systemic with our political system because most of us have been so distracted by the R versus D arguments over stupid, mostly meaningless issues, that we have taken our eyes off of the real ball. Every level of government in the USA in the majority of states and localities (not all) is facing serious financial peril. Look at CA, IL, and NY. Look at our large cities. Cronyism runs rampant in these places. There is simply no reason for any of us to accept this crap anymore. Why are we paying wealthy business people for malls or stadiums or any other assets they seek to build? Corporate socialism sucks and citizen socialism sucks. Socialism sucks all around for everyone. Time to return to a government that does not create dependency in our business or personal lives, but rather remains removed as an impartial referee enforcing the rules on everyone equally with no political favorites. That goes for both sides. This was the original concept set up by our Founders and I am afraid we have drifted far off course. Time to put an end to this. You all in the Dem party must start taking the party back from the leftist radicals and socialists that have taken it over. We on the right are already doing that by throwing out established incumbents one after another in every state and in every locale. And by the way, those of you that are business leaders, demand that your fellow business leaders live to a higher standard than suckling off the government pig for your survival. They should be ashamed that they cannot survive without government help. How pitiful.

    There… my rant is over…

    Have a nice weekend!

    • dtgraham says:

      While I, too, think that corporate socialism may have a friendlier audience amongst establishment Republicans than Tea Partiers, I just don’t see that last part of your rant Obozo. To my eyes there’s been a rightward drift in the Democratic Party over the last two decades. Clinton started it. Obama has carried on with the Bush tax rates and has even cut taxes further (payroll). He’s basically kept the Bush/Cheney military policy. Iraq is only over due to his honouring the timetable of the agreement Bush signed to end the occupation this year. He has championed charter schools at the expense of public education. His so called universal health care is just the GOP response to Hillarycare in the 90’s, involving private insurance companies only and still leaving a lot of Americans without health insurance. Etc, etc…..

      I think the reason the Tea Party is so amazingly organized, funded, and looked after (they seem to get bussed everywhere) is that they’re little more than useful mannequins for AFP, Freedom works, Rupert Murdoch and Fox, the Kochs, and various other billionaires. They’re using this largely fake, non grassroots, “name” that they created to end the modern concept of government as a useful entity and return the nation to the gilded age more or less. Compare the Tea Party to the helter skelter, loosely organized, basically unfunded, Occupy movement. That’s what a truly grassroots people’s movement looks like. There’s no way that individual, like minded, Americans coming together could accomplish what the Tea Party has done and do it in such a short time. Especially in the era of citizens united. I’m not buyin’ it.

      I may be wrong, Obozo, but that’s how I see it.

      • ObozoMustGo says:

        dt… you must be flat out stoned out of your mind (LOL) to think:

        a) Dems have turned right? Nothing could be further from the truth. I’ve written in these blogs many times about how hard left Obozo and his cadre of socialist radicals in his administration are, not to mention Obozo’s own history and membership/backing by the Communist Party USA for his IL Senatorial run. And his entire past has been hard left.

        b) The Tea Party is not a “party” with any organizational structure whatsoever. There are some organizations like Tea Party Express or Tea Party Patriots that raise funds from average Americans like me to advertise and fight the establishment candidates in both parties, but they are not at all connected to the local groups that make up the concerned citizens who have become politically active for the first times in their lives. Most of them are older and retired, or close to it, because the rest of us actually have to work for a living every day. And this imagined connection to the Koch brothers is just a leftist nutjob fantasy. I’m not an active member, but have been to 2 events in the last 3 years. Every single person that got on a bus paid their own way, dude. Unlike Dems, we dont expect someone else’s money to pay our way. There is no one funding their meeetings. They have them at local businesses like restaurants, bars, or VFW’s, or civic centers. There is no coordination with regional and national efforts at all. It’s strictly a local grass roots movement that is unique from town to town across America.

        c) Comparing the Tea Party to the Occupy movement is like comparing Obozo to Hitler. While they may have similarities in political circumstances, Obozo is NOT Hitler in any way. The Tea Party is ALWAYS peaceful, patriotic, and cleans up after themselves. Only leftist plants with the goal of discrediting the Tea Party have been seen behaving less than acceptably, and they are always kicked out. The Occupy movement is organized, though not to the individual level, and is made up of mostly revolutionary radicals, anarchists, communists, socialists and others. Their protests grow violent in many cases, and the remnants of what is left when they are finally removed from where they were is nothing short of a disaster zone of human waste and garbage. If you want to read the truth about the Occupy movement, go here:


        This is a site that is run by a former socialist radical that led these things in his past, David Horowitz. He knows what he’s talking about because he was equally blinded like today’s radicals, but was fortunate enought to have cured himself of that disease.

        Getting back to the point, dt, the fact is that taxpayer dollars should be no more used for corporate socialism as they should for any socialism. Until we as voters demand politicians that represent TAXPAYERS interests first, we’re going to keep getting the same old crap. Right now, many of them represent their own reelection interests first.

        Have a nice day, dt!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.