Real World Economics: Political whims have economic consequences – St. Paul Pioneer Press

by | Apr 24, 2022 | Financial

The Florida Legislature’s move last week to revoke the Walt Disney Co.’s special taxing district in Orlando at the impetus of GOP Gov. Ron DeSantis highlights many economic issues.Edward Lotterman
Special tax treatment for projects of wealthy businesses, including those enriching team owners with taxpayer money for sports stadiums, are a cancer on the economy and society. So, in general, many economists are glad to see them curbed. But this move reflects one man’s desire to reach the Oval Office by dialing up animus surrounding divisive cultural issues.
Personal views aside, the action in Florida raises an interesting economic question, one that also applies to the impounding of Russian oligarch’s yachts and private jets, the freezing of the Russian government’s dollar-denominated foreign exchange reserves.
The issue, at its most fundamental level, is the base on which all economic reasoning lies — namely “opportunity cost.” Resources, including time and even personal emotional energy, are limited. Choose to use them on one alternative and you cannot devote them to another. When biting into a hoagie, you can’t also bite into a walleye sandwich. Spend a week in Branson and you cannot spend the same week in Vegas. Work 70-hour weeks to move toward the executive suite and you will spend less time watching your kids grow up.
Seize a nation’s U.S. dollar foreign exchange reserves just because it is doing something you don’t like, however horrific, and because you have power to do it, screams to other nations that they should keep their reserves in alternative currencies to minimize the possibilities of the same fate. Abolish a special taxing-and-local-services district set up 55 years ago, which all involved expected to continue, because a capricious governor thinks it will give him a political leg up, and you tell future investors considering building in your …

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