Ludwig von Mises probably sums my thoughts up on the government buying a failing hotel with tax dollars and stated it better than I can:
“History does not provide any example of capital accumulation brought about by a government. As far as governments invested in the construction of roads, railroads, and other useful public works, the capital needed was provided by the savings of individual citizens and borrowed by the government.” Ludwig von Mises, Human action: a treatise on economics
To elaborate a bit, bailing out Hutchison Whampoa by buying their defunct hotel is the opposite of Capitalism. The free market is a system of profit and loss. Not a programme of private profits and socialsed losses.
I realise the government purchase of the hotel is being billed as saving jobs and the Grand Bahama economy, but the deeper question is why investors are shying away from Grand Bahama?
If there is to be an economic turnaround the government has to provide the framework that makes investors, Bahamian and foreign alike, feel like they want to invest. That does not include bailing out failing projects. The owners enjoy the benefits given under the Hawksbill Creek Agreement, they should not benefit of tax dollars as well.
Investors or capitalists, however one wishes to refer to them, are important for economic growth and the government should shout this from the halls of Parliament to the campaign trail. Impugning investors and the market process and tying investors hands with more and more regulations only dampens economic activity slowing growth and job creation.
As Professor Deirdre McLoskey pointed out "the Bourgeois Revaluation, was the coming of a business-respecting civilization, an acceptance of the Bourgeois Deal: “Let me make money in the first act, and by the third act I will make you all rich.” Much of the elite, and then also much of the non-elite of northwestern Europe and its offshoots, came to accept or even admire the values of trade and betterment. Or at the least the polity did not attempt to block such values, as it had done energetically in earlier times."
We need that revaluation here.
We also need our government to understand its proper role and using tax dollars to bail out a failing business enterprise is not one of them.
