Florida government is set to revoke the Disney Corporation’s longstanding anti-competitive and anti-competitive special favors that the state granted the company nearly five decades ago. On Thursday afternoon, Florida’s House and Senate voted to end the mega-corporation’s special district that has long allowed Disney to engage in activities prohibited to other private groups and individuals in the state. . The governor should sign the legislation.
The impending status change comes after senior Disney officials repeatedly criticized Florida’s GOP — currently the state’s ruling party — for legislation that had nothing to do with Disney’s ability to do business in the state. Perhaps unsurprisingly, this caused many GOP officials to question why Disney was receiving special privileges denied even to Disney’s direct competitors. In the past, Disney was normally protected from the dangers of its special status, as Disney showered state politicians with gifts, campaign money, and other types of special favors that normal people would identify as bribes. -of-wine. Many of the same people now voting to repeal Disney’s special status have accepted such “freebies” in the past. But for some reason, the political landscape has changed enough in recent years that many policymakers feel like it’s now more politically rewarding to punish Disney than cater to its whims. The fightback effort at Disney was likely also fueled by national politics and the fact that Disney has long been a platform for leftist politics through its outlets like ABC and ESPN.
The situation has led to strange political rhetoric and bedfellows. The GOP is now being accused of being ‘anti-business’ while dissident Democrats seem to have suddenly become laissez-faire capitalists, pontificating on the virtues of low taxes and leaving corporations to run their own affairs.
But is revoking Disney’s special status really an attack on markets or private property? It depends on how you look at it. Let’s first see what privileges Disney enjoys in Florida. The special ward, called Reedy Creek, was established in 1967 and allows the Disney Company to operate without local government oversight on its San Francisco-sized property outside Orlando. The special status means Disney can issue tax-exempt bonds and build new developments without having to deal with local government obstacles to development such as zoning laws.
Proponents of the global conglomerate often describe this situation as a kind of taxpayer favor. For example, CNBC defines the Special District as an arrangement “established by the Florida Legislature so that Disney may develop Walt Disney World infrastructure at no cost to Florida taxpayers.” In reality, of course, this infrastructure exists – and only exists – to funnel paying customers to Disney theme parks. It would be absurd to expect taxpayers to pay for this type of development under all circumstances, and that could be assured without a special district like Reedy Creek.
But perhaps the most important aspect of the Special Ward is that none of Disney’s competitors benefit from a similar arrangement. At least one GOP lawmaker noted this when defending the new bill, pointing out that Universal, Seaworld and Legoland didn’t get their own special districts. And it’s only existing competitors who could muster the capital necessary to compete with Disney on an uneven playing field designed to favor Disney. It’s impossible to know how many other entertainment venues and private owners might have also competed in Orland if Disney hadn’t sucked all the air out of the local market with its cronyism deal.
Consequently, Universal has operated at a disadvantage for its entire existence in Orlando. Unlike Disney, Universal has to deal with local ordinances, local zoning laws, and cannot take advantage of tax-exempt bonds.
Reedy Creek’s control of its own zoning and building codes is Disney’s most significant advantage among Central Florida tourist destinations.
Take Universal Studios Florida, for example. Planning for USF began in the early 1980s, but it wasn’t until around 1986 that plans for the park were officially announced. In what must have been a remarkable coincidence, Disney announced plans for its own movie-themed park in 1987.
But although Universal has a huge head start on Disney, Disney-MGM Studios (now Disney’s Hollywood Studios) opened in 1989. Universal Studios Florida didn’t open until 1990.
It is possible, of course, that Disney’s plans moved ahead faster than Universal’s due to better internal management. But it’s also quite plausible, even likely– that Disney was able to accelerate its development at a much faster rate than its competitors due to its special legal status.
In other words, by picking and choosing who gets a special ward and who doesn’t, the legislature is responsible for picking winners and losers in the theme park business. Seen in this light, the removal of Disney’s special status is nothing more than an end to a long-standing policy of using the coercive power of the state to harm Disney’s competitors. Disney, of course, is fine with this arrangement and would surely push – and probably already possesses is lobbying to prevent any of its competitors from enjoying similar benefits.
In other words, Disney’s special deal acts like a tax on everyone else by reinforcing Disney’s monopoly power and preventing consumers from reaping the benefits of competition. This is simply the usual type of corporate welfare regime that we have long seen in the form of “economic development” policies favored by governments for decades. These policies favor certain powerful large companies, but will not grant the same favors to small companies and competitors. Then the corporate accomplices and their friends in the legislature or city council take credit for the “jobs created,” as if the economy wouldn’t have grown if the laws hadn’t been written to favor a privileged few. . These offers use phrases such as “low taxes” and “free markets”, but really have nothing to do with laissez-faire or free markets. These are love deals for politically well-connected people.
When we understand this, we see Disney’s Reedy Creek deal for what it is and always has been.
Admittedly, all of this makes free market stalwarts uncomfortable. We hate to see taxes go up or government control tightened over a private company that Disney – for the most part – still is. But there is also an invisible factor here. The unseen is the extent to which private enterprise has been inhibited, stifled and pushed aside by the drafting of laws favoring one company. How much would the public benefit from other competitors in the Orlando area? How much less could consumers have paid for tickets to Disney parks because Disney was able to legally block competitors from entering the market? We’ll never know.
*About the author: Ryan McMaken (@ryanmcmaken) is an editor at the Mises Institute. Send him your article submissions for the Wire updates and Power and market, but read the instructions in the article first. Ryan holds a bachelor’s degree in economics and a master’s degree in public policy and international relations from the University of Colorado. He was a housing economist for the state of Colorado. He is the author of Cowboys Cocos: The Bourgeoisie and the Nation-State in the Western Genre.
Source: This article was published by the MISES Institute