Politicians Promise; Enterprise Delivers

by Jeffrey Tucker - March 4, 2008

Reprinted with permission.

While the politicians run around the country telling us of their plans to make our lives better – what wizardry they command; merely to make speeches, pass laws, and print paper, thereby making us prosperous and secure! – free enterprise is busy actually accomplishing this, and with little or no fanfare.

This is the thought that struck me when I read a recent headline that 43,000 have applied for jobs at the new KIA Motors auto plant that is soon opening in Georgia. When the plant opens, there will be 2,500 jobs, so many of those people who have applied will be disappointed. What does that say, except that we need more and more such plants?

But if that is to happen, we need to curb the activities of politicians so that free enterprise can do its job – which, after all, has nothing do to with elections, campaign finance, lobbying, or yard signs. Enterprise takes place on a completely human scale, person to person, and with every exchange, every winning investment, society is made just a bit better off.

I've been driving by the site of the planned facility now for about six months, and it is nothing short of a marvel of ingenuity and daring. Actually, it is an amazing inspiration. A beautiful thing. Look across the highway and see what seems to be miles and miles of cleared land, with tractors buzzing about, with dirt, steel, and wood being moved from here to there. It is in its early stages of construction. But in what you see there are wild dreams at work. Ah, civilization!

It was months before a sign appeared that it would be the new site of a KIA automotive plant.

You get chills when you think of the checks they've had to write already. Every driver of every tractor has to be paid. The 3,300-acre plot of land itself must have been incredibly expensive. The entire plant represents a $1.2 billion investment, and there are also five supply plants going up. The company will pay and pay and pay – leaking fantastic sums of money for years.

And why? For what gain?

The gains are purely speculative. The plant doesn't open until November 2009. But even then, not until the first car is purchased off the showroom floor does expense turn to revenue. Think of it: In the end, it all comes down to one salesman talking to one customer. And, in the end, it is up to the customer whether to trade money in for a car. He can walk away. If everyone walked away, this company would be bankrupt. All the expense, the planning, the purchases, the vast apparatus, will have proven to be a waste.

Talk about living on the edge. And why? There are two possible answers: The first is to make a buck. Some people say that's greedy and disgusting – so much effort and resources and time put into the grubby task of making money. Let's allow for a moment that raw greed is indeed the underlying motive. How does it work itself out in practice? Through an incredible and overwhelming act of human service, one that is rooted in offerings to the whole of society that everyone who accepts does so of his or her own volition.

While it is impossible to know with certainty what motivates others, greed alone cannot account for the level of entrepreneurial fanaticism that is behind this kind of undertaking. More likely, it is a drive to do something spectacular. The motives could even be purely altruistic: the desire to give people great jobs and great cars. What the motivation is really doesn't matter here; the key is the reality itself. KIA is doing wonderful things and taking enormous risks so that you and I, in the end, might have a fun car to drive.

It is also notable that this company is based in South Korea. So here we also see free enterprise smashing borders, uniting people across the world in a common cause, bridging barriers of culture and language to accomplish wonders for the whole of the human family. And they do it with no central planner. What drives them is not an election schedule, federal legislation, or the ambitions of the powerful and the mighty, but merely the deft coordinating hand of the free market.

Where politicians parade around and talk about themselves, no one apart from those who watch the automotive industry closely even knows the names of the principal players here.

To compare politicians with entrepreneurs is like comparing two runners in a race, one who stands at the starting line and makes a speech, and another who runs the full distance around the track without saying a word.

Voters were not asked if this plant could go up, and, because of that, the CEO didn't have to pander to anyone, tell fables of the fabulous things he will do with other people's money, or reinvent himself as some sort of human savior. He doesn't have to attend rallies or ask for everyone to cough up money. All decisions concerning this investment involve private property used for public benefit.

Now, you might be curious about how a plant this size opens without government help. Sometimes there are sweetheart deals behind these things, so I looked it up. It turns out that the state of Georgia did indeed provide sizeable tax breaks. They concern income, sales, and land taxes – and the action of the state consisted in removing obstacles that shouldn't have been there in the first place. Such tax breaks should be available to all, and that they are made only for KIA is a problem of justice. However, a tax cut does not actually extract a single dime from the citizens, so it is far more easily justified than an actual subsidy.

The people behind this will probably not go down in anyone's history book. They hardly make the news now. They don't even get the credit from the people who buy their cars or work in their factories. On the contrary, they are held accountable for even the smallest amount of dissatisfaction. And their accountability is not just about reputation; it is about the bottom line. The truth is finally in the profit and loss numbers – a withering and bracing method of testing that politicians never face.

Reflecting on all this makes me want to put a KIA yard sign in my yard. But on second thought, I think that violates zoning laws. Special provisions are made for political signs.

Jeffrey Tucker is the editor of Mises.org. Contact him at tucker@mises.org.