Will Punishing the Mouse End the Florida Cronyism?

Florida Governor Ron DeSantis recently signed legislation stripping Walt Disney World of its independent and special district status after the company opposed the state’s new law regarding discussion of sexual orientation. or gender identity in classrooms.

Although the motive for this action is problematic, some of its supporters argue that there is nothing to worry about, because it was time to revoke a cronyism privilege granted to Disney 50 years ago anyway. But if it is really a fight against cronyism, the legislation does it badly.

Patronage is the unhealthy alliance of business and government. It takes the form of government officials at the state, local, and federal levels granting special privileges to particular businesses or industries. These privileges may include special tax breaks, government loans, direct grants or, as in Florida, “special districts”.

I spend a lot of my working hours researching the harm that cronyism does to citizens. That’s because, as my colleague Matthew Mitchell wrote a decade ago, “Whatever form it takes, government-granted privilege (to private corporations) is an extraordinarily destructive force. It diverts resources, hinders genuine economic progress, breeds corruption and undermines the legitimacy of both government and the private sector. »

So, does Disney benefit from a document that should be deleted? Yes. Disney has certainly been granted an incredible privilege to act as its own government within the boundaries of Orange and Osceola counties. For example, it runs its fire department, administers planning and zoning rules, writes building codes, employs its own inspectors, and is exempt from local regulations and some $200 million in taxes. He collects the rest of the taxes he owes.

The removal of special district status means that these types of responsibilities would be absorbed by the two counties in which Walt Disney World is located. Local ratepayers would then bear the cost of all municipal services on the property – an estimated cost of $1 billion. The business, in turn, would be subject to the same poor local services and regulations that most of us are used to. Additionally, Florida will be tied by years of costly litigation to determine how to separate the company from the counties.

But maybe unraveling that special treat is worth it. Don’t expect it to result in a fairer diet. Indeed, if this configuration is so unacceptable — a claim most Republicans haven’t seemed to make in the half-century the special district has been in place — it should be unacceptable to Florida’s other 1,844 special districts as well. Of these, 1,288 are, like Disney, independent neighborhoods. But we don’t hear any significant Republican complaints about it.

In other words, GOPers want to continue the practice of extending privileges selectively. What lawmakers should have done is decide whether these special districts are a good idea. If so, access to them should be made available to any business that meets certain minimum and clear criteria and denied to any business that does not.

From the point of view of local competition, the idea of ​​independent special districts has some value. Indeed, they allow people to see the differences between the areas where municipal services are run privately (i.e. quite efficiently) and the jurisdictions most of us are subject to, with nests potholes in the streets, broken public toilets and patchy police protection.

However, this approach would require consistent policy thinking and development. And while Republicans in Florida today applaud Disney’s removal of special district status and the idea that such privileges for big business are problematic, they had no problem granting Disney’s streaming services an unfair exemption from a 2021 technology regulation that imposes daily fines of $250,000 when statewide job applicants are blocked from a social media platform for more than 14 days. Lawmakers haven’t extended the same exemption to Netflix or Hulu.

This episode should serve as a warning to companies seeking special privileges from the government. Governments give arbitrarily and unjustly, and they take away with just as much arbitrariness and injustice. Moreover, when a company’s profitability depends heavily on government largesse, it must be careful not to irritate its government overlords. Disney obviously failed to do so.

This sad case did nothing to change the cronyism in the state of Florida, but it did once again expose the arbitrariness of government in our lives and the cost of depending on its favors.

Véronique de Rugy is the George Gibbs Chair in Political Economy and Senior Fellow at the Mercatus Center at George Mason University.