Neal Dunn’s Crony Capitalism Problem

“Conservative” Boasts Ties With Enterprise Florida

One of the most important Republican congressional primaries is taking shape in the panhandle, with Tallahassee attorney Mary Thomas facing off against Bay County urologist Dr. Neal Dunn for the right to face Congresswoman Gwen Graham in Florida’s second district. Already the race has been defined by the battle lines that have emerged in the Republican Party as a whole, with conservative organizations and activists lining up behind Thomas and establishment figures, such as former Congressman Steve Southerland, lining up behind Dr. Dunn. While Graham’s 2014 success was the Democratic Party’s biggest victory that year, newly drawn Congressional district lines appear to give her Republican challenger a major edge in 2016.

Given these dynamics, the primary battle is intense. Both camps have already tried to connect each other to the widely despised political hermaphrodite Charlie Crist (Dunn was a donor and supporter of Crist, while Thomas worked for the State of Florida while Crist was governor.) Meanwhile, the hardest punches of the campaign so far have come from Thomas on Dunn’s past as a lobbyist for the Florida Medical Association, an organization that backed Obamacare expansion in 2014.

Dr. Neal Dunn

While Dr. Dunn may have a difficult time explaining away his FMA record, which could undermine his argument that his medical experience makes him the best candidate to tackle the Affordable Care Act, his campaign has made the interesting move of bragging about another organizational tie that should give North Florida conservatives cause for concern — Enterprise Florida.

Enterprise Florida is a public-private partnership established by the Florida legislature in 1992. The aim was to have an organization funded by both public and private funds to invest in grants, loans, tax incentives and other subsidies to spur economic development and job growth in the state. Unfortunately, this is the same logic always used by politicians to promote pet causes at the expense of basic economics. Americans may remember that President Obama has long endorsed private-public partnerships as an economic panacea, resulting in disastrous policies such as the infamous failed Solynrda loans. That’s because private-public partnerships are simply a nice way of saying “crony capitalism”, and while politicians always enjoy attacking such behavior during campaign season, it unfortunately finds bipartisan support when it’s time to legislate.

President Obama, speaking at Solyndra

If the idea of trusting government to make wise choices investing in private companies sounds questionable in theory, it’s outright disastrous in practice. Enterprise Florida has been attacked for years by watchdog organizations such as the Reason Foundation, Integrity Florida and Americans for Prosperity for its blatant cronyism and failure to deliver on its stated promises. For example, while Enterprise Florida original aim was to be funded with a 50/50 split of public and private funds, it has devolved into an organization that receives as much as 85% of its budget from Florida tax payers, even as it under-performs its nominal goals. More distressing still is the fact that all three organizations have raised red flags regarding possible “pay-to-play” dynamics at work in the organization

As the Reason Foundation notes:

According to the documents obtained by Integrity Florida, Enterprise Florida provided contracts to corporations with ties to Enterprise Florida’s board of directors. Half of Enterprise Florida’s board of directors have also “invested” an average of $50,000 each into Enterprise Florida.41 Another potential conflict of interest revealed in the report is the fact that the board has control over staff bonuses, of which nearly $500,000 worth were given out by the board in 2012 ($70,000 alone to the president/CEO). While it is unclear whether or not these board member investments or staff bonuses factor into deciding which companies receive funding, all the elements for a pay-to-play scheme are certainly there.

While Dr. Neal Dunn joined the board of Enterprise Florida in 2014, after the last Integrity Florida report was published, the organization continues to be a subject of controversy. In 2015, Florida Senate President Andy Gardiner raised concerns about the organization’s bookkeeping. Meanwhile, Enterprise Florida and its allies in Tallahassee have pushed to increase the public funding of Enterprise Florida to $250 million dollars.

While it is always possible for an organization to improve internally, the larger issue at play is Dunn’s demonstrative support for the very idea of public-private partnerships and other forms of government subsidization of business. This very issue has become one of the hottest inner-GOP debates in Washington. For example, last October some Republicans in Congress aligned themselves with Nancy Pelosi to resurrect the Export-Import Bank — a crony, taxpayer-backed bank that works as a subsidy for large US corporations like Boeing. There is no free market defense for such a program. Unfortunately too many Republicans in Washington care more about the opinion of the US Chamber of Commerce than they do standing up for honest capitalism.

“We already have too many politicians (in both parties) who are too easily fooled into support absurd policy.”

In his legendary book Economics in One Lesson, Henry Hazlitt wrote:

The art of economics consists in looking not merely at the immediate hut at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

While Dr. Dunn’s involvement with Enterprise Florida shouldn’t be seen as a reflection of the man’s character, it does demonstrate a troubling lack of this basic economic understanding.

We already have too many politicians (in both parties) who are too easily fooled into supporting dangerous policy — be it a Wall Street bailout, or Cash for Clunkers, or using Fannie Mae and Freddie Mac to promote home-ownership — with emotional, flawed arguments, usually regarding job creation or economic growth. What they fail to see is that the government can’t invest money without first taking it away. Enterprise Florida requires tax payers to bankroll business ventures for private gain. It leads to business owners being forced to subsidize potential competition. It leads to a culture incompatible with free enterprise and small government.

Considering the current track record of Speaker Paul Ryan, America simply can’t afford to have a Congressional district as conservative as the Florida panhandle electing Republicans who offer more of the same. If Dr. Dunn wants to demonstrate the conservative principles he has touted during the campaign, he should resign from Enterprise Florida and denounce crony capitalism.

And consider reading Henry Hazlitt.