A few years after New Jersey legalized gambling and allowed casinos to open in Atlantic City in 1977, the state mandated that a portion of revenues to be set aside to improve "blighted areas," especially in run-down Atlantic City, a noble aim.The pattern is a familiar one: government and large corporations engaging in mutual back-scratching at the expense of the social and physical environment. The corporations, grown rich on taxpayer-funded subsidies, can afford the very lobbying that perpetuates their subsidies. It’s a vicious circle. When I talk about Social Policy Bonds I usually emphasise their efficiency. But they have another great advantage: transparency. Expressing policy in terms of targeted outcomes does mean that ordinary people can follow what’s going on. Under a bond regime we might even choose to subsidise casinos or other large and wealthy corporations – but at least we’d be doing so with our eyes open. Under the current regime, there are legions of lawyers, politicians and bureaucrats who have every interest in obscuring the truth. As Ologopoly Watch continues:
But according to a New York Times story ("Atlantic City Casinos Reap Anti-Blight Fund" 1/28/2007), over the past decade the moneys have been diverted to quite unintended target - the casinos themselves. According to the story, over $400 million out of a total of $1.8 billion since it was started) has been diverted from the state-run Casino Reinvestment Development Authority to projects that should have been paid for by the casinos themselves.
Getting the tax dollars you pay in to be given right back in the form of subsidies is a great deal for the big companies. The ability to threaten to move, to play off one state against another, leads to tax breaks for companies that hardly need the money, while big social needs are unmet. Further more in this case, the casinos are directly responsible for some of the poverty and misery (drugs, prostitution, bankruptcy) that later cost the state in terms of law enforcement, hospitalization, and/or incarcerations.