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Archive for April 29th, 2022

Earlier this month, I defended Disney’s self-governance status.

I wasn’t motivated by the company’s position on Florida education legislation (my view is that all sorts of controversial education issues can and should be solved by having school choice).

Instead, I viewed Reedy Creek (Disney’s “Independent Special District”) as a good example of private governance.

And if you believe that the private sector produces better results, this seems like a no-brainer.

So does this mean these enclaves are a good idea?

There’s not a clear-cut answer. In a column for the Wall Street Journal, Judge Glock of the Cicero Institute is concerned that special districts often are a way of expanding government rather than curtailing it.

Reedy Creek is only one example of the proliferation of powerful “special districts,” shadowy local governments that exercise ever-greater control over taxation and spending. Florida alone has 1,800 such districts. According to the U.S. Census, there are more than 38,000 of them across the country—double the number of cities. …They are means to escape citizen limitations on government power and should be brought under the control of regular voters and local governments again. …After the tax revolt in the 1970s, special districts became a convenient way for government to escape new limitations on taxes. Over the past four decades, states have created more than 8,000 local governments. Ninety-six percent of these have been special districts. …Special districts are an increasing burden to taxpayers. They intentionally keep their accounting obscure, but…we know California districts alone spend $76 billion. In Nassau County, N.Y., 140 different special districts cost the average homeowner $1,000 a year in property taxes.

This sounds awful. And I’m sure it is awful.

But it’s not a description of Disney.

Professor David Henderson, an emeritus professor at the Naval Postgraduate School, shares my perspective about letting the company govern itself. Here’s some of what he wrote on this controversy.

 Walt Disney Corporation has a special status in Florida that allows it to avoid many regulations and some taxes and fees. …No one that I have found addressing the issue claims that Disney uses this freedom badly… Care to bet which roads are better: roads in the Reedy Creek District or roads in surrounding counties? I’ll take the bet. The explicit argument that Florida Republican legislators and Florida governor Ron DeSantis make is that Disney receives special treatment. They’re right. …But what if that special treatment works to produce good results?

And Disney does produce good results.

But there’s one more issue to address, which is whether it’s fair for Disney to have self-governance when other companies don’t have the same right.

Universal Studios competes with Disney in the same area and presumably doesn’t have self-governing status.

This isn’t fair. We don’t want politicians awarding special status to one company over another. That’s cronyism.

Fortunately, Professor Henderson gave us the answer.

…there are two ways to get rid of special privileges. The way the Florida Republicans don’t seem to have considered is to make them less special by giving people in other counties the same flexibility.

Indeed, private governance could be and should be a tick-the-box exercise. Any and all companies that meet transparent criteria should be allowed to choose a self-governance approach.

Keep in mind, however, that allowing companies to govern themselves is different from special districts that expand the powers of politicians and bureaucrats to govern others.

In other words, special districts can be good or bad depending on the purpose.

P.S. There are also examples of self-governance in Mexico, South Africa, and Nigeria.

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