Florida Gov. Ron DeSantis recently signed legislation stripping Walt Disney World of its status as an independent special district after the company objected to the state’s new law regarding discussion of sexual orientation or gender identity in classrooms.
While the motive behind this action is problematic, some of its supporters argue that there is nothing to worry about since it was time to revoke a criminal privilege granted to Disney 50 years ago anyway. But if this is really a fight against nepotism, the legislation is going the wrong way.
Nepotism is the unhealthy alliance of business and government. It takes the form of government officials at the state, local and federal levels who grant special privileges to certain companies or industries. These privileges can include special tax breaks, government loans, direct subsidies, or—as in Florida—so-called “special districts.”
I spend much of my working time researching the damage that nepotism does to citizens. That’s because, as my colleague Matthew Mitchell wrote a decade ago, “Whatever its appearance, government-granted privileges (to private companies) are an extraordinarily destructive force on both government and the private sector.”
So is Disney benefiting from a Handout that should be scrapped? Yes. Disney has certainly been given the incredible privilege of operating as its own government within the borders of Orange and Osceola counties. For example, it operates its fire department, administers zoning and zoning codes, writes building codes, employs its own inspectors, and is exempt from approximately $200 million in local regulations and taxes. She collects the remainder of the taxes she owes.
The removal of special borough status means that these types of responsibilities would be assumed by the two boroughs in which Walt Disney World is located. Local taxpayers would then bear the cost of all municipal services on the property — a cost estimated at $1 billion. The company, in turn, would be subject to the same subpar services and local government regulations that most of us are accustomed to. Additionally, Florida will face years of costly litigation to figure out how to separate the company from the counties.
But maybe it’s worth the expense of untangling this special treatment. Just don’t expect this to lead to a more just regime. Indeed, if this facility is so unacceptable – a claim most Republicans seem not to have made in the half-century that the special district has existed – it should be unacceptable for the other 1,844 special districts in Florida as well. Of these, 1,288 are independent districts like Disney. But we don’t hear any significant complaints from Republicans about it.
In other words, GOPers want to continue the practice of selectively escalating privileges. The legislature should have decided whether such special districts are a good idea. If this is the case, access to them should be granted to all companies that meet certain minimum criteria and clear criteria, and denied to all companies that do not.
From a local competition perspective, the idea of independent special districts has some merit. In fact, they allow people to see the differences between areas where municipal services are run privately (i.e. reasonably efficiently) and the jurisdictions most of us face, with unrepaired potholes in the roads, broken public toilets and unequal police protection.
However, this approach would require consistent thinking and policy making. And while Florida Republicans today are hailing the removal of Disney’s special district status and the idea that such privileges are problematic for big corporations, they had no problem granting Disney’s streaming services an unfair exemption from a 2021 tech regulation, daily fines of $250,000 inflicted on candidates for statewide office being banned 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 looking to win special privileges from the government. Governments give haphazardly and unfairly, and they take back just as haphazardly and unfairly. In addition, when a company’s profitability depends heavily on government generosity, it must ensure that it does not anger its government overlords. Disney obviously failed.
This sad affair did nothing to change nepotism in the state of Florida, but it did expose once again the arbitrariness of the government in our lives and the cost of depending on its favors.
Veronique de Rugy is the George Gibbs Chair in Political Economy and a Senior Research Fellow at the Mercatus Center at George Mason University.