States should think harder before political controversy arises about what they’re empowering large private companies to do with public money and power.
The battle between the Ron DeSantis–run government of Florida and the Walt Disney Company is apparently not approaching a final resolution after more than a year and a half of sparring. The lawsuits are ongoing and have not been going well for Disney, yet the company shows no sign that it is rethinking its enormous presence in Florida. The hot topic is still the decision by Florida’s legislature — acting at the urging of DeSantis — to abolish Disney’s Reedy Creek Improvement District, the special district that effectively gave Disney, a privately owned and publicly traded corporation, governing power over the territory that includes its theme parks. That power has been transferred to the Central Florida Tourism Oversight District (CFTOD), which answers to the elected state government.
Florida has a number of special legislative districts, a system that it uses to enable private and sometimes public development by exempting enterprises such as The Villages and Cape Canaveral from some regulatory red tape and oversight. There were always those who found these sorts of exemptions anti-democratic because they freed more business decisions from government review, but the merit of that critique varies based on what kinds of government interference we’re talking about. If you believe in small government, free markets, and classically liberal governance that seeks to apply neutral rules to all and provide a level playing field for market participants, there is a case to be made both for and against the special districts. In their favor, they act to reduce overall the burdens of government, encourage businesses to deliver what consumers want without substituting the judgments of regulators, and keep Florida’s tax burdens low and its government more leanly staffed than most. The argument against such districts is that they give a privileged position to some businesses rather than eliminating governmental burdens across the board. Moreover, while giving exemptions from regulatory oversight is not as bad as subsidizing companies with taxpayer money, it nonetheless tilts the competitive playing field.
Reedy Creek long stood as the extreme example, a corporate fiefdom so complete that it was effectively a cross between Galt’s Gulch and the British East India Company. Disney simply ruled the center of the state unchallenged, unsupervised, and often unquestioned. But as I’ve noted before, it worked:
Prior to 2022, the marriage between Disney and Florida was outrageously beneficial for both parties, and nobody in the state capital in Tallahassee thought to disturb it.
When Disney World opened in 1971, the population of Florida was 7.2 million people. The state’s population, which had doubled since 1954, has tripled since then, twice the growth rate of the rest of the country. Per capita income in Florida in 1971 was $4,433. That tripled by the mid 1980s, hit nearly $40,000 before the recession in 2007, and in 2022 reached $63,597. Even in constant, inflation-adjusted dollars, per capita income in Florida has doubled in the past 20 years.
Disney is only one part of that story, but it has been a hugely important one, both materially and symbolically. It is the crown jewel of Florida’s massive tourism industry. In 2019, 131 million people visited Florida, spending nearly $100 billion, supporting 1.6 million jobs and $57 billion in wages and salaries. Those numbers are even higher post-Covid. Even with its small-government budget (half the size of New York’s with a larger population), tourism-related income is a major reason why Florida’s government can afford to do without a state income tax.
This morning, the CFTOD released a lengthy report reviewing Reedy Creek’s governance, buttressed by expert analyses on governance structure, accounting, and urban planning. It’s obviously an effort to enter the public debate (and perhaps the litigation) by detailing all of the ways in which Reedy Creek was a captive creature of Disney. The catchiest parts address how Disney engaged in what we’d recognize as bribery of Reedy Creek employees, if we didn’t already know that the point of Reedy Creek was to serve the interests of Disney and only the interests of Disney.
That brings us back to the fundamental question: Was doing away with Reedy Creek good policy? Certainly, after half a century, it was no longer needed to incentivize Disney to invest in Florida, and Disney can hardly complain that the state reneged on a deal that lasted for 52 years. But the jury will be out for some time on whether CFTOD is actually an improvement on letting Disney do whatever it wants.
The question of political economy, however, is a distinct one. Nobody seriously doubts that the legislature’s getting rid of Reedy Creek was triggered by Disney’s public spat with DeSantis and the legislature over the Florida law limiting sexual instruction of very young children. Given Eleventh Circuit and Supreme Court law, and given the fact that Reedy Creek was a public privilege rather than a private right, it remains contested whether that amounts to prohibited retaliation against political activity, but it surely reflects a response to political activity. Conservatives rightly dislike that when it happens (as routinely it does) in places such as California, Illinois, and New York.
The most sympathetic argument in favor of the termination of Reedy Creek by DeSantis and the legislature is that the education-bill controversy revealed the danger to Florida in Disney’s implicit threat (one consistent with similar threats to state self-government in recent years) to use its economic leverage to force the state to repeal a law favored by its voters. Woke capital flourishes in the absence of competition, and republicanism counsels against the state giving competitive advantages including the privileged exercise of state power to those who will be empowered to use those advantages to diminish the power of ordinary citizens to govern themselves. When somebody points a gun at your head, it has a clarifying effect on your view of whether they’re the sort of person who should have a gun.
In other words: Disney has the same right as any business to public comment. But — like Major League Baseball when it wields the power of its exemption from federal antitrust laws to try to dictate state voting rules — it does not have a right to have the government help it attack the people’s power to set education policy. Even more so than the economic functioning of a deregulatory district, that is a big-picture question. It suggests that states should think harder before political controversies arise about what they are empowering large private institutions to do, not with the money of their shareholders, but with public money and public power.