Government officials: Get out of the economic plotting business

Government officials: Get out of the economic plotting business

by
Wayne Hoffman
December 16, 2011
Wayne Hoffman
Author Image
December 16, 2011
"Every town has self-proclaimed economic gurus who are making judgments about how to use taxpayer dollars to achieve unparalleled levels of economic prosperity."

 

I have an amazing job that lets me travel the state to talk about free markets. During these travels, I get to hear from and talk to numerous local elected officials who truly care about their communities. Unfortunately, many of these officials think they have a supernatural understanding of their local marketplaces and the ability to manipulate these markets to be whatever they want them to be. It really doesn’t matter where I go: Nampa, Boise, Pocatello, Ketchum, Post Falls or Sandpoint. Every town has self-proclaimed economic gurus who are making judgments about how to use taxpayer dollars to achieve unparalleled levels of economic prosperity.

A couple of weeks ago, I witnessed this phenomenon once again in Challis, where local officials are anticipating an $800,000 federally-funded community center project. While the project comes from a congressional appropriations (using the money from the federal government’s printing press), the city and county will be responsible for the ongoing annual maintenance and operations costs of the community center. Forever. That’s a big commitment on the part of local taxpayers. When local officials are asked how much the community center will cost to operate, the answer is no one really knows. But, say local officials, if Challis manages to bring in three groups of 150 people to town to use the community center, the facility will likely break even each year.  By now, you’re wondering how local officials can determine a “breakeven point” when they don’t even know the annual operating costs. And if you know our state’s geography, you’re probably wondering how likely it is to transport any group of 150 to the beautiful but still somewhat isolated mountain town five hours from Boise and more than two hours from Idaho Falls. But these government types now think they’ve got all the smarts when it comes to the state’s tourism industry.

Challis is just an extreme example of economic tinkering that should never occur. In Coeur d’Alene, local officials recently dedicated part of a meeting to a proposal for government-created and subsidized rental housing. The officials spent an inordinate amount of time debating the future of the rental market the prospects for future growth of this market in the city’s economic core. As if they have expertise or clairvoyance on this issue. Even people in the apartment rental industry wish they had the insights of these government officials. Indeed, Nampa is in the middle of a planned development of a downtown so-called “pivot block” from which great economic prosperity will no doubt emanate because government officials have blessed it. Call me a skeptic.

In these travels of mine, city and county officials always ask, “But Wayne, what should we be doing to lure economic development to our towns?” They, of course, feel they’ve been elected to do something. Or at least appear as if they’re doing something. I tell them what I always say: Get out of the way. Lower the tax burden. Eliminate impacts fees (as Middleton did recently). Get rid of the regulatory barriers to new business and the confiscatory tax policies that are injurious to old ones.

If an elected or an appointed board is spending any time at all contemplating the economic viability of rental housing, the tourism industry or widget makers, something has gone horribly wrong.


 

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