Voice For Liberty

Tag: Government planning

  • Wichita/Sedgwick County Community Investment Plan survey

    A survey created for the Wichita/Sedgwick County Community Investment Plan has numerous problems and seems designed to satisfy the goals of government officials and planners instead of citizens.

    The process, titled “Community Investments Plan … a Framework for the Future” is the result of an initiative of Wichita Mayor Carl Brewer made during his “State of the City” address in January. 500 randomly selected people in Sedgwick County have been invited to attend, at least to start, a series of four meetings held evenings. The first meeting was last night. Twelve of the invited participants attended.

    As part of the process, participants will help develop a survey that will be administered to 25,000 residents in January. A draft of the survey may be viewed at Wichita/Sedgwick County Community Investment Plan Survey.

    There are a number of problems with the survey. For many of the questions, the only possible responses are “Strongly Disagree,” “Disagree,” “Agree,” and “Strongly Agree.” There is no possibility for answering “Don’t know,” “Need more information,” or something like that.

    The introduction to the section of questions titled “Global Economy and the Strength of Community” reads “We must make some difficult choices about how best to invest limited resources to strengthen the local economy and to improve quality of life today and for future generations. The outlook for the future depends in part on the willingness of the community to pull together and respond to global challenges.”

    Who does the opening “We” refer to? Individuals, corporations, small business firms, churches, or government? Each operates from a different investment perspective, I think we can agree.

    Then, there’s the statement that the “community” must “pull together.” Again, the term “community” is so vague as to be nearly meaningless. And “pull together”: Does that mean people voluntarily forming business firms, charities, or mutual aid societies? Or does it mean government?

    Another question: “Local government, the school district, community organizations and the business community should work together to create an investment climate that is attractive to business.”

    The meaning of an attractive investment climate means different things to different people. Some people want an investment climate where property rights are respected, where government refrains from meddling in the economy and transferring one person’s property to another. An environment free from cronyism, in other words. But the Wichita way is, unfortunately, cronyism, where government takes an active role in managing economic development. We in Wichita never know when our local government will take from us to give to politically-favored cronies, or when city hall will set up and subsidize a competitor.

    Another statement that survey respondents are asked to agree or disagree with: “The growing divide between citizens is one of the most important threats to the well-being of our community and nation.”

    Is there, in fact, a “growing divide?” And if there is, what is the cause? The growth of government leads directly to the destruction of civil society, that being where people cooperate voluntarily to solve problems and create beneficial institutions. Civil society is being replaced with the political society, where someone else makes decisions for you, notwithstanding efforts like this survey.

    When we see the city council awarding no-bid contracts to their campaign contributors — contracts that, when put to competitive bid, come in at lower cost: This is what creates a divide in our community.

    When we see a council member receive thousands in campaign contributions from an out-of-state company right as he is about to make a controversial vote that means millions to that company: This destroys civil society and creates divides.

    There is an entire section of statements that start with “Local government should use public resources …” Instead of the euphemism “public resources,” why not call it what it is: Taxpayer money. Your money.

    There are three questions relating to the subsidy program at the Wichita airport. An example is “I’m willing to pay increased taxes or fees to support investment … that uses public dollars to reduce the cost and increase the number of commercial flights at Mid-Continent Airport.”

    This is an example of a question where the premise is false. Since the subsidy programs have been in place, the number of flights from the Wichita airport has declined, not increased. See Wichita flight options decrease, despite subsidies and Wichita airfare subsidy: The negative effects.

    Monthly departures from WichitaMonthly departures from the Wichita airport

    At least the final section of questions is prefaced with whether people are willing to pay more taxes or fees in order to support spending. But for most of the survey, situations are presented without regard for cost. An example is “The community should improve public transportation by making bus travel faster and more convenient including evening and weekend service.” How could anyone be against that, especially when senior citizens are mentioned, as in one question?

    But if survey respondents were told that most bus systems, including Wichita’s, receive only about 20 percent of their revenue through the farebox, and that taxpayers pay the rest, how might they respond then? And how many people are aware of the massive taxpayer subsidies — excuse me, “public resources” — that are required?

    Overall, the survey appears to be designed to bring people to conclusions the survey sponsors want, or provide answers that can be interpreted in they way they want. Not defining terms like “community” and an “investment climate that is attractive to business” allow the survey sponsor to create their own interpretation of the results.

    And who is the survey sponsor? A collaboration between local government and the Hugo Wall School of Urban and Public Affairs at Wichita State University. This academic unit exists to produce future generations of government planners, and they’ll all want jobs. City hall and the county building are full of politicians and bureaucrats that, with few exceptions, seek to expand their influence, budgets, and power.

    When we put professional planners and bureaucrats in charge of a survey designed to gauge attitudes towards the desirability of planning — is the answer not predetermined? It’s not that the planners are dishonest people. But they have a vested economic and professional interest in seeing that we have more government planning, not less.

    Perhaps a program like this would better be administered by a market research firm, whose goal and interest would be to find the truth, regardless of the wishes of the client.

    But really, there is a very simple way for government to get the answers it is seeking. Joseph Ashby said it well on his radio program: If government wants to know how people want their money spent, it should let them spend their own money.

    Wichita/Sedgwick County Community Investment Plan Survey

  • Special interests will capture south-central Kansas planning

    Special interest groups are likely to co-opt the government planning process started in south-central Kansas as these groups see ways to benefit from the plan. The public choice school of economics and political science has taught us how special interest groups seek favors from government at enormous costs to society, and we will see this at play over the next few years.

    Sedgwick County has voted to participate in a HUD Sustainable Communities Regional Planning Grant. While some justified their votes in favor of the plan because “it’s only a plan,” once the planning process begins, special interests plot to benefit themselves at the expense of the general public. Once the plan is formed, it’s nearly impossible to revise it, no matter how evident the need.

    An example of how much reverence is given to government plans comes right from the U.S. Supreme Court in the decision Kelo v. New London, in which the Court decided that government could use the power of eminent domain to take one person’s property and transfer it to someone else for the purposes of economic development. In his opinion for the Court, Justice Stevens cited the plan: “The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community.” Here we see the importance of the plan and due reverence given to it.

    Stevens followed up, giving even more weight to the plan: “To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment.”

    To Stevens, the fact that the plan was comprehensive was a factor in favor of its upholding. The sustainable communities plan, likewise, is nothing but comprehensive, as described by county manager Bill Buchanan in a letter to commissioners: “[the plan will] consist of multi-jurisdictional planning efforts that integrate housing, land use, economic and workforce development, transportation, and infrastructure investments in a manner that empowers jurisdictions to consider the interdependent challenges of economic prosperity, social equity, energy use and climate change, and public health and environmental impact.”

    That pretty much covers it all. When you’re charged with promoting economic prosperity, defending earth against climate change, and promoting public health, there is no limit to the types of laws you might consider.

    Who will plan?

    The American Planning Association praised the Court’s notice of the importance of a plan, writing “This decision underscores the importance for a community to have a comprehensive development plan formulated through a democratic planning process with meaningful public participation by everyone.”

    But these plans are rarely by and for the public. Almost always the government planning process is taken over and captured by special interests. We see this in public schools, where the planning and campaigning for new facilities is taken over by architectural and construction firms that see school building as a way to profit. It does not matter to them whether the schools are needed.

    Our highway planning is hijacked by construction firms that stand to benefit, whether or not new roads are actually needed.

    Our planning process for downtown Wichita is run by special interest groups that believe that downtown has a special moral imperative, and another group that sees downtown as just another way to profit at taxpayer expense. Both believe that taxpayers across Wichita, Kansas, and even the entire country must pay to implement their vision. As shown in Kansas and Wichita need pay-to-play laws the special interests that benefit from public spending on downtown make heavy political campaign contributions to nearly all members of the Wichita City Council. They don’t have a political ideology. They contribute only because they know council members will be voting to give them money.

    In Wichita’s last school bond election, 72 percent of the contributions, both in-kind and cash, was given by contractors, architects, engineering firms and others who directly stand to benefit from new school construction, no matter whether schools are actually needed. The firm of Schaefer Johnson Cox Frey Architecture led the way in making these contributions. It’s not surprising that this firm was awarded a no-bid contract for plan management services for the bond issue valued at $3.7 million. This firm will undoubtedly earn millions more for those projects on which it serves as architect.

    The special interest groups that benefit from highway construction: They formed a group called Economic Lifelines. It says it was formed to “provide the grassroots support for Comprehensive Transportation Programs in Kansas.” Its motto is “Stimulating economic vitality through leadership in infrastructure development.”

    A look at the membership role, however, lets us know whose economic roots are being stimulated. Membership is stocked with names like AFL-CIO, Foley Equipment Company, Heavy Constructors Association of Greater Kansas City, Kansas Aggregate & Concrete Associations, Kansas Asphalt Pavement Association, Kansas Contractors Association, Kansas Society of Professional Engineers, and PCA South Central Cement Promotion Association. Groups and companies like these have an economic interest in building more roads and highways, whether or not the state actually needs them.

    The planners themselves are a special interest group, too. They need jobs. Like most government bureaucrats, they “profit” from increasing their power and sphere of influence, and by expansion of their budgets and staffs. So when Sedgwick County Commissioner Jim Skelton asks a professional planner questions about the desirability of planning, what answer does he think he will get? It’s not that the planners are not honest people. But they have a vested economic and professional interest in seeing that we have more government planning, not less.

    And we have evidence that planners watch out for themselves. It is not disputed that this planning grant benefits Regional Economic Area Partnership (REAP). Sedgwick County Commissioner Richard Ranzau says that John Schlegel, Wichita’s Director of Planning, told him that “acceptance of this grant will take REAP to another level, because right now they are struggling, and this will help plot the course for REAP.” He said that REAP, which is housed at the Hugo Wall School of Public Affairs at Wichita State University, needs to expand its role and authority in order to give it “something to do.”

    We see that REAP is another special interest group seeking to benefit itself. In this case, our best hope is that REAP engages in merely make-work, that the plan it produces is put on a shelf and ignored, and that the only harm to us is the $1.5 million cost of the plan.

    By the way, did you know that Sedgwick County Commissioner Dave Unruh, who voted in favor of the plan that benefits REAP, is now chairman of REAP? Special interest groups know how to play the political game.

  • Wichita Mayor Carl Brewer on role of government

    When President Barack Obama told business owners “You didn’t build that,” it set off a bit of a revolt. Those who worked hard to build businesses didn’t like to hear the president dismiss their efforts.

    Underlying this episode is a serious question: What should be the role of government in the economy? Should government’s role be strictly limited, according to the Constitution? Or should government take an activist role in managing, regulating, subsidizing, and penalizing in order to get the results politicians and bureaucrats desire?

    Historian Burton W. Folsom has concluded that it is the private sector — free people, not government — that drives innovation: “Time and again, experience has shown that while private enterprise, carried on in an environment of open competition, delivers the best products and services at the best price, government intervention stifles initiative, subsidizes inefficiency, and raises costs.”

    But some don’t agree. They promote government management and intervention into the economy. Whatever their motivation might be, however it was they formed their belief, they believe that without government oversight of the economy, things won’t happen.

    But in Wichita, it’s even worse. Without government, it is claimed that not only would we stop growing, economic progress would revert to a previous century.

    Mayor Carl Brewer made these claims in a 2008 meeting of the Wichita City Council.

    In his remarks (transcript and video below), Brewer said “if government had not played some kind of role in guiding and identifying how the city was going to grow, how any city was going to grow, I’d be afraid of what that would be. Because we would still be in covered wagons and horses. There would be no change.”

    When I heard him say that, I thought he’s just using rhetorical flair to emphasize a point. But later on he said this about those who advocate for economic freedom instead of government planning and control: “… then tomorrow we’ll be saying we don’t want more technology, and then the following day we’ll be saying we don’t want public safety, and it won’t take us very long to get back to where we were at back when the city first settled.”

    Brewer’s remarks are worse than “You didn’t build that.” The mayor of Wichita is telling us you can’t build that — not without government guidance and intervention, anyway.

    Many people in Wichita, including the mayor and most on the city council and county commission, believe that the public-private partnership is the way to drive innovation and get things done. It’s really a shame that this attitude is taking hold in Wichita, a city which has such a proud tradition of entrepreneurship. The names that Wichitans are rightly proud of — Lloyd Stearman, Walter Beech, Clyde Cessna, W.C. Coleman, Albert Alexander Hyde, Dan and Frank Carney, and Fred C. Koch — these people worked and built businesses without the benefit of public-private partnerships and government subsidy.

    This tradition of entrepreneurship is disappearing, replaced by the public-private partnership and programs like Visioneering Wichita, sustainable communities, Greater Wichita Economic Development Coalition, Regional Economic Area Partnership (REAP), and rampant cronyism. Although when given a chance, voters are rejecting cronyism.

    We don’t have long before the entrepreneurial spirit in Wichita is totally subservient to government. What can we do to return power to the people instead of surrendering it to government?

    Wichita Mayor Carl Brewer, August 12, 2008: You know, I think that a lot of individuals have a lot of views and opinions about philosophy as to, whether or not, what role the city government should play inside of a community or city. But it’s always interesting to hear various different individuals’ philosophy or their view as to what that role is, and whether or not government or policy makers should have any type of input whatsoever.

    I would be afraid, because I’ve had an opportunity to hear some of the views, and under the models of what individuals’ logic and thinking is, if government had not played some kind of role in guiding and identifying how the city was going to grow, how any city was going to grow, I’d be afraid of what that would be. Because we would still be in covered wagons and horses. There would be no change.

    Because the stance is let’s not do anything. Just don’t do anything. Hands off. Just let it happen. So if society, if technology, and everything just goes off and leaves you behind, that’s okay. Just don’t do anything. I just thank God we have individuals that have enough gumption to step forward and say I’m willing to make a change, I’m willing to make a difference, I’m willing to improve the community. Because they don’t want to acknowledge the fact that improving the quality of life, improving the various different things, improving bringing in businesses, cleaning up street, cleaning up neighborhoods, doing those things, helping individuals feel good about themselves: they don’t want to acknowledge that those types of things are important, and those types of things, there’s no way you can assess or put a a dollar amount to it.

    Not everyone has the luxury to live around a lake, or be able to walk out in their backyard or have someone come over and manicure their yard for them, not everyone has that opportunity. Most have to do that themselves.

    But they want an environment, sometimes you have to have individuals to come in and to help you, and I think that this is one of those things that going to provide that.

    This community was a healthy thriving community when I was a kid in high school. I used to go in and eat pizza after football games, and all the high school students would go and celebrate.

    But, just like anything else, things become old, individuals move on, they’re forgotten in time, maybe the city didn’t make the investments that they should have back then, and they walk off and leave it.

    But new we have someone whose interested in trying to revive it. In trying to do something a little different. In trying to instill pride in the neighborhood, trying to create an environment where it’s enticing for individuals to want to come back there, or enticing for individuals to want to live there.

    So I must commend those individuals for doing that. But if we say we start today and say that we don’t want to start taking care of communities, then tomorrow we’ll be saying we don’t want more technology, and then the following day we’ll be saying we don’t want public safety, and it won’t take us very long to get back to where we were at back when the city first settled.

    So I think this is something that’s a good venture, it’s a good thing for the community, we’ve heard from the community, we’ve seen the actions of the community, we saw it on the news what these communities are doing because they know there’s that light at the end of the tunnel. We’ve seen it on the news. They’ve been reporting it in the media, what this particular community has been doing, and what others around it.

    And you know what? The city partnered with them, to help them generate this kind of energy and this type of excitement and this type of pride.

    So I think this is something that’s good. And I know that there’s always going to be people who are naysayers, that they’re just not going to be happy. And I don’t want you to let let this to discourage you, and I don’t want the comments that have been heard today to discourage the citizens of those neighborhoods. And to continue to doing the great work that they’re doing, and to continue to have faith, and to continue that there is light at the end of the tunnel, and that there is a value that just can’t be measured of having pride in your community and pride in your neighborhood, and yes we do have a role to be able to help those individuals trying to help themselves.

  • Kansas counties decline sustainable communities planning

    Two of the five Kansas counties that were asked to participate in a sustainable communities planning grant have decided not to join the effort. Of the five counties (Sedgwick, Butler, Reno, Harvey and Sumner), Butler and Sumner county commissioners voted against participation.

    The REAP sustainable communities planning process is designed to, in the words of REAP, “create a long-term regional plan for ensuring the health and productivity of our local economy. The grant will support community engagement to identify common values and goals, followed by local and regional efforts to enhance economic development, connect people with jobs, reduce housing and transportation costs, ensure public safety, and use of limited public funds efficiently in the years ahead.”

    Critics of government planing processes such as this are concerned that the planning process would subject us to additional control by the federal government. These are the so-called strings that are thought to accompany federal grants.

    (For those who are interested in what strings look like, here’s an example of one that is relatively innocuous. A HUD document titled Program Policy Guidance OSHC-2012-01 explains “Applicants that reach a certain qualifying score under the Regional Planning Grant Program or the Community Challenge Grant Program will receive PSS designation. PSS designation provides your entity access to bonus points for selected other HUD grant programs, technical assistance, and other capacity building opportunities that will strengthen future efforts to apply to the program.” REAP has been awarded this status, as it complied with this “string.”)

    When the Wichita City Council deliberated its endorsement of and participation in this program, Council Member James Clendenin (district 3, southeast and south Wichita), asked a series of questions of Joe Yager, chief executive officer of REAP, as to whether these concerns were true. Yager said no, there are no strings accompanying the grant. But what about after the planning process is over in three years? Will the plan be forced upon us, Clendenin asked?

    Yager answered no, that local governing bodies would have to vote to implement any of the ideas or programs that resulted from the plan. Nothing will be forced upon us, nothing is mandated, he said. We wold simply have a “toolkit” of things to use.

    This view or attitude — that local elected officials will protect us from the harmful elements that will emerge from the plan — is dangerously naive. First, in his short time in office, Clendenin has regularly voted for expansions of government planning, power, and spending. He doesn’t stand out from most other council members, not even the Republican members (except for one), as they also regularly vote for these things.

    Second, we know that after the plan is complete there will be the argument that since we have the plan, that since we spent three years and $2.2 million on the process, we might as well go ahead and implement it.

    Then, there will be the future grants and undoubtedly increased local spending required to implement the plan. There is now research that looks at the effect of federal grants on future local spending. In their research paper titled Do Intergovernmental Grants Create Ratchets in State and Local Taxes? Testing the Friedman-Sanford Hypothesis economists Russell S. Sobel and George R. Crowley concluded this: “Federal grants often result in states creating new programs and hiring new employees, and when the federal funding for that specific purpose is discontinued, these new state programs must either be discontinued or financed through increases in state own source taxes.”

    The authors cautioned: “Far from always being an unintended consequence, some federal grants are made with the intention that states will pick up funding the program in the future.” See Federal grants increase future local spending.

    Sedgwick County Commissioner Richard Ranzau has researched the sustainable development movement, and has written a paper explaining what he found.

    Randal O’Toole, Senior Fellow at the Cato Institute, has written extensively on government planning, especially regarding land use and transportation. His op-ed on this topic follows:

    The vast majority of Americans, surveys say, aspire to live in a single-family home with a yard. The vast majority of American travel — around 85 percent — is by automobile. Yet the Obama administration thinks more Americans should live in apartments and travel on foot, bicycle, or mass transit.

    To promote this idea, the administration wants to give the south central Regional Economic Area Partnership (REAP) the opportunity to apply for a $1.5 million grant to participate in “sustainable communities.” Also sometimes called “smart growth,” the ideas promoted by these programs are anything but sustainable or smart. (As members of REAP, the governing bodies for both Wichita and Sedgwick County endorsed this grant.)

    The urban plans that come out of these kinds of programs typically call for:

    • Redesigning streets to increase traffic congestion in order to discourage people from driving;
    • Increasing subsidies to transit, bike paths, and other “alternative” forms of travel even though these alternatives are used by few people;
    • Denying owners of land on the urban fringes the right to develop their property in order to make single-family housing more expensive;
    • Subsidizing high-density, developments that combine housing with retail shops in the hope that people will walk to shopping rather than drive;
    • Rezoning neighborhoods of single-family homes for apartments with zoning so strict that, if someone’s house burns down, they will have to replace it with an apartment.

    My former hometown of Portland, Oregon has followed these policies for two decades, and the results have been a disaster. In their zeal to subsidize transit and high-density developments, the region’s officials have taken money from schools, libraries, fire, and police, leaving those programs starved and in disarray.

    Since 1980, Portland has spent more than $3 billion building light-rail lines. Far from improving transit, the share of commuters taking transit to work has fallen from 9.8 percent in 1980 to 7.5 percent today, mainly because the region cut bus service to pay for the trains. Traffic congestion quadrupled between 1984 and 2004, which planners say was necessary to get people to ride transit.

    The region’s housing policies made single-family homes so expensive that most families with children moved to distant suburbs where they can afford a house with a yard. Residents of subsidized high-density housing projects drive just about as much as anyone else in the Portland area, and developers have learned to their sorrow that if they follow planners’ guidelines in providing less parking for these projects, they will end up with high vacancy rates.

    Despite these problems, Portland has received lots of positive publicity. The reason for this is simple: by forcing out families with children, inner Portland is left mainly with young singles and childless couples who eat out a lot, making Portland a Mecca for tourists who like exciting new restaurants. This makes Portland a great place to visit, but you wouldn’t want to live there unless you like noisy, congested streets.

    The idea of “sustainable communities” is that planners can socially engineer people into changing their travel behavior by redesigning cities to favor pedestrians and transit over automobiles. Beyond the fact that this is an outrageous intrusion of government into people’s lives, it simply doesn’t work. Such experts as University of California economist David Brownstone and University of Southern California planning professor Genevieve Giuliano have shown that the link between urban design and driving is too weak to make a difference.

    To protect livability and avoid unsustainable subsidies to transit and high-density development, Wichita, Sedgwick County, and other REAP members of south central Kansas should reject the $1.5 million grant offered by the federal government.

  • Wichita speculative industrial buildings

    A new feature of Wichita’s economic development policy grants property tax and sales tax forgiveness for speculative industrial buildings. These are buildings built without having a tenant in place. The proposed plan had a formula that grants a higher percentage of tax forgiveness as building size increases, but the council eliminated that and voted a 100 percent tax abatement for all buildings larger than 50,000 square feet.

    Given tax costs and industrial building rents, this policy gives these incentivized buildings a cost advantage of about 20 percent over competitors. That’s very high, and makes it difficult for existing buildings to compete. Probably no one will build these buildings unless they qualify for and receive this incentive.

    The city hopes that these incentivized buildings will generate new jobs in Wichita. But there appears to be nothing in the policy that prevents existing companies in Wichita from moving to these buildings.

    Will the owners of speculative buildings rent only to companies newly moving to Wichita, or will they rent to whoever is willing to pay? And will Wichita companies want to move to a new building with cheaper rent? This policy has the risk of simply moving jobs from one location to another, creating no new jobs. All it does is harm landlords with existing buildings.

    While the policy was designed to encourage large buildings instead of small, there appears to be no limitation on the size of space landlords can rent. A building 50,000 square feet and larger gets 100 percent tax abatement. But the space could be rented out in smaller parcels to multiple tenants, making it easy to steal local tenants from another landlord.

    Existing industrial landlords in Wichita — especially those with available space to rent — must be wondering why they attempt to stay in business when city hall sets up subsidized competitors with new buildings and a large cost advantage. This is what is meant by unintended consequences.

    Citizens must wonder about equality. A principle of taxation is that everyone pays equally. Tax policy should be applied uniformly to all citizens. But this program creates a special class of landlords and tenants who do not have to bear their full share of the cost of city, county, school district, and state government.

    Then, we must ask ourselves what do we really get for the cost of these incentives. Alan Peters and Peter Fisher wrote an academic paper titled The Failures of Economic Development Incentives, published in Journal of the American Planning Association. A few quotes from the study, with emphasis added:

    Given the weak effects of incentives on the location choices of businesses at the interstate level, state governments and their local governments in the aggregate probably lose far more revenue, by cutting taxes to firms that would have located in that state anyway than they gain from the few firms induced to change location.

    On the three major questions — Do economic development incentives create new jobs? Are those jobs taken by targeted populations in targeted places? Are incentives, at worst, only moderately revenue negative? — traditional economic development incentives do not fare well. It is possible that incentives do induce significant new growth, that the beneficiaries of that growth are mainly those who have greatest difficulty in the labor market, and that both states and local governments benefit fiscally from that growth. But after decades of policy experimentation and literally hundreds of scholarly studies, none of these claims is clearly substantiated. Indeed, as we have argued in this article, there is a good chance that all of these claims are false.

    The most fundamental problem is that many public officials appear to believe that they can influence the course of their state or local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering their expectations about their ability to micromanage economic growth and making the case for a more sensible view of the role of government — providing the foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.

    In 2008 Kansas Legislative Division of Post Audit investigated spending on economic development. It found about the same as did Peters and Fisher.

    There is one incentive that can be offered to all firms: Reduce tax costs for all. The Tax Foundation report from earlier this year should be a shrill wake up call to the city and state that we must change our ways.

    But the action the council is considering today moves us in the opposite direction. These incentives have a cost. Other businesses have to pay. That only increases the motivation and necessity to seek incentives from the city and state, which in turn raises the cost of government and taxes. It’s a spiral that leads to ever-increasing control of economic activity by city hall.

    We in Wichita need to build a dynamic economy in Wichita that is based on free enterprise and entrepreneurship rather than government planning and handouts. This is the way we can have organic and sustainable economic development. We can start on this path today by saying no to this incentive package.

  • Central planning: Are we humans or pawns?

    From LearnLiberty.org, a project of Institute for Humane Studies, a video titled Adam Smith and the Follies of Central Planning.

    “How do you like being told what to do? If someone tells you to do something you find enjoyable or fulfilling, you may not mind. What if you are told to do something contrary to what you would choose for yourself? What if the government was the one telling you to do it? Adam Smith, the philosopher and father of economics, talks about a “man of system,” a central planner who believes he can orchestrate the lives of others, like chess pieces that can be moved at will. As Professor James R. Otteson illustrates, society suffers when the man of system attempts to force his desires on the lives of individuals in ways that contradict their own desires. According to Smith, people are not chess pieces to be moved on a board; they are living and thinking and have their own wills. Individuals pursuing their own desires will constantly be in conflict with the desires of any central planner.”

    In Kansas, we see the rise of central planning in several ways. Officials believe they can plan and guide our economic development efforts, and the results have not been successful.

    Wichita believes it can plan its downtown development and direct taxpayer subsidy to politically-favored developers and campaign contributors, but voters, when given a chance, reject this.

    Then we have the rise of sustainable communities planning, shepherded by the professional planners working at Regional Area Economic Partnership.

    All these are examples of the problem explained in the video.

  • Intentions and results

    From a video produced by LearnLiberty.org, a project of Institute for Humane Studies: “Prof. Don Boudreaux explains what economists mean when they talk about unintended consequences. Essentially, unintended consequences are the large outcomes that emerge from the actions made by many individuals. These outcomes can be good or bad. Therefore, when analyzing various polices, we must be extremely careful to distinguish between intentions and results.”

    Boudreaux concludes the video with this: “We live in this incredibly complex world. When we take any action, we know that the consequences of those actions are going to extend out very far. We can see those consequences only a little bit in front of us. We can’t trace them out fully. And it applies whether or not you believe in big government, tiny government, and medium-sized government. Yes, it’s difficult in many cases to trace out how the incentives will have real-world effects. But that difficulty does not excuse us from the task of pursuing it. We can’t just simply say, oh the intentions of the policymakers are good, therefore we can be assured that the results will be good. That’s cheating. We just can’t do that. That’s very bad public policy.”

    Understanding this is especially important as we in Wichita and the surrounding area prepare to undertake a comprehensive government plan for sustainable communities.

    The video’s page is Unintended Consequences, or click below to view at YouTube.

  • Wichita decides to join sustainable communities planning

    At yesterday’s Wichita City Council meeting, the council took up the issue as to whether the city would participate in the REAP sustainable communities planning process. All council members except Wichita City Council Member Michael O’Donnell (district 4, south and southwest Wichita) voted in favor of participation.

    Critics of government planing processes such as this are worried that the planning process would subject us to additional control by the federal government. These are the so-called strings that are thought to accompany federal grants.

    (For those who are interested in what strings look like, here’s an example of one that is relatively innocuous. A HUD document titled Program Policy Guidance OSHC-2012-01 explains “Applicants that reach a certain qualifying score under the Regional Planning Grant Program or the Community Challenge Grant Program will receive PSS designation. PSS designation provides your entity access to bonus points for selected other HUD grant programs, technical assistance, and other capacity building opportunities that will strengthen future efforts to apply to the program.” REAP has been awarded this status, as it complied with this “string.”)

    James Clendenin (district 3, southeast and south Wichita), asked a series of questions of Joe Yager, chief executive officer of REAP, as to whether these concerns were true. Yager said no, there are no strings accompanying the grant. But what about after the planning process is over in three years? Will the plan be forced upon us, Clendenin asked?

    Yager answered no, that local governing bodies would have to vote to implement any of the ideas or programs that resulted from the plan. Nothing will be forced upon us, nothing is mandated, he said. We wold simply have a “toolkit” of things to use.

    This view or attitude — that local elected officials will protect us from the harmful elements that will emerge from the plan — is dangerously naive. First, in his short time in office, Clendenin has regularly voted for expansions of government planning, power, and spending. He doesn’t stand out from most other council members, not even the Republican members (except for one), as they also regularly vote for these things.

    Second, we know that after the plan is complete there will be the argument that since we have the plan, that since we spent three years and $2.2 million on the process, we might as well go ahead and implement it.

    Then, there will be the future grants and undoubtedly increased local spending required to implement the plan.

    It’s also naive of Clendenin to ask a professional planner like Yager questions about the desirability of planning. What answer does he think he will get? It’s not that the planners are not honest people. But they have a vested economic and professional interest in seeing that we have more government planning, not less.

    One of the things Wichita has agreed to do is to provide in-kind services to the planning consortium in the form of staff time. Wichita City Council Member Michael O’Donnell (district 4, south and southwest Wichita) asked a series of questions determining whether some work might go unperformed as staff members devote time to the planning process.

    John Schlegel, Wichita director of planning, assured him no, that no work would go undone as a result of staff members taking on new responsibilities as part of the city’s in-kind contribution.

    Two years ago a similar issue arose in Sedgwick County, where staff time was devoted to the oversight of the Intrust Bank Arena. At the time I reported this: “Sedgwick County Commissioner Dave Unruh told the Wichita Eagle that the county did not hire any new staff to perform work that has an estimated value of $2.6 million. My question is this: Is this evidence that there was $2.6 million of slack time in county employee’s schedules? How were they able to get this vast amount of work accomplished? Perhaps after the arena work that has occupied $2.6 million of staff time is complete, we could hire out this staff to earn revenue for the county, as it seems they will have time on their hands.”

  • Special interest groups capture government

    As Wichita and the surrounding region start to develop a government plan to manage our future, we have to be vigilant to ensure that the process is not co-opted or appropriated by special interest groups that see the planning process as a way to profit at the expense of everyone else. Unfortunately, the average person has very little motive to stay informed. The costs are dispersed and small on an individual basis, but the benefits are concentrated and large to special interest groups that organize themselves to benefit from government spending. This creates a dynamic where the special interest groups almost win at the expense of everyone else. The following excerpts from chapter 3 of Government failure: a primer in public choice by Gordon Tullock, Arthur Seldon, and Gordon L. Brady help explain.

    Organized Lobbying

    Public choice is more difficult because of the existence of organized lobbying and pressure groups. This practice is more visible in the United States than in the United Kingdom. … In discussing the organization of political pressure groups, the primary point is that, on the whole, investing a considerable amount of time or money pursuing activities that will have little effect on me personally is unwise. At the University of Arizona, many of my colleagues talk about political issues. Yet the issues that lead them to organize in order to bring pressure on the state government of Arizona or the federal government in Washington have direct effects on the university or on their working conditions.

    This problem was formally analyzed by Mancur Olson, who pointed out that, on the one hand, when a relatively small number of people are heavily affected by a collective activity, organizing is in their interest. This rule applies for several reasons. First, individuals in the group will either benefit a good deal if the political action is in their favor or be injured a good deal if it is against them. Second, because there are only a few of them, organizing is relatively easy (low transactions costs) for them.

    On the other hand, if the collective decision affects a large number of people but represents only a small amount to each of the group, the converse applies. Each member of this large group would find only minor effects (either costs or benefits) from whatever is done. A large number of people experiencing a small loss are difficult to organize because each could reasonably think that his or her contribution to the joint lobby would make little difference in the likely success of the action. Hence, in such circumstances the individual avoids making a contribution.

    Consider the following example. Suppose the proceeds of a tax of five pence levied on every citizen of Britain are to be given to the authors who have recently written learned pamphlets for the Institute of Economic Affairs. One would expect the authors would be very interested in this proposal, which, after all, for each author would be a lot of money. Hence, they would seek to bring pressure on the House of Commons to pass it.

    Because the cost to the individual citizen is only five pence, the citizen would be foolish to allocate personal resources to prevent passage. Simply complaining to his or her member of Parliament might entail a greater burden than the loss of the five pence. In practice, of course, this tax to benefit Institute of Economic Affairs authors, although easy to understand, is not likely to be successful. Although it is a simple transfer from a large number of voters to a few authors, the newspapers would, no doubt, create a public outcry that would prevent its adoption.

    Laws or regulations that have this characteristic of diffuse costs and concentrated beneficiaries do sometimes become law, perhaps because the effect is disguised by superficially plausible propaganda or rationalizations developed by the pressure group. Consider the following example. At one time the United States had a tariff to protect the manufacturers of the chin rests for violins. Only one company employing four or five people made the chin rests. For violin purchasers who had to pay two or three cents more for the violin because of this tariff, the cost was much too small to lobby. Nevertheless, the investment was worthwhile for the manufacturer of the small violin part to testify before the U.S. Senate; no one testified on the side of the violin purchasers against the tariff.

    The argument in defense of the tariff was the potential unemployment of the four or five engaged in manufacturing the chin rest. A tax, even a small tax, on violins to provide a pension for the employees of the company would have failed because, although economically more efficient, it would have been entirely too obvious. …

    If you talk with ordinary citizens who benefit from one of the special-interest lobbies (such as the American Association of Retired People, environmental advocates, sugar producers, or welfare recipients), they present a series of public-interest arguments with every appearance (which I am sure is genuine) of belief. Nevertheless, the private-interest argument leads to the organization of these groups, to the transfer of funds, to the protection of jobs, and to special privileges for special-interest groups. The public-interest arguments normally require that the project itself be designed in such a way that the direct transfer is hidden from the public eye.