Friday, April 10, 2009

Dangle Carrots, and Carry a Big Stick

Last week I wrote about the city's stimulus package involving tax rebates to selected developers. This week city council approved the first of these incentive programs--Regent Square. While the developers of the Ashby High Rise continue to get the run around from City Hall, our esteemed leaders are awarding $10 million to a Boston developer.

Increasingly, City Hall is selectively choosing which developers will succeed and which will not. Rather than allow the free market, and the choices of individuals, to determine which projects proceed, City Hall is playing favorites. Greg LeRoy, executive director of GoodJobs First, a national watchdog of public economic subsidies, told the Chronicle:
If these projects are stalling and developers are saying they’re not going to execute them, well, that’s the market and the market has slowed down.

LeRoy correctly added that with the softer demand, this project could do more harm to the economy by increasing capacity at a time that the market has determined such capacity is not needed. The owners of other properties not receiving these special benefits are likely to suffer.

The city offers contradictory reasons for this meddling. In the case of Ashby, it is to "protect neighborhoods". In the case of Regent Square, it is to encourage construction. If the city wishes to encourage development, why is it doing so in such a selective manner?

There is certainly evidence of political pandering in the case of Ashby. Mayor White, who has already announced his intention to run for the United States Senate, receives considerable support from the neighborhoods opposed to Ashby. Regardless, while the city dangles carrots in front of the developer of Regent Square, it continues to brandish a big stick against the developers of Ashby.

The proper purpose of government is the protection of our rights, including property rights. While denying the Ashby developers the right to use their property as they judge best, the city simultaneously violates the rights of other property owners by giving special tax breaks to the developers of Regent Square.

The solution is not more transparency, as some have suggested. The solution is to limit government to its proper functions--in the case of city government, the police and courts. So long as politicians exercise illegitimate powers they will continue to dispense political favors. So long as the city can dictate land-use, or regulate signs, or control business operations, or a myriad other infringements of our rights, they will enact programs that benefit some at the expense of others. And those who have the proper political connections will be the recipients of those favors.

Mayor White has indicated that he plans to continue this policy of political patronage, noting a number of other properties that might be offered incentive packages. And what criteria will he use when selecting which properties to favor, and which to ignore? He has not told us, because he cannot possibly know--it will be determined by the expediency of the moment. As Ayn Rand wrote in "The Pull Peddlers":

The worst aspect of it is not that such power can be used dishonestly, but that it cannot be used honestly. The wisest man in the world, with the purest integrity, cannot find a criterion for the just, equitable, rational application of an unjust, inequitable, irrational principle. The best that an honest official can do is to accept no material bribe for his arbitrary decision; but this does not make his decision and its consequences more just or less calamitous.

And so it is when the city government, or any government, dangles carrots and carries a big stick.

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