The following article by Linn and Ari Armstrong originally was published February 18 by Grand Junction Free Press.
“The first law of economics is scarcity, and the first law of politics is to disregard the first law of economics.” So opines Thomas Sowell, as quoted in the recently revised book, Common Sense Economics. It is a book Grand Junction officials would do well to read.
Yes, government should protect individual rights by operating police departments and courts. But the city of Grand Junction does far more than keep the peace and protect property rights. It runs a variety of businesses that should be left to the private sector.
At the city’s web page (GJCity.org), the department with the most subcategories listed is Parks and Recreation. This includes aquatics; the city “provides year-around programming at two aquatic facilities.” It includes the Avalon Theatre, Convention Center, and “Cultural Arts,”which offers tax dollars to politically favored art. It includes golf as well as “Recreation,” a department “dedicated to providing high quality, affordable leisure experiences.”
The city also provides ambulance service. This might change; a January 18 media release from the city notes that, after a bidding process, “City Council will decide whether to continue providing the service through the [fire department] or switch to a private provider.”
We have nothing against golf or those other activities. But just because some service is a Good Thing doesn’t mean government should help provide it. Groceries and shoes are good things, but we don’t want the city running the stores that sell them. We like peaches, wine, beer, and movies, but we don’t want the city taking over all the peach orchards, vineyards, breweries, and cinemas.
The first problem with city-run businesses is that some of them are subsidized. So taxpayers who do not use those services, however poor, are forced to subsidize those who do use them, however wealthy. (We don’t think politicians should forcibly transfer wealth from rich to poor, either.)
Traci Wieland, the city’s Recreation Superintendent, said of the city’s services, “Some are self-funding, and some are not;” the question of subsidies “ranges from program to program.” She added, “Any shortfall that we have would obviously come from the general fund of Grand Junction.”
We’re all for charitable contributions to make certain services more widely available. Indeed, Wieland noted that various local businesses already donate funds for some projects. We just don’t think the city should subsidize them with forcibly confiscated tax dollars.
Perhaps the brilliant French economist Frederic Bastiat best addressed the matter: “When we oppose subsidies, we are charged with opposing the very thing that it was proposed to subsidize and of being the enemies of all kinds of activity, because we want these activities to be voluntary and to seek their proper reward in themselves.”
The city’s golf courses are self-funding. Parks and Recreation Director Rob Schoeber said, “All of the salaries pertaining to the golf courses are covered by the golf fees. The courses operate as enterprise accounts. Their budget is separate from the city general fund, and they cover their own capital and operating expenses annually.”
At least the golf courses cover their basic costs. But Schoeber notes that, while “items sold in the golf pro shops are subject to sales tax,” the “golf course land is not subject to property taxes.” That’s a huge competitive advantage over free-market recreational businesses. Government should treat every business equally, not favor some businesses over others with discriminatory taxes.
Even if, hypothetically, a city business paid for itself and paid the same taxes as everyone else, still the city should auction off the business and use the proceeds to reduce people’s tax burden.
The core principle is that the purpose of government is to protect individual rights. When city government instead does things like run golf courses, it muddles its mission and opens the door to all sorts of illegitimate activities.
Moreover, even a self-funding city business is not fully subject to the market forces of profits and loss. Only ownership of the resources, which city officials never experience, can fully provide the incentive to devote those resources to their best use. Maybe the golf courses should be run differently, or maybe they should be converted to some other use entirely. Such decisions are rightly made by people interacting voluntarily on a free market.
Perhaps city councilors should contemplate how they’d feel if the city went into direct competition with their businesses. Members of the council work in the fields of accounting, investing, realty, banking, and security. Should the city open real estate offices, banks, and alarm installation centers? Should the city convert part of the Avalon Theatre to an accounting office that gets special tax breaks?
The city cannot provide services without reducing services offered by others. Resources are scarce. Trying to defy this basic law of economics is like trying to defy the law of gravity. City government should focus on protecting people’s rights, and leave recreation to the free market.
Mike Dial commented February 26, 2011 at 4:10 PM
Ari, the same kind of nonsense is going on here in Montgomery County, Maryland. The county council is forking over $300,000 to keep open a county-owned golf course that is not self-supporting because few use it. The county is also building a theater to be used as a music venue. The cost was originally supposed to be $8 million, but of course with overruns, it’s now over $11 million. I wrote to my county councilwoman to point out that theaters and golf courses that people actually want don’t have to be subsidized by the county. I also reminded her that the county budget is so bad that cuts are being made, even to police and fire departments. She didn’t even bother to reply to me. In the local newspapers, the head of the county council claims that the theater will actually make the county money, so we citizens should not oppose it (!). How do we rein in spending in a deep-blue state like Maryland with idiots like this in power? If you work for a living, like me, you can’t even attend council meetings, which are all during the day.