Part One: Drying up the tax fountain
I suspect many people have troubling getting a good grasp of the on-going conservative struggle to prevent large-scale takeover of the economy by the federal government. I think there are two main obstacles to their understanding.
First, the idea of the virtuousness of the market as a regulator and organizer of economic life is difficult to communicate. It’s an abstract idea and it does not correspond well to people’s own experience. In their personal life, people think that when good things happen it’s a because someone (some one) made good decisions. First, it’s Mom, and then, it’s the “leadership” of the many organizations within which they live, schools, churches and especially employing organizations. To an extent, the one is themselves.
In daily life, there are few occasions to reflect upon the fact that the myriad decisions made by anonymous decision-makers, including bad decisions, aggregate into good outcomes. The market processes involved are both too magical-seeming and too abstract.
At any rate, for some reason, schools and universities do a bad job of explaining these processes. Liberal Arts teachers don’t understand them themselves and they are hostile to them. Most of them are born socialists. If you eat the King’s bread long enough, you become a monarchist.
Economics teachers whose job it is to explain the market usually understand and like markets but they don’t teach well. (I think I know why but this is the subject for another essay.) At any rate, they would argue in their own defense, they don’t have the students long enough, in high school or in college, to make much of a difference. Incidentally, I know a very good senior from an expensive university, who says she will no take a single Economics class before she graduates.
The second obstacle to understanding what’s at stake in the current political struggle is that large things are inherently difficult to understand. So, the large numbers – trillions and such – currently being bandied around by both liberals and conservatives with respect to the health care debate don’t speak to many people’s imagination. For another reason, large-scale socio-economic processes are almost invisible.
The difference between 6% unemployment and 10% is of the order of six million people. I don’t know six million people; I just know my neighbors, three of whom lost their jobs recently. (Obviously, the two obstacle to understanding macro-processes overlap: large numbers are incomprehensible and large processes are invisible, in part because only large numbers make they perceptible.)
Small changes taking place before my very eyes, on my street and not far beyond it illustrate better some of my objections to government take-overs of any fraction of the economy.
My city of Santa Cruz, located on the coast of central California has a population of about 40,000. I live near its center with a view on city hall’s back parking lot, one block from the municipal library and one block from the civic auditorium.
The city government of Santa Cruz is colonizing the city to the detriment of the city, the real city, from a sociological standpoint and from the standpoint of the production of wealth. Of, course, I am taking the traditional view that the function of government is to serve everyone else, that government is not a good in itself. Originally, city government is a pretty good way to take fairly decisions that must be taken.
Secondarily, city government provides services. Being of the libertarian tendency of conservatism, it’s not clear to me that it should deliver any services at all. Yet, some services – such as public libraries – have been municipalized (or taken over by counties) for so long and so reasonably well that I don’t wish to fight this battle right now. My purpose is narrower. It has to do with the “how” of municipal services delivery. My theme is that city government does many things badly because it is not subject to competitive forces so that its mistakes are not ever reversed but repeated over and over.
The city government keep taking possession of prime real estate and putting it out of circulation, for economic purposes. This is a bad for the local economy and for the city government’s own ability to provide basic services via taxation.
Across the street from me is a large three-units, Victorian house for formerly drug addicted pregnant women and female former addicts with small children. The shelter is reasonably well run. It’s not much of a neighborhood blight. Formerly, it housed three moderately priced rental units for UC Santa Cruz students.
The house was thoroughly re-modeled three times before it was turned into a shelter. Someone thought that what was good enough for students was not good enough for reformed drug addicts. If private money was used, it’s not of my business. Just making a note of how charity functionaries’ minds work.
Also across the street from me, in another direction is a large shelter for victims of domestic violence. I don’t know what purpose the building served before but, it’s ideally located for rent-paying students and also for rent-paying senior citizens. I am guessing it could easily house fifteen people in comfortable circumstances. Assuming current individual rent to be at minimum $250 per person and per month, the lot should generate more than $45,000 in income each year. Such income, in turn, influences and undergirths the value of the property. Ultimately, the higher the property value, the more it pays in taxes.
The battered women’s center also does not pose many problems as a neighbor because it seems to have low to very low occupancy. It sits on a large corner lot and includes a playground, obviously for the victims’ toddlers. I have not tried to find out hard numbers about the real rate of occupancy because I am sure I would be given the run-around by local social works bureaucrats. I am sure they don’t think the average tax-payer has a right to know. What I can say is that I have never seen any children playing in the shelter’s playground although I have been walking by there several times a week often several times a day, for several years. This particular piece of property is ill-used, for that reason alone. Perhaps, it’s not located close enough to an area of domestic violence to be of much use to anyone. Oops!
Both the ex-drug addicts shelter and the victims of domestic violence shelter are within easy walking distance of the bus depot where any drug can be had, day and night (about six blocks). The two centers are situated ten minutes one way, by car, from the nearest reasonably-priced supermarket and at least a long hour round-trip walking. (Too far with small children.)
Of course, the female inmates of both shelters have the option of a short pleasant walk to the organic store on main street or to the nearby once-a-week farmers’ market for the overprices “health” foods my wife and I would not dream of buying.
Both shelters should probably exist, in some form. There is no reason why they should be located where they are. There are strong reasons why they should not. One reason is that their location helps defeat the purpose for which they were created: helping people who need help. They scream of bureaucratic mindlessness: Let’s put them in an area that’s familiar to us, the bureaucrats must have thought. Nothing else matters.
I have another, stronger objection. Both properties have been taken off the tax roll. In California, taxes increase when a property changes hands. The take-over by some mixture of government and non-profit organizations, reduces to close to zero the probability that these property will be sold and thus become liable to higher taxes. Public entities are reducing their tax base at the same time as they are increasing tax-funded services. It’s the same people, the same mentalities that claim the right to act mindlessly in economic matters that should automatically raise tax revenues and to expand endlessly the roll of tax-eaters.
There used to be a small auto-shop in my area, the only one downtown Santa Cruz. I don’t know if it was making money. I don’t know if it was a successful business. It should have been because it was plum in an area with many seniors who don’t like to have their cars serviced in the boondocks. What replaced the auto-shop makes me suspicious of how it changed hands. In its place now stands a Hope office, yet another organization against misery.
My suspicion arises from the fact that Hope is not much of a job creator. It does not generate wealth that circulates locally and that can be taxed legitimately. I suspect that public resources were used to outbid for this prime location enterprises that would do both.
More on this problem next time.
PS There are no conventional “poor” for Hope to help downtown; rents are too high there.