Keep government out of
economic development

Sounding Board Editorial #3 (February 17, 2008)

Dennis Foster

     Here is the third, in this ongoing series.  It is nice to use this soap box to preach a little free market economics.  The editorial ran on February 17.

Not a week goes by that we don’t hear about some new government program that is going to improve our lives.  I am usually skeptical about these efforts.  This week the county board of supervisors expressed interest in increasing its bureaucracy to include “economic development,” a course which Flagstaff has also been pursuing.  Aside from the huge potential for waste and mismanagement, my question is, “Why?”  What is the rationale for using taxpayer dollars to fund this kind of endeavor?

The usual response is that these efforts will generate higher paying jobs.  But, why is that the role of our city and county governments?  Quite simply, it isn’t.  Using government for these kinds of purposes should raise some moral and ethical red flags.  Government has one unique characteristic that distinguishes itself from the market – we are coerced into complying with its decisions, and to pay the taxes it assesses.

Using government to improve the public good should be a difficult task, since there is virtually no end to how many projects that can be dreamt up, be it an auto mall, or a convention center, or an economic development agency.  Let those who are most likely to benefit from these kinds of projects fund and promote them.  Indeed, it appears that the city’s agenda in this regard is to attract only a particular type of business to town, making the use of taxpayer money even more indefensible.

Dennis Foster has a Ph.D. in economics, teaches at the university level and is an avid Grand Canyon hiker.

The editorial that ran in the paper, on this topic, basically complained about the county wanting to duplicate the city's efforts at economic development.  Yikes!  There used to be a group called GFEC (Greater Flagstaff Economic Council) that was a public-private entity which pursued economic development.  The city decided to end its participation in this group and to follow its own economic development agenda.  To me, that means some kind of distorted focus on "green business."  Using tax money for this purpose is astounding, and, yet, seems to be done with little or no opposition.  It seems to me an excellent example of Milton Friedman's argument that people don't organize to promote the general interest.  They only organize to promote the special interest.

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