Local government should serve,
not compete

Sounding Board Editorial #4 (February 24, 2008)

Dennis Foster

     My previous editorial touched on the proper role of government, and I felt that an additional commentary was appropriate.  In part this arose from the discussion we had in our editorial meeting, where the notion that we (Flagstaff) somehow compete with other cities was taken as an axiom of economic reality.  I tried to dissuade my colleagues of this idea, but I don't know if I was successful.  So, a bit more of a pointed argument, below.  The editorial ran on February 24.

There is the idea that “we” are in economic competition with other cities, counties, states and nations.  That idea is false.  Businesses compete with one another, to maximize profits for their owners; cities do not.

For more than two hundred years, economists have understood that what raises our standard of living is the increased specialization of labor, which is used to produce the goods and services that we are relatively good at producing.  We call it the “law of comparative advantage.”  That is why oil is pumped out of the ground in Saudi Arabia, why automobiles are made in Michigan and why tourism businesses flourish In Flagstaff.

Do we really want the city, or county, to pick “selected industries for growth and support?”  I am sure that some cities across the Midwest decided to do just that a few years ago, throwing taxpayer money at the development of ethanol plants.  These “earth friendly” ventures are now being cited as potentially significant contributors of greenhouse gases.  [Whether that will “cause” global warming is,  pardon the pun, still up in the air.]

I don’t want my local governments to “jump start” business ventures, be it an electric car company, a wind power plant, or a biofuel facility that uses pine cones.  If these projects make sense, private capital will direct resources accordingly.

I do want my local governments to get more snow plows, fill more pot holes and find a way to quiet train horns at two o’clock in the morning.

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

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