What is the Role of Local Government?
The Quixotic quest to solve economic problems through social engineering continues apace.
Fair warning, this might well be the first in a series of what local governments should - and should not - do.
My friend Jack Rubin and I sat on a panel last night for a discussion of the question of “What is the role of local government?” This was in front of the students of a project called Leadership Park City, a thirty-year-old training opportunity that “identifies, encourages and trains new community leaders, and provides class members a long-term, group-oriented learning opportunity”.
Our situation is particularly interesting, because our “local” government is in charge of Park City, one of, if not THE, premier ski destination in the Rockies. In my mind, that makes Park City government as much a brand oriented corporation as it does a local government.
No doubt that Park City has issues – extremely high home prices, high cost of living, issues attracting and retaining hourly workers (both seasonal and full time), how to maintain the Park City lifestyle (the word “community” was bandied about but never defined) in the teeth of rapid growth and how to deal with the mega-corporations that have turned three sleepy little ski hills into the two largest resorts as measured be skiable acres in North America.
It was an interesting couple of hours.
Jack and I were outnumbered. There were six people on the panel, four of whom were either on the left or moderate, but clearly left leaning. The two of us describe ourselves as classic liberals, aka constitutional conservatives, and as Park City tends to lean from left to far left, the majority of the audience conformed to that demographic.
We failed at the objective of defining what the local government’s role should be, not because the discussion wasn’t of high quality but because the subject is trying to get a grip on half jelled lime Jello. To give you an idea of the wide range of subjects, it ranged from the pros and cons of the city funding the construction pickleball courts to it mandating company paid child/health care and finding a way to help people who can’t afford to live in Park City. For a city government, those two things are on the opposite ends of the “needs” spectrum.
For sure, the panel migrated into two camps – a shocker, I know, one camp, population four, indicated government had to do something even though they weren’t really clear what that “something” was. The other camp, population two, centered on the proposition that government should be very limited in scope whatever they decided to do.
Given that we weren’t very successful in finding either agreement or an answer to the question, I want to remark on a couple of things I noticed:
The lack of recognition of the true root cause of many of Park City’s problems.
The lack of recognition of the fact that Park City’s “issues” are symptoms of the real problem.
I proposed that the true driver of the issues is twofold, the first being the economic concept of scarcity, the second is the concept of moral hazard.
Park City is a scarce commodity. Lots of people want to live here, but there simply isn’t enough to go around. It has limited building space and the desire to protect open spaces has caused even more restriction of available land for building.
In the natural world, there exists something called the “carrying capacity”. The carrying capacity of a biological species in an environment is the maximum population size of the species that the environment can sustain indefinitely, given the food, habitat, water, and other necessities available in the environment. Anybody who has ever farmed or ranched understands this concept because we know about how finite resources limit the number of acres we can plant or the heads of cattle we can graze on a given plot of land.
Carrying capacity in nature can be augmented with artificial modifications – irrigation, fertilizer, insecticides and herbicides in the case of plants and hay, commercial feed, and water wells for livestock – but even then there are limits.
Those processes merely push the resource decline curve to the right, temporarily expanding the capacity. Once these augmentations are ended (because they are too costly or damaging) , the carrying capacity snaps back like a rubber band – and if one continues to load the land with the same amount of plants or livestock, the carrying capacity is sharply reduced over the pre-augmentation levels, and sometimes the land is damaged to the point lifetimes are required for it to return to its natural state.
Carrying capacity implies a real issue, a natural law called “scarcity” - and natural laws are like gravity – it doesn’t matter if you agree with them or even understand them, they still apply equally to everyone. The most absolute and fundamental issue that faces all of mankind is scarcity.
Noted economist Walter E. Williams stated:
“How does one know whether things are scarce? That's easy. When human wants exceed the means to satisfy those wants, we say that there's scarcity. The bounds to human wants do not frequently reveal themselves; however, the means to satisfy those wants are indeed limited. Thus, scarcity creates conflict issues — namely, what things will be produced, how will they be produced, when will they be produced and who will get them? Analyzing those issues represents the heart of microeconomics.”
The fact is, and this is not just me saying this, that government taxing and spending simply cannot outrun or outspend market forces.
The second issue was moral hazard.
It is a fact that the residents of Park City are subsidized by tourists. Approximately 80% of the funds that come into Park City come because of people coming here, and this sets up a massive moral hazard. Moral hazard arises when an economic actor has an incentive to increase their exposure to risk because it does not bear the full costs of that risk. In short, people are far more prone to take risks when they do not bear the consequences.
A common suggestion from the left side of the panel seemed to be “we can afford to tax in order to give/subsidize”, which is why I mentioned the one question government has trouble asking itself – which is this: “Are we making things worse?”
In the long run, almost every solution one panelist proposed would worsen the problem she sought to solve. Literally everything she sought to make more “affordable” through government intervention would make those things more expensive in the long run – subsidizing childcare was an example. This idea is just the student loan crisis in diapers.
Governments create problems because they are the ultimate in moral hazard - they are never subject to the social or economic conditions they create, so their behaviors and decisions have no relationship with the conditions resulting from their “fixes”.
Government has nothing. They can never “help” one person without harming someone else – and because they have to skim a little off the top for themselves, to “help” one person requires them to hurt entire swaths of taxpayers.
There is not a single government program, policy, or action for which you, the taxpayer doesn't pay.
Even if citizens do not directly pay taxes, the pay with a loss of liberty and/or opportunity.
Most progressives I know can’t reason to a logical endpoint, they only reason to a point of emotional satisfaction. Last night was no exception. Many points were pure emotional reasoning because they “care”. I don’t doubt the caring is real, but they will never accept the possibility that what they want to do will likely make things worse. With the current governing ethos in PC, the best role for them is, as I noted last night, is to explain to their constituents the consequences of what they say they want.
Scarcity of resources sets up the either/or question and raises another of the most important free market concepts – choice - and the minute choice enters the picture, so does politics and where you have politics, you have moral hazard.
The left side of the panel decided Park City is different – and I noted that it is certainly different from my home town in Mississippi, but being different doesn’t make it unique any more than it exempts the city government from the laws of economics.
There’s no doubt Jack and I shared the table with good, honest people who passionately believe in their positions - but the fallacy of emotional reasoning is that passion equates to correctness - and it doesn’t.
The fact is there is no such thing as a free lunch and any politician who tells you there is, is a liar. They might as well claim gravity doesn’t exist. The panel’s ideas to just tax the corporations never considered who ultimately pays those taxes - spoiler alert, it ain’t the corporations.
Every action has an equal and opposite reaction – maybe not today or tomorrow, but at some point, the bill comes due.
As our president with the minimally active brain would say, “That’s a fact, Jack.”
Bottom-up government, the preference of conservatives or libertarians, does not start at the level of local government, but rather at the level of the individual. An individual, to the best of one’s ability, has to begin with oneself. In that case, the function of local government is not to assume responsibility from the individual, but rather to encourage, cajole, mentor, nudge ... and at least engage the individual to assume personal responsibility.
It does seem most on the left can’t think past the initial effect of their ‘solutions’