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Monday, January 19, 2009

There's a reason so many Steeler fans have left Pittsburgh

Jerry Bowyer has an excellent piece in today's Wall Street Journal on why sports - and taxpayer subsidized sports stadiums - do not lead to broader economic gains (a point we have made over and over).  Bowyer's case in point is Pittsburgh, along with Baltimore and Philadelphia, which despite successful NFL teams and fancy new taxpayer-funded stadiums - other with millions in other "economic development"/corporate welfare subsidies - continue to lose population and jobs.

A U.S. Census report just out shows that Pittsburgh's population has just been surpassed by Toledo, Ohio. Mayor Luke Ravenstahl, 28, the Burg's wunderkind without the wunder, responded this week to the news. He isn't interested in repealing the special tax breaks for favored businesses the city uses to tamp down calls for pro-growth tax cuts, or in demanding more accountability from a school system that spends $18,000 per-child every year. And he isn't talking about repealing a steep parking tax that socks commuters. He wants a recount from the Census Bureau.

But Pittsburgh has lost half of its population since the 1950s, the decade in which the city imposed its first individual income tax. That was the peak. Since then, each new tax designed to fund public works to "keep our young people here" spurs more and more people to call for a moving van.

Maybe America should take a look at Baltimore, Philadelphia and Pittsburgh before getting behind Mr. Obama's plan to use public-works projects to lead us out of economic morass.


Tom Martin said...

I used to live in the Burg. We used to be the third largest corporate HQ on the planet - today?
Not on the radar.
Barrak need not repeat the failed policies of tax and spend - go a few blocks away from the new (as I understand it the old stadium is still not paid off) stadium into the North side and see how well decades of big government policies have driven anyone with the ability to leave out of the city into the suburbs.

Elizabeth A. Male said...

Frederic Bastiat addressed this error of reason in "The Seen and the Unseen," originally published in 1848. With respect to public works, he said:

"5. Public Works


Nothing is more natural than that a nation, after making sure that a great enterprise will profit the community, should have such an enterprise carried out with funds collected from the citizenry. But I lose patience completely, I confess, when I hear alleged in support of such a resolution this economic fallacy: "Besides, it is a way of creating jobs for the workers."

The state opens a road, builds a palace, repairs a street, digs a canal; with these projects it gives jobs to certain workers. That is what is seen. But it deprives certain other laborers of employment. That is what is not seen.

Suppose a road is under construction. A thousand laborers arrive every morning, go home every evening, and receive their wages; that is certain. If the road had not been authorized, if funds for it had not been voted, these good people would have neither found this work nor earned these wages; that again is certain.

But is this all? Taken all together, does not the operation involve something else? At the moment when M. Dupin*9 pronounces the sacramental words: "The Assembly has adopted, ...." do millions of francs descend miraculously on a moonbeam into the coffers of M. Fould*10 and M. Bineau?*11 For the process to be complete, does not the state have to organize the collection of funds as well as their expenditure? Does it not have to get its tax collectors into the country and its taxpayers to make their contribution?

Study the question, then, from its two aspects. In noting what the state is going to do with the millions of francs voted, do not neglect to note also what the taxpayers would have done—and can no longer do—with these same millions. You see, then, that a public enterprise is a coin with two sides. On one, the figure of a busy worker, with this device: What is seen; on the other, an unemployed worker, with this device: What is not seen.

The sophism that I am attacking in this essay is all the more dangerous when applied to public works, since it serves to justify the most foolishly prodigal enterprises. When a railroad or a bridge has real utility, it suffices to rely on this fact in arguing in its favor. But if one cannot do this, what does one do? One has recourse to this mumbo jumbo: "We must create jobs for the workers."

This means that the terraces of the Champ-de-Mars*12 are ordered first to be built up and then to be torn down. The great Napoleon, it is said, thought he was doing philanthropic work when he had ditches dug and then filled in. He also said: "What difference does the result make? All we need is to see wealth spread among the laboring classes."

Let us get to the bottom of things. Money creates an illusion for us. To ask for co-operation, in the form of money, from all the citizens in a common enterprise is, in reality, to ask of them actual physical co-operation, for each one of them procures for himself by his labor the amount he is taxed. Now, if we were to gather together all the citizens and exact their services from them in order to have a piece of work performed that is useful to all, this would be understandable; their recompense would consist in the results of the work itself. But if, after being brought together, they were forced to build roads on which no one would travel, or palaces that no one would live in, all under the pretext of providing work for them, it would seem absurd, and they would certainly be justified in objecting: We will have none of that kind of work. We would rather work for ourselves.

Having the citizens contribute money, and not labor, changes nothing in the general results. But if labor were contributed, the loss would be shared by everyone. Where money is contributed, those whom the state keeps busy escape their share of the loss, while adding much more to that which their compatriots already have to suffer...."

We appear ready to embrace the mass delusion of "Public Works" as a cure for the economic ills facing the Commonwealth and the country. Isn't it a shame our elected representatives are so bereft of the ability to reason, that they cannot see the fallacy? May God help us all.