November 14, 2009
Greater Buffalo has been declining for nearly fifty years. That’s not easy in a world where many states, cities and countries have thrived and grown during that same period of time. It takes plenty of thought to keep the miserable status quo going in the face of the public’s demand for change.
Buffalo’s political class—those responsible for the decline—have been up to the challenge. First, they are absolutely brilliant at making up rationalizations for the decline that keep the blame from falling onto their well-deserving selves. Here a list of some of their excuses:
• St. Lawrence Seaway
• the weather
• air conditioning
• the Marshall Plan (seriously)
• “free trade” (in quotes because we don’t have free trade)
• corporate greed (as if our corporations are greedier than Florida’s)
• racism (as if we are more racist than North Carolina)
The actual cause of our decline is the excessive consumption of our capital by the political class: high taxes and fees; burdensome regulations, permits and licensing requirements; corporate welfare and the highest union membership in the country; too many government agencies employing too many people making too much money.
The politicians are also adept at what I call faux reform. All resources are scarce and that includes the time, energy and money that citizens have to devote to reform efforts. Also scarce are several intangible resources: media and public attention and historical opportunity. The time for change has to be right.
So then, if citizens back a faux reform effort, this will “crowd out” support for other efforts, and will, in the short run, deter further efforts as unnecessary. In the long run, faux reform will discourage future efforts as a waste of time since the prior effort failed.
Both locally and nationally, there have been in recent decades a myriad of reform efforts aimed at reducing the size of government.
All have failed!
Let’s list a few.
• 1977 Crangle Machine defeated, loses mayor’s office and council to “reformers.”
• 1980 Reagan elected to get the government off our backs.
• 1994 Republican Revolution
• 1999 Reformer Giambra elected
And, over the years, locally, there have been various efforts to downsize legislatures and town councils.
Each and every one of these reform efforts FAILED to make government smaller! In fact, government got bigger.
We must always focus on distinguishing between real change and faux reform and resist the facile trap of faux reform.
The purposes of faux reform are to (a) con the public into thinking that real changes are being made; and (b) preserve the status quo regime: a corporate state run by and for the benefit of the political class.
There are two possible tests for distinguishing between faux reformers and real reformers. First, do they favor proposals that will reduce the government’s consumption of our capital? Second, do they favor returning political power to this region and away from Albany (New York City) and Washington?
The classic faux reform is regionalization. This makes no sense in theory and in practice has failed to cut costs. Most of the costs of government are transfer payments, not administrative costs and our largest governments, state and federal, are already consolidated.
Another example of a faux reform is so-called “downsizing.” I grant that many of the downsizers are sincere but that doesn’t change the fact that it’s a faux reform.
Let me back up and talk about small “r” republicanism, the theory that government power is delegated by the people. That worldview always viewed the legislature as the preeminent branch of government and always distrusted the executive branch as most likely to be the focal point of tyranny or concentrated power.
Now, let’s get back to downsizing. The least expensive part of any government is the legislature. For instance, the state legislature, though quite bloated with patronage jobs, is less than two tenths of one percent of the total budget. The same is true with Congress—less than two tenths of one percent of the federal budget. Peanuts! I assume the same is true with the county and municipal governments but I haven’t done the math.
So, why in the world would anyone think that the solution to our problems is to cut the least expensive but most important branch of government and the one that is closest to the people?
Now, the proposal to downsize the county legislature is particularly annoying. Right now, it is almost impossible to defeat an incumbent county legislature. Before the recent election, I could only count five who lost in the entire history of the legislature since the mid-60’s when it was created. Why? Gerrymandered districts that cross over organic communities. This favors the machine and makes it difficult for community leaders or local business leaders to win. Downsizing the legislature even further will make the districts larger, approaching the size of assembly districts.
How many incumbent assemblymen have lost in the last fifty years? Darn few, maybe two or three. So, downsizing will reduce the competition of elections, increase the power of the machines and reinforce the power of elites and big donors. And they call that reform?
Here’s a better approach. Keep the same number of legislators; end the gerrymandering as Free New York has urged in the past; eliminate pensions and all other benefits for elected officials; and get rid of the obsolete district offices and give them all a blackberry with a published number and email. If you need to meet constituents, make a house call or go to the local diner.
In large towns like Amherst, elect board members by district. That would make elections more competitive and less expensive.
The latest magic bullet for saving Greater Buffalo is running government like a business. (Let’s leave aside the fact that this idea has been around for decades.)
This is a bad idea and bad ideas are dead ends. Government can’t be run like a business because it’s not a business. A business is a private, voluntary entity whose capital value is the property of the owners. Government is a coercive monopoly that raises funds by threatening to throw people in jail if they don’t pay up. It doesn’t matter that the people may not approve of how their funds are spent, or in fact that they strongly disapprove.
Private firms get their funds through voluntary free market transactions. If a business loses money, it comes out of the owner’s pocket. If government loses money, it comes out of the taxpayer’s pocket; the politicians just retire to Florida with big fat pensions. So government can’t be run like a business.
Politicians are not business owners. They do not own the capital value of their enterprises; they merely control the levers of power for a time. Therefore, they tend to exploit that power to maximize their short-term self-interest and that of their allies. This is why governments almost always under-invest in capital and infrastructure. The politicians won’t be around when those bridges crumble. Payroll, benefits and pensions are, however, always fully funded.
The “owners” of government, the public, are not really owners. That’s a myth. If you really own county government, just try to sell your shares and you will be prosecuted for fraud. Since you can’t sell your shares and you have no managerial control over “your company,” you don’t have the incentive that private owners and managers have to be cost-efficient.
Since government property is rarely up for sale, there are no market prices at all for the bulk of public property. That means that there is no way to tell if those resources are being used efficiently. The classic example is the Buffalo waterfront. It has been owned by the government and not up for sale so the market is unable to determine its true worth and value.
The fact that intelligent people cling to this impossible idea of running government like a business suggests to me that they mean it as a metaphor such as “run like the wind” or “beat the stuffing out of them.” However, even at the level of metaphor, it fails. A business spends frugally because it wishes to maximize profits. But it can’t be too frugal or it will lose customers and revenue. A coffee shop that saved money by asking the customers to drink black coffee would quickly lose most of its customers and revenue.
But consider what forces are at play here. There are customers who can choose another restaurant. Then there are the subjective valuations of the customers who trade off price and quality. There is the price system arising from the free exchange of property in the marketplace.
How does this metaphor apply to government? Government doesn’t have customers. It had no competition in the same area. Since it obtains its revenue by taxation, the subjective valuations of its taxpayers are completely unknown to its officials. It is useless to take a poll or a survey. The only way to know a person’s subjective valuations of cost, benefit and price is to observe their free choices. Government can’t do that it or it would cease to be a government and become an entirely different entity, a business firm.
Is laying off three of the six landscapers at a county park a good idea or a bad idea? A restaurant facing the same issue but with respect to table servers would quickly find out, or would know from past experience. At some point, fewer servers means fewer customers and revenue. Only trial and error can tell and the best estimators stay in business while those who guess wrong lose revenue and even their businesses over time. The only way for a county park to replicate the efficiency of a restaurant would be to actually become like a private firm and charge fees to cover all its costs. Even then, without private owners, it would lack the incentive of private business to cut costs and generate a profit.
Private firms try to maximize revenue and profits. Governments make no profits but they do have revenue. Should their goal be to maximize revenue? A cynic would say that is in fact their goal—the revenues of all levels of government seem to increase year after year--but those who want to run government like a business seem to want the government to have less revenue. Again, the analogy to private business is not helpful.
Running government like a business is indeed an intellectual dead end that fails even at the level of metaphor. It is yet another instance of a faux reform. Faux reforms are bad since they crowd out proposals for real change. Real change requires that we reduce the government’s consumption of our scarce capital. Free New York has proposed many ways of doing so, including the elimination of 1403 government agencies, spending cuts of $9.3 billion statewide and $147 million in Erie County, ending corporate welfare and tying public sector wages and benefits to those earned by private sector nonunion workers.
In a larger sense, our prime mission is to educate the public as to the nature of the foul regime responsible for our decline, the corporate state, the insidious partnership of big business, big government and unions to control the government and use it as their own private piggy bank.
In the corporate state, government is not run like a business; business is run like a government! Politically-connected private firms donate huge sums to politicians. In return, they get to use the government to tax citizens for “grants”. They get to use governmental power to excuse taxes the rest of the citizens must pay. Big firms benefit from overregulation that cripples their smaller and newer competitors.
So let’s put aside the schoolboy fantasy of running government like a business and get to work dismantling the corporatist regime which allows businesses to run like governments.