The Problem with Economic Development

“Mr. Chairman, I’d like to allot $500 out of my Recreation account to the ‘Snowbirds over Anderson’ event.”


“We have a motion and a second. Is there any discussion? Hearing none, all in favor raise your right hands. Let the minutes show the motion passes unanimously.”

This is a scene we see enacted regularly (with variations) at our local County Council meetings. Why are our elected officials giving taxpayer money to a recreational event instead of to schools, law enforcement, or roads?

This little equation sums up the answer:

Recreational events = tourists = economic stimulus

And that, ladies and gentlemen, is why your tax dollars are going to everything from events like “Balloons over Anderson” to local stimulus programs. They are even considering starting a county bank.

The Problem

So many of our elected officials at every level seem to think that anything is okay, if it is meant to create jobs (never mind if it actually does). This “end justifies the means” mentality has opened the floodgate to an alarming avalanche of harmful legislation. The problem is that most officials – conservatives included – don’t have a basic framework of principles from which they develop solutions.

Overlooked Principle #1: Limited Government

The word “limited” refers not to the size of government, but to its scope. In other words, there are some areas in which government should not be involved, under any circumstances.

Overlooked Principle #2: Free Enterprise

Wealth is created by the private sector, not the public. All government can – and should – do is create favorable conditions for the generating of wealth. As my mentor Kathi Seay would say, “If you can find it in the yellow pages, government shouldn’t be doing it.”

When these two principles are violated, a whole host of problems follow. Quite simply, the government can’t help us without hurting us more. As Ronald Reagan put it, “The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.'”

The Solution

So is there anything government can do to boost the economy? No,  not directly. However, there are many ways that government can benefit the economy, including:

  • Work toward a broad-based low-rate tax system. This will create an even playing field and remove onerous tax burdens.
  • Deregulate as much as possible.
  • Provide the necessary infrastructure such as roads, bridges, and sewer, and maintain them regularly.
  • Keep the crime rate low with an effective law enforcement program.
  • Provide a quality education system (more on that later).

If you were a business owner, wouldn’t you like to locate your company in a place like that?

One final point: the fact that government shouldn’t be  funding recreational events doesn’t mean there’s anything wrong with those events per se. Many of them are great ideas, and there’s no reason the local businesses or Chamber of Commerce shouldn’t work together to fund their own economic stimulus project.

After all, who wouldn’t want to see the Snowbirds? 😉

2 Responses to “The Problem with Economic Development”

  1. You forgot to mention this puts the Government in the position of picking winners and choosing losers, or favored and frowned upon events and activities.
    Local Governments always end up working like out of control home owners associations, unless you the citizen hold your preverbial foot on their neck, like Obama says he does with business.

  2. Ken, excellent point. It’s like playing Robin Hood with the market. Thanks for bringing that out.