The Boardwalk of Huff Park

Recently, I moved to the northeast side of Grand Rapids, after having spent the past twenty years south of the city in Caledonia. With three weeks between the end of finals and my internship, I had a lot of time to kill.

To fill some of that time, I decided to walk around the streets and sidewalks to familiarize myself with this foreign land. Huff Park is within walking distance, so I started there. Yesterday, walking down a trail I hadn't seen before, I came across a sign hanging on a chain blocking the path.

The original message of the sign was weathered and undecipherable. Someone had crudely scraped "STOP" on the sign. I stepped over the chain. A colorful sign informed me I was on the Huff Park Boardwalk. I didn't see any immediate danger, so I kept moving.

The boardwalk seemed fine. The sign had mentioned it was built with plastic boards, which seemed to be holding up. Soon, the reason behind the sign became clear. At intervals, the boardwalk had sunken into the wetlands, and water spilled over the boards. Some enterprising individual had procured more boards, and laid them over the water so walkers could pass. 

While the boardwalk wasn't in great shape, it was largely serviceable. Friends of Grand Rapids Parks, "an independent, citizen led, nonprofit enterprise" had replaced some of the broken boards on their own accord, as seen below.

Rather than petition the city government to use taxpayer funds to fix the decrepit boardwalk, the self described "friends" of the park did it on their own.

In 2013, passionate park enthusiasts urged voters to support a ballot proposal that would add a new city property tax to revitalize and repair city parks. The tax would yield about $4 million a year, with an average cost to the homeowner of around $45. The proposal passed with 60% support later that year.

Part of that money, around $900,000, goes towards replacing the boardwalk in Huff Park. Though the total cost to the project is $1.2 million, the remaining $300,000 comes from the state government, through the Michigan Natural Resources Trust Fund. Taxpayers from across the state, not just the city of Grand Rapids, are paying for the Huff Park boardwalk repair. 

Should the city government be responsible for these parks? A better question might be, should the taxpayers be?

Most would say yes. Park enthusiast Tommy Allen defended the proposal, writing passionately about the importance of parks (and new property taxes). On Friends of Grand Rapids Parks, Allen says "But these actions, while necessary and vital to shore up the losses, are unfortunately not going to be enough to bring about the solutions we need to advance in the years ahead after a decade of depreciation on our parks from use."

The Executive Director of Friends of Grand Rapids Parks, Steve Faber, agrees, claiming "...there isn't much more that can be done to patch it up. What really needs to be done is to rebuild the boardwalk." 

Why can't individuals who want to fund the parks to do on their own? Is it right that a small numerical majority of voters can add to the tax burden of thousands of homeowners in the city? According to Election Magic, the proposal passed by a little over 3,000 votes. Turnout for the proposal was around 15,000 voters, total. Most wards had below 25% turnout.

The City of Grand Rapids has a population of around 200,000. With the passage of this ballot measure, a small number of voters (and taxpayers) forced a tax on a much, much larger body of taxpayers. This is a gross injustice.

Some may benefit a nicer boardwalk, and some may not. Some might think the increased tax burden is worth it, and some might not. Either way, they're paying. 

Local Government, "Blight", and Legal Plunder

In The Law, Frédéric Bastiat writes on the dangerous idea of "legal plunder", saying...

"Under the pretense of organization, regulation, protection, or encouragement, the law takes property from one person and gives it to another; the law takes the wealth of all and gives it to a few — whether farmers, manufacturers, ship owners, artists, or comedians."

This definition of "legal plunder", taking property from one to give to another, encompasses all sorts of government activity. At a local level, it's easy for a municipal government to wave its hands and claim that policies of legal plunder - where property and wealth is taken from one group of individuals and given to another - is really in the common interest of all. 

One example is the idea of urban "blight". Originally a biological term referring to dying plants, the term has been appropriated by governments to mean some sort of decrepit or decaying building. To combat this blight, local governments seek to demolish or other renovate these buildings (often with taxpayer funds). Justifications for this include: higher property values (and thus, higher tax revenues for the municipality), public safety concerns, and economic development. 

Pictured: Blight (?)

To use a local example, the city of Hillsdale recently voted to demolish three structures deemed "blighted". One such structure, the remains of a burned-down house, was on the property of a local woman. She protested the move heavily, but the city council voted to demolish it all the same.

The councilors had a host of justifications for their vote, including the public safety risk that a child might fall into a basement and be injured. Mind you, this has yet to happen, but we must be vigilant all the same!

The cash-strapped city government may have been partially motivated by the promise of a $24,275 grant from the state of Michigan, meant to cover the costs of demolishing blighted property. Who benefits in this scenario? Certainly not the taxpayers as a whole. Taxpayers in the city of Hillsdale pay state taxes, which the state then sends back to the city of Hillsdale to tear down houses. The rise in the value of their property from less nearby blight is likely to be negligible, and probably not even cover the taxes they had to pay for the pleasure. 

Some property owners may benefit, if they were planning on demolishing the property regardless (as is often the case). Only now, the taxpayers are footing the bill. The city is happy if the move generates slightly more tax revenue, years down the line, due to marginal increases in property value.

Would the city of Hillsdale be a little bit nicer if these plans go through? Probably. Is it worth perpetuating a system of legal plunder that transfers wealth from many taxpayers to a few beneficiaries? Probably not. 

The Economics of Parks and Recreation - Swing Vote

[Heavily conceptually inspired by "The Economics of the Office"]

Parks and Recreation, a mockumentary style comedy in the vein of The Office, explores the lives of employees at the Parks and Recreation department in the fictional Indiana city of Pawnee. One of the main sources of conflict in the show is between the Director of Parks and Rec, the grizzled anti-government Ron Swanson, and the Deputy Director, the cheery (and pro-government) Leslie Knope. Eventually, Leslie is elected to City Council, and starts a crusade for more and more government involvement in the lives of the citizens of Pawnee. 

One such crusade, as seen in the episode "Swing Vote", is to stop the closing of the Pawnee Palms Public Putt-Putt, a government subsidized mini-golf course. Ron Swanson, ever the budget hawk, has moved to cut funding, citing his belief in "cutting useless government projects". Ron notes the course costs taxpayers $9000 a year to fund, and views it as little more than government waste.

The issue will be decided by a City Council vote the next day. A desperate Leslie tries to whip votes to "save" the course, citing how it's "good for families" and "a job creator".

Leslie's second argument, that the subsidized course is a "job creator", is one of the most persistently enduring economic fallacies. The city of Pawnee is not "creating" any jobs at all. All they are doing is transferring wealth from one group (the taxpayers) to another (those who are employed by the Public Putt-Putt). While jobs may exist as a result, these aren't "created" in the same sense that someone could create new jobs by opening a new restaurant and employing people there. Jobs of that sort wouldn't exist without providing real, economic value to the patrons of the restaurant, the employer, and so on. Government jobs, like at the Public Putt-Putt, don't face the same constraints. They shall continue to exist as long as they are funded by the government, which they often are.

One Councilman, Jeremy Jamm, holds the swing vote on the issue. Leslie, eager to get his vote, takes him golfing at the Public Putt-Putt, and plies him with copious amounts of snow cones to try to sway his favor. Leslie's actions show the way that many decisions are actually made in government, through trading favors and excessive lobbying. Ostensibly acting for the "public good", Jamm is actually making his vote based on what he personally can get out of it. Individuals still face incentives, even in government, as stated in public choice theory.

Ron Swanson, sensing that Leslie might try to influence Jamm, also arrives at the course. He consistently states the downsides of the course, namely, that "this ridiculous play palace costs the taxpayers thousands of dollars a year". Leslie responds by again noting that "everyone loves it". Some people may in fact enjoy the Public Putt-Putt (at the government subsidized pricing), but all taxpayers might not. Ron is defending those taxpayers (likely including himself) that do not enjoy Putt-Putt, and are yet forced to pay for it through their tax dollars.

Eventually, Jamm is swayed to Ron's side (after Ron beats Leslie in a game of mini-golf). An angry Leslie confronts Ron the next morning, who cites his principles as the reason for his opposition. Jamm later meets Leslie in her office, brazenly offering to switch his vote for the right offer. Leslie seems sickened by his political graft, but Jamm notes that this system of trading favors for political support "is just how people like us [politicians] operate".

Leslie, apparently drawing a line in the sand, refuses to make a deal, and Putt-Putt is defunded. However, she later notes a plan to authorize funding through a ballot proposal, which she believes will pass. Putt-Putt's passing is a classic example of concentrated benefits, dispersed costs. Those who stand to benefit (former employees of the Public Putt-Putt, former patrons) will eagerly vote for its authorization. The apathetic (or indifferent) taxpayers who don't support Putt-Putt will likely not find it worth their time to go vote to save a few cents on taxes per year.

This process is repeated over and over, for all kinds of government projects, and eventually those few cents add up. That is why there is consistent government growth. That is why so many boondoggles, like a publicly subsidized mini-golf course, exist. When economic decision-making is politicized, this is the end result.

The Economics of Politics in Star Wars - The Phantom Menace

The infamous Star Wars prequel trilogy (Episodes I, II, and III) is widely panned for bad writing, weak characters, and weaker dialogue. Brief moments of glory, including (at-the-time) cutting-edge  special effects and improved lightsaber fight choreography do little to distract from the glaring flaws.

One aspect of the trilogy, however, presents an interesting insight into the economic analysis of politics and institutions. Many mocked The Phantom Menace for focusing on the mundane topics taxation and trade routes, while getting mired down in the muddled bureaucracy of the Galactic Senate.

To disregard the political intrigue inherent in the prequels because they lack action and flash is to ignore the dominant story thread of the trilogy. Every aspect of the three movies, from the Naboo Crisis to the Clone Wars, serves to further the goals of future Emperor through political means.

Senator Sheev Palpatine (also known as Darth Sidious and, later, the Emperor), drives the plot of movies forward through political maneuvering. Though the process is gradual, Palpatine manages to control both sides of a civil war and overthrow the government of the Republic, forming a Galactic Empire with him at its head.

In Episode I: The Phantom Menace, the plot revolves around the Naboo Crisis. The Trade Federation, a megacorporation and commerce guild, blockades the planet of Naboo in response to the Republic's taxation of trade routes previously marked as Free Trade Zones. It should be noted that the Trade Federation was under the influence of Palpatine, though cloaked in his role of Darth Sidious. Following the blockade, the Trade Federation invades Naboo. In other words, a trade war led to military conflict. French economist Frédéric Bastiat is alleged to have said:

"When goods don’t cross borders, Soldiers will."

Palpatine was also the Senator representing Naboo in the Galactic Senate. By engineering a political crisis on his home planet, Palpatine planned to thrust himself into the political spotlight, taking advantage of the crisis to grow his power.

The ruler of Naboo, Queen Amidala, escapes the blockade and eventually makes her way to the Galactic Senate, to plea for assistance against the invasion. She is blocked at every turn, with the corrupt Senate bureaucracy moving too slowly to act, and many Senators denying an invasion ever took place.

The current Chancellor, an unremarkable figurehead, is deposed by a vote of no-confidence. Palpatine, as the Senator from Naboo, is widely seen as the logical replacement to fill the seat, and is elected by a wide margin.

Here, one can see one of the biggest lessons in political incentives, as widely taught by economists and political theorists. Crisis, political or otherwise, tends to guide support towards strong-men who promise action and strength. Palpatine engineered the Naboo Crisis, and positioned himself to take advantage of it.

In The Phantom Menace, one can see crucial economic lessons play out. The folly of oppressive taxation and opposing free trade is apparent, as this led directly to a military conflict. In addition, the incentives of collective decision making, where the government grows and centralizes in the face of crisis, is used by Palpatine to further his rise to Chancellor.

While much of The Phantom Menace focuses on mindless action, irrational characters, and something about Jedi, the backdrop of political intrigue and corruption shows a depth and complexity seen nowhere else in the prequel trilogy.

(Analysis continued for Attack of the Clones HERE.)