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Sunday, April 25, 2010

For What It's Worth

Last week my disatisfaction with our little world in Whatcom county sort of overflowed. 

Maybe it was too much coverage of the thieves and scoundrels in Washington and New York who blithely raped the economy, and now gloat, having one political party prostrate in obedience, and the other on one knee deferentially assuring these thugs they wish not to offend.

Can't put my finger on just what was the tipping point, but there it was.  Like the character in the movie, I realized, "I'm as mad as hell and I'm not going to take it anymore!" 

So, out came an article on Sam Crawford, something of a poster boy for the problems in Whatcom county.

The parallel, with Crawford popping up everywhere with his prejudices and conflicts, flipped me.  I'm sorry, this guy's not ready for prime time.

I guess it's the realization that things are the same everywhere.  Influence peddlers, cozy little crony capitalists, self-promoting politicians turning tricks, and a public too distracted by the pressures of mere survival to understand; we've got it all, like everywhere else.

An anthem from the sixties began, "There's somethin' happenin' here, what it is ain't exactly clear."  And I confess, when I see folks' growing anger with the system, I'm reminded of those days.  "... a thousand people in the street, singin songs and a carryin signs, mostly say hooray for our side..."

Locally, the popular beef is all about "property rights" and "taxes." Taxes, because we don't think we're getting our money's worth; and property rights because we seem to believe turning farms and forests into tract housing and McMansions will create jobs, affordable housing, and just make it a better world.
 
So maybe we should try and make the somethin' that's happenin' here -- perfectly clear; because there are some interesting connections between taxes, property rights, and political corruption.
 
To start, it's important to understand what, in classical economics, is meant by "rent seeker."  It most commonly describes someone who receives economic rent by manipulating the political system. 

"Economic rent" is an unearned gain, as opposed to profits earned from work and production of real  goods or services.

Most rent seeking focuses on gaining special privileges from government decisions and regulation. Rent seeking commonly is accomplished by influencing government policy in a way that creates wealth for the rent seeker at the expense of the public and taxpayers.

Another type of rent seeker is the corrupt bureaucrat or politician who solicits payments for abusing their discretionary power on behalf of clients who will pay them.

Special interests seeking lax enforcement of the law, for instance vesting a right to develop more houses on their property, is a perfect example of rent seeking in practice.

Most economists recognize the value of land is largely attributable to the provision of government services and infrastructure (road building, water, public schools, fire protection, police and medical services etc.) rather than any contribution by the landowner.

This is why land speculators so aggressively lobby for their property to be up-zoned and included in jurisdictions that provide these services and infrastructure. We see 'em all the time trying to reshape urban growth areas to include their land. Even the county executive tried it.
 
The moral hazard in tolerating rent seeking is great.  If "buying" a county council, or influencing those responsible for enforcement of regulations, is cheaper than bearing the real costs of adding land to urban areas, developers will tend to choose the cheaper option, leaving the public and the taxpayers to bear the future costs. 

Some economists argue that government should reform the tax systems, and first recover the windfall rents they create for private interests, rather than levying taxes on those who actually work and produce something.

These unearned profits could be an important source of public revenue. But the rent seekers use some of their unearned profit to keep from being taxed (bribes and campaign contributions) and transfer the tax burden to the public, who they convince should oppose all and any taxes.
 
So does this remind you of the situation right here at home? 
 
Maybe next time you go to a tea party, and you're all worked up about your taxes; and you're convinced that the guvmit is trying to grab yer land because some clever scissorbill's explained how you too could get rich like them if you could just stick it to the taxpayer.  Just remember, that's you taxpayer.
 
The time has come to look at the situation for what it is.  They're gettin' rich, we're payin' taxes.  Our government is turning their straw into gold with zoning regulations and vesting policies.  It's time we saw their land for what it's worth, not what we make it, and at least get some of that gold to pay for our help.
 
As I recall, that old song wound up, "everybody look what's goin down."