Enough Political “Investments” Will Ruin Any Economy

    Do not think about, write about or deal with  human behavior without determining the effects of incentives.

   Wherein we see that the lobbying of sports organizations are especially effective in obtaining taxpayer money. Remember the Silverdome in Michigan–huge loss–the Toronto Dome–cost $125 M real cost $597 M sold for $125 M and then $25 M–as they say in politics–good deal. And the economic stimulus–didn’t happen. As they say in politics–our intentions were good so the results don’t matter. It’s what happens when a few people spend many other people’s money. Apparently these, and other similar examples, don’t inform people about the stupidity of subsidizing the athletic endeavours of a few and calling it good economic “investment.”

Sacramento’s Subsidy Kings
Paul Jacob

Oh, how the other half lives!

And lies.

By “the other half,” I don’t mean “the wealthy.” They’re as honest and decent as any other group. No, I’m talking about those with their hands on the levers of government power . . . along with their subsidy-seeking cronies.

Kevin Johnson, once a National Basketball Association all-star, now serves as the Mayor of Sacramento. Johnson garnered more than a thousand career steals mostly for the Phoenix Suns; he now plays a different game of plunder. He is assisting the Sacramento Kings by dishing out $258 million in tax dollars to build the team’s owners a brand new arena.

Actually, Mayor Johnson and city officials claim they’re splurging only $258 million, and most media outlets (including, absentmindedly, my own Common Sense e-letter) have repeated that “official” number. But the true amount of the subsidy must also count the 3,700 parking spaces handed over for free to the NBA franchise, and include various infrastructure subsidies, tax breaks and other bennies, too.

Thus, the total subsidy to the billionaire Kings’ owners amounts to nearly a third more, a whopping $334 million — roughly Sacramento’s yearly cost to provide all pay and benefits for the city’s entire workforce, including pensions and healthcare for all retired workers.

The city, however, boasts that the arena project will bring over $11 billion in economic benefits over the next few decades. That preposterous claim is now the subject of a legal challenge against the city.


    What they do in these circumstances is pick a number that looks good–it has to be a large enough multiple of the original “investment” so that it’s almost too good to be true. It always is too good to be true because it’s imaginary. For example, the multiple of return for “investing” in early education appears to be 6, a number that is made up.

“Documents discovered in the lawsuit show that those claims of benefits were invented by the subsidy seekers themselves, e-mailed to the city, and, by the magic of cut and paste, placed into the staff report, where the city’s elected leaders and the public were defrauded into believing they were reading the considered judgment of the professionals of government,” writes former deputy state treasurer Mark Paul at his The California Fix blog. “When the city staff spoke, the welfare seekers’ lips moved.”

As I wrote last year in this space, if there is a consensus among economists on anything, it would be that public spending on sports stadiums is not a driver of economic progress. University of Chicago economist Allen Sanderson states clearly, “If you want to inject money into the local economy, it would be better to drop it from a helicopter than invest it in a new ballpark.”

Moreover, the people of Sacramento don’t want to pay for a new arena. They voted down a tax increase back in 2006 that would have gone toward that purpose. With 80 percent voting NO.

But as Mark Paul predicted correctly a year ago, “[E]xpect Sacramento Mayor Kevin Johnson and his allies on the council to do everything they can to avoid making voters part of the conversation.”

Thankfully, even with all of California’s problems, citizens in the Golden State still enjoy the power to take matters into their own hands to forge a solution.

At least 23,000 citizens objected by signing petitions to put this lavish subsidy to a referendum vote. Yesterday, a judge ruled that the measure would be kept off the ballot: errors in the wording of the petition “disqualified” it.

Sadly, the people of Sacramento will not get to vote on the issue.

Sacramento Taxpayers Opposed to Pork (STOP), the disheartened group pushing the referendum, issued a reasonable press release, which stated, “We call on Sacramento’s disenfranchised voters to express their outrage to their City Council, and we call on our elected representatives to begin listening to their constituents.”

But in a prepared sore-winner statement, Mayor Johnson called the petitioners “outsiders” who “have tried to undermine the right of Sacramento to control the destiny of our Kings, our downtown and our future.”

To be clear, Johnson doesn’t mean the right “of the people” to control their city. No. He means his right to dictate for Sacramento even against the will of the majority.

That sort of trash talk isn’t limited to the mayor. The leader of a group working against a public vote on the arena giveaway went out of his way to attack local businessman Chris Rufer, charging that “Rufer’s funding . . . is supporting STOP’s effort to steal 4,000 jobs, steal a once-in-a-generation opportunity to transform downtown and makes him an accomplice in Seattle’s attempt to steal the Kings.”

Who’s stealing? Those spending their own money so people can vote? Or those against a vote because they want spend other people’s money?

The real thieves are apparent: the city has filed a lawsuit to take land from current businesses in downtown Sacramento to flip that property to the Kings through yet another abuse of eminent domain.

While a big fan of the game of basketball, Mr. Rufer, CEO of The Morning Star Company, the world’s biggest processor of tomato ingredients, wrote a letter to a local paper explaining, “What makes me a Libertarian is the fact that I don’t believe in coercively imposing my personal beliefs on others or expecting anyone else to subsidize what I personally like to do.”

“I’m against subsidy, period. It’s simply a moral argument,” he told a Merced Sun-Star reporter. “If it was a subsidy for a fish pond, I’d be against it.”

Mr. Rufer is right: forcing one person to subsidize another is immoral. Subverting democratic process to force nearly half-a-million folks living in Sacramento to subsidize a few wealthy businessmen merely adds cruel insult to that unjust injury.


  Note these emotional  political arguments about stealing jobs and basketball teams. Illuminating.

To order my novel, “Days of Songs and Mirrors: A Jacobite in the ‘45”, click here.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies


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