Saturday, August 1, 2009

Glen Mar bonds approved

The Glen Mar Church bonds have won approval from the County Council. This entire bond program is a complete joke. The only thing this program does is to allow the County Council to hand out federal tax subsidies to certain groups. If the goal of the program is to spur business and investment in the community, a general tax cut should be implemented instead. Simply making money cheaper to borrow for certain groups does nothing but misallocate resources (home mortgage interest deduction comes to mind).

In order to gain the bonds, the church had to certify the money would not go towards religious purposes, but for secular programs such as a day-care center, after-school programs and other youth activities. The church is required to report back once a year to the county’s finance department and the county Economic Development Authority on how it uses its new building, said Dick Story, the authority’s CEO.

Story said the church building would provide construction jobs and a few long-term positions associated with the child care program.

One of the things you should always ask when someone claims that program X will create jobs is: “compared to what”? If the Columbia bank would have taken this $10 million and hid it under the CEO’s pillow rather than lend it out, then yes, the church will create jobs. But if the Columbia bank would instead have found another borrower, or if the church would have expanded without the tax incentive, then the bond program is not creating jobs. Anyone who purports to be an economic expert, like Mr. Story, should know all about this. At its heart, this is the concept of opportunity cost, and the failure to take it into account can lead one to believe absurdities such as breaking a window creates economic growth.

It is unfortunate that the Howard County Economic Development Authority even exists. Special interest groups like that who advocate for hand outs to certain business under the guise of economic development always give me a chuckle, because they stand in the way of economic efficiency. These groups remind me of the immortal words of Adam Smith, someone who Dick Story has probably never read:

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."


Anonymous said...

Well, it doesn't make me chuckle. These fiefdoms have to go.