Tuesday, September 20, 2005

Brand! New! Never Discredited! Really!

London council has approved in principle what some call a "bold and innovative" new economic development strategy...
Maybe in 1650 a belief that bureaucracies can "create jobs" for anybody but themselves might have been bold and innovative. I mean, really, don't get starry eyed just because they're talking about high tech.
City staff and officials with the London Economic Development Corp., TechAlliance of Southwestern Ontario and the Stiller Centre for Biotechnology Commercialization, will form a transition committee to explain why they need more than $1 million in funding by 2010 to try to bring high-tech jobs to the city...

The city-initiated report, titled London's Next Economy, also would see the city set aside $3 million a year to guarantee high-risk loans to new companies, which could lead to a profit or a loss.
So if my taxes are raised for this project, and I'm less able to afford, say, a new roof, then I am poorer one roof and roofers are poorer one roofing job. If the bite isn't quite that heavy, maybe I'll just have to do without a new guitar, or a portable hard drive, and decrease the viability of retail in the city. I'm poorer one guitar and the music shop is poorer one guitar sale.

Now spread this effect across the entire city. This damage to our economy, to our well-being, is done supposedly to attract more desirable employment to the city. But plans like this throw away real value, and real employment opportunities, on investments that nobody is making with his own money. They deprive people of the things they want so that the people who jockey to run this fund get the things THEY want. And who spends the money of a multitude of strangers as carefully as he spends his own?

It's Londoners themselves who build the economy of this city. That $1 million will still be spent or invested if this plan doesn't go through. It will be spent by Londoners for Londoners, on the goods and services those Londoners want. And at the other end of that is -- the jobs that are"created" by this $1 million. Van Meerbergen has it right:
Coun. Paul Van Meerbergen said the strategy is Liberal, "old-school" thinking to "throw more tax dollars at the problem and it will somehow, magically generate jobs."

"What we should be doing is getting our spending down and cutting taxes if we're truly interested in (economic development)," he said.
Ce qu'on voit:
The proposal includes funding increases over five years and would be expected to create 10,000 jobs and increase the percentage of high-end jobs in the city's workforce from 28 per cent to 35 per cent.
Ce qu'on ne voit pas:
...I want to agree with a drainer to make a trench in my field for a hundred sous. Just as we have concluded our arrangement, the tax-gatherer comes, takes my hundred sous, and sends them to the Minister of the Interior; my bargain is at end, but the Minister will have another dish added to his table. Upon what ground will you dare to affirm that this official expense helps the national industry? Do you not see, that in this there is only a reversing of satisfaction and labour? A Minister has his table better covered, it is true, but it is just as true that an agriculturist has his field worse drained. A Parisian tavern-keeper has gained a hundred sous,I grant you; but then you must grant me that a drainer has been prevented from gaining five francs. It all comes to this, - that the official and the tavern-keeper being satisfied, is that which is seen; the field undrained, and the drainer deprived of his job, is that which is not seen. Dear me! how much trouble there is in proving that two and two make four; and if you succeed in proving it, it is said, "the thing is so plain it is quite tiresome," and they vote as if you had proved nothing at all.
From "That Which Is Seen, and That Which Is Not Seen", Bastiat's "Credit" and "Public Works".


Robert McClelland said...

If the money isn't leaving the region, it will have the same effect as you spending it in the region. My gawd, do you right whingers truly believe that your tax dollars disappear into an economic blackhole never to be seen again? It's basic economics. It makes no difference to an economy who spends the money.

MapMaster said...

"Right whingers" recognize that there's a distinction between money and value. Money spent on something that has no value to anyone is money being spent unproductively — money spent by individuals on what they actually want is money spent productively. This is how the economy grows, by people finding what is of value to other people and providing it in exchange for money — jobs are created, manufacturing increases as capitalists invest to provide that value, accrue profit, re-invest... and consumers work to create things of value to others so that they can obtain things of value to themselves. The economy doesn't grow, or shrinks, when money is confiscated to please political concerns — it's not precisely a black hole, but effectively it's only money circulating without purpose. Money, the amount of which is determined centrally, is merely the amount of value or wealth in an economy divided by that arbitrarily set amount. Lesser value divided by the the amount of money is still lesser value than a greater value divided by the same amount, but one could hardly say the economy is equally well off. Otherwise, let council print off millions of extra dollars and give it to their friends — will the economy still be in the same shape?

Anonymous said...

My Gawd Robert you could do with a little brushing up on economics.

Here's a little puzzler for you: imagine an economy with only 2 people in it, named Robinson and Friday. The economy, and especially the standard of living, would be higher under which of these 2 circumstances:

A) Robinson catches fish and collects berries in sufficient numbers for both to survive. Friday builds a large, comfortable house for each of them, and thereafter spends his time weaving fishing nets and making baskets for Robinson to use.

B) Robinson catches fish and collects berries in sufficient numbers for both to survive. Friday calls himself The Government, and spends half his time measuring and regulating Robinson's activities, and the rest of his time writing and distributing a newspaper which trumpets the achievements of The Government and which denigrates the greed and shallowness of Robinson - which he calls, the Crusoeian Broadsheeting Compilation, or CBC for short. Friday wraps himself in his broadsheets for shelter at night, and Robinson must sleep on the bare ground with no roof.

Mike said...

"It makes no difference to an economy who spends the money."

First, it makes a difference to me, the difference of a new roof or guitar, whether or not I am the one spending the money. It's a difference of wealth. I'm a roof poorer.

It also makes a difference to the businesses I would support if left to spend or invest my own money. It makes a difference to everyone in the same way, as producers and consumers in the London economy.

Second, I don't know how you can make the above claim. There is a difference between wealth spent to create jobs digging ditches and fill them in again, versus wealth spent on rooves.

Lisa said...


So may I help myself to the food in your fridge? If "it makes no difference to a economy who spends the money" then I guess it doesn't matter who ends up with the goods?

Accordingly, the publically sponsored soup kitchen is the only fair way to distribute the spoils.

The collective farms feed the region and we must bow down to the enlightened planners.

Pietr said...

10,000 jobs.
$1,000,000 a year.
That's $100 a year a job.
That should certainly attract plenty of zombies.Or parrots.Or hamsters?
"Get myself a job; some responsibility,can't even feed my cat, on social security..."