Wednesday, October 18, 2006

London, Ontario: the city that economics forgot

Ultimately, economic growth is a complex matter. Sure, economic growth won't happen without roads and a reasonable tax rate. But it also won't happen without a sustainable natural environment, a vibrant cultural community, a visible respect for heritage, a lively and bustling downtown core, a healthy partnership with educational organizations, an obvious concern for those who have fewer advantages.
— London Free Press editorial, Toward a new London, Oct. 14, 2006
The conceit of civic politicians to practicing sound financial management and economic planning is not upheld by the evidence of declining median family incomes in London relative to other Ontario cities, stagnant job growth, rising crime and deteriorating municipal infrastructure. These indicators of economic decline have coincided with an increase in the regulatory restriction of property development, the expansion of the city government's capital and operating budgets to $862.7 million in 2006, the inflation of the municipal debt to $371.1 million, the repayment cost of which topped $38 million in 2004, or 5.6 per cent of the city's budget, and a 25 per cent increase in property taxes and a 50 per cent increase in water and sewer rates between 2000 and 2005 that has made London homeowners among the most highly burdened in Canada, with the owner of an average bungalow in London on the hook for $3,734 including surcharges in 2005. The lesson is hard to avoid that enlarging political and bureaucratic interest in and control over the city's economy subtracts from economic growth and opportunity — which would surprise few economists because politically-motivated spending through taxes must come at the expense of voluntary and unregulated spending on goods and services that promotes growth and opportunity in the free market.

Incumbents, candidates, their supporters and special interest groups bent on maintaining or acquiring disposition of an expanding portion of London's economic assets for political purposes have since found it necessary to perpetuate a willfull confusion between economic tenets and political objectives by equating objective and quantifiable economic indicators with chipper but inscrutably vague, immeasurable and ultimately meaningless "quality of life" precepts: "livability," "sustainability," "heritage," "diversity," "culture," "community," and so on. As economic metrics, however, these boiler plates cannot sustain any agreed-upon or impartial definition or scrutiny, but they are certainly not by any stretch of the imagination economic resources, inputs or outputs. Although they may be employed by some as decision-making variables for allocation of already existing economic inputs or wished-for outcomes of economic activity, appropriation of economic resources for collective decision-making under their banners produces profoundly deleterious economic consequences. That politicians, bureaucrats and political interests have rendered them as axioms is no surprise. That the London Free Press indulges them instead of exposing the folly of massive expansion in economic intervention by politicians and bureaucrats is pitiable.