START:In the debate about around the 2013 Municipal Budget I have noted an ongoing debate on twitter and in person on the role of government and the efficiency/inefficiency of government regarding the collection and spending of our tax dollars. This has most often come up for me when speaking about supporting those who are living near or below the poverty line or in the provision of service for things such as transit, bike lanes, or Library services.
In thinking about this there are a number of divides that surface.
One: Governments role should be limited to providing only the most basic of services and that the impact of the services should be minimal on the tax rates established by government.
Two: Government is always inefficient and therefore where the option is to have a private/for profit service deliver this it will be better for efficiency and for commerce.
Three: It is the responsibility of the individual to make their own success and wealth and that it is not the role of government to provide this.
Four: Economic development can only be enhanced if the municipality provides economic incentives for businesses to locate in London such as reduced servicing costs, tax incentives, and reduced buying costs for land.
At the heart of the argument is the divide between the philosophies of the “right”and those of the “left” but I actually think this is a false place to consider the issues of the 2013 budget from.
One: If Government at any level provides only the most basic of services then we end up with a number of issues that cannot be addressed by the private sector. The private sector is premised on the idea of creating profit , within the confines of supply and demand, for the services and products it sells. It will not be motivated by, for example, a need to provide health coverage for anyone who cannot afford it nor would private enterprise see a benefit in providing affordable housing. Government would be motivated to provide these services if it is the will of the electorate and in the public interest. We must also recognize that the cost of not providing service such as affordable housing is actually greater in the long run than not providing it. The costs to our health, policing, ambulance, mental health, and welfare systems is actually greater in the end. Of note is the impact government programs have on taxes. Staying with affordable housing a study by the State of Utah in 2003 showed “Another measure of economic impact is state and local taxes generated by the increase in income earnings. The estimated income, sales and property tax generated by affordable housing programs in 2003 was $20.4 million. This estimate was derived by applying an effective state and local tax rate of 10.2% to the $200 million in income generated by affordable housing programs”
In looking at the previous example we can recognize that Government can provide a service, in this case affordable housing, that can have a positive net economic impact on a cities economic well-being. The same example can be applied to transit or bike lanes etc. if in providing a service there is a net benefit to the population government can and should act on it.
Two: The idea that government is always inefficient is a popular meme that emerges repeatedly as a justification for moving services to the private sector or not providing that service in the first place. We have to recognize the roles of each sector, government and business, to answer this question.
Economist John T. Harvey in Forbes Magazine said the “question still stands: does it make sense to run government like a business? The short answer is no. Bear in mind, first, that “efficiency” in the private sector means profit. Hence, to ask that the government be run like a business is tantamount to asking that the government turn a profit. The problem in a nutshell, is that not everything that is profitable is of social value and not everything of social value is profitable.” and goes on to say “Those arguing for a business model for government must necessarily be ready to shut down all government functions that do not earn a profit, regardless of their contribution to our well-being.” . It is also important to remember that the most disastrous economic calamity since the Great Depression happened because of private business. If we follow the idea that government needs to be efficient by responding to its citizens needs , maybe through the use of deliberative polling, but is the best way to serve the social good it may help us to focus where we should put our efforts in the 2013 municipal budget.
Three: We all love the idea of the rugged, self reliant, independently made individual and much of the idea of “pulling yourself up by your bootstraps “ or “ the self-made man” is attractive we have to recognize that no one achieves success by themselves independent of any others help. If we look at Bill Gates for example we know, through books such as Malcolm Gladwell’s Outliers, that he had opportunities that others didn’t from access to early personal computers to the time on those computers “ this case Gladwell’s 10,000 hours rule” to became an expert in developing software for them. Of course Mr. Gates was highly driven and created many opportunities for himself and Microsoft but even so he did not do this alone and we must recognize that if not for the generosity of some early supporters he would never have achieved his success. Should we not look at supporting those who are less fortunate the same way? If we provide the means for them to become housed, achieve a stable income, and access to training and education, could we not also be also helping to support another Bill Gates? And if not a Bull Gates how about a Bill the Plumber? Or Bill the Electrical Engineer? Or Bills kid the Doctor?
My point is that in assisting those who need our help we create a better overall outcome socially and economically for all of us. If we create the means where more Bills, or Beatrice’s for that matter , can succeed then we create a better social and economic well-being. In terms of the services we provide municipally this is an issue in the upcoming budget debate.
Four: If we only look at economic development through the lens of tax relief and servicing we miss some other areas that may be of equal or greater benefit. it is no secret that I am a fan of Richard Florida and his thinking on economic development and the creative class argument. The greatest attraction for me to this thinking is that it is talent, not only a company or corporation, that makes economic development possible and through the attraction of talent we create opportunities for business and the municipality.
I view increasing our transit capacity and the development of bike lanes, pedestrian only areas, place making, and arts and culture as a means of economic development. The Arts and Heritage Councils working with the Creative Cities working group and through the London Culture office is about to present some new research on the impact of Arts and Culture on London’s economy and the results are staggering. The report, released to Council at the end of January , will show that these sectors have had significant impact on London’s economy.
By investing in these areas the municipality creates fertile ground to attract and retain talent to London that results in companies such as Digital Extremes or Voices.Com or The Uber Cool Store.
In and Article in Atlantic Cities Florida Quotes William Fulton of Smart Growth America “This Millennial generation is the generation that decides where it’s going to live before it decides what it’s going to do.”. If we want this generation to decide London is the place where it’s going to live than we have to create the infrastructure for it to be attractive. Economic Development cannot only be seen through the lens of incentives for business but incentives for quality of life that attract the talent needed to support and create those businesses.
Finish: There is not a left or right to the above arguments but rather a how, where, and in which manner you want to live and by extension how you want your city, your London, to reflect those values. For me 0% does not offer enough of a balance of tax burden vs quality of life and quality of growth. The city we want to live in is in your hands and all you need do is express that during this important time of decisions. Share that view-point as I have shared mine here.