For the promotion of liberty.

Wilmington mayor, Bill Saffo, is spending $100,000 of taxpayer money to research the effects of taxpayer money being spent. This may seem like a paradox.  It is.  So we will attempt with this post to save the consumer $100,000.

Austrian economist correctly point out the adverse effect of government spending for the sole purpose of creating jobs. Opponents of this ideal readily point to statistics of x number jobs created and the positive effect those jobs have on the economy. They ignore, however, Y number of jobs forced out of the economy and those never created.

“Necessary policemen, firemen, street cleaners, health officers, judges, legislators and executives perform productive services as important as those of anyone in private industry. They make it possible for private industry to function in an atmosphere of law, order, freedom and peace. But their justification consists in the utility of their services. It does not consist in the “purchasing power” they possess by virtue of being on the public payroll.”
― Henry Hazlitt, Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics

This can be applied to the proposed tax funded baseball stadium.

Collectively, as a community, we will own a piece of property. In our case, an estimated $40,000,000, baseball stadium and the land it will sit on. This will be paid for via a $40,000,000 property tax increase. We will then be forced to maintain the property by using funds collected through more taxation and excessive fees. In the end it will cost the taxpayer well above the $40,000,000 estimate, however, for the sake of argument we will continue with the initial figure.

What purpose would Wilmington City Council have for raising taxes on the citizens to build a baseball stadium? Will the stadium fix the badly worn roads? No. Will it supply us with a more efficient system for delivering water into households? No. How about removing our waste on trash day? No. The sole purpose of the baseball stadium is to create “revenue” or “jobs”, as I stated earlier. City Council hopes to provide its citizens with a sheet of statistics showing how many jobs will be created and how much money the city will bring in. As always, they neglected to see the harm actually done.

When taxes are raised on consumers it reduces the amount of purchasing power each person holds. Money that would have otherwise gone back into the economy is now redirected. In our case, the money is redirected into a multibillion dollar corporation. This act of corporate welfare has been called many things; some call it crony capitalism, corporatism, or even by its true name, Marxism. Whatever you choose to call it, if anything at all, you must understand one fact, the money has now been removed from the community.

When money is taken from the consumer it is also taken from the business owner. Business in the community will take a hit at the rate of 40,000,000. This is money that will never be invested into new jobs, inventory expansion, or maintenance. A reduction in the quality of products will naturally occur while its cost naturally will rise. Service industries may have to cut the size of their business or make adjustments at the expense of the workers and/or consumers to keep up with the increased cost of living. These decreases in the standard of living ALWAYS outweigh the benefits.

In the case of the stadium, there are many reports and statistics showing cities often fail in achieving their ambitious, yet foolish goals. For the sake of argument let us assume the stadium exceeds projections and fills 75% capacity for the majority of a season. The roads are not designed to hold that many people at one time, which means more taxes will be collected to pay for reconstruction, bridges, repairs, etc. With less purchasing power the consumer is further affected while the corporation prospers.

Any profits actually made at the Stadium will go to the corporation managing it. Leaving the taxpayer praying they never break their lease, because if they did all that would be left is an empty stadium, economic damage, and all the debt. Should we blame the corporation for being greedy? Or blame our City Council for being foolish? Either way, It’s going to affect us all.

“When Alexander the Great visited the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: ‘Yes, stand a little less between me and the sun.’ It is what every citizen is entitled to ask of his government.”
Henry Hazlitt

Picture is from

http://wilmingtonwatcher.blogspot.com/2012/02/wilmington-signs-up-for-baseball-debt.html