Wednesday, June 15, 2005

Mike Bloomberg: never cry defeat when it comes to spending tax dollars

The West Side Stadium proposal has been vanquished, but NYC Mayor Bloomberg has revealed his contingency plans to spend hundreds of millions of taxpayer dollars.

At a Sunday night news conference, Bloomberg announced the new New York Mets stadium. It will be built on city property next to Shea Stadium, and the city and state will put up $180 million of the projected $855 million cost. (That's a smaller percentage than public funds would have been in the West Side Stadium, $600 million out of $2 billion.) This stadium is Bloomberg's "Plan B" to convince the IOC to give the 2012 Olympics to New York. Should that happen, the city and state will spend another $108 million to help convert it for the Olympics.

The New York Yankees are expected to announce their new stadium plans tomorrow. They'll fund the stadium construction themselves, but the city and state of New York must fund $300 million for various improvements to public infrastructure.

To date, not once has Bloomberg offered to use any of his $3 billion fortune. Why should he? The ventures are risky and could easily prove to be busts. Contrary to Bloomberg's "this can't lose" optimism, stadiums are far from guaranteed to pay for themselves. However, it's easy to be optimistic when investing with someone else's money, and even more so when the project's success or failure won't be determined until years after you leave office.

"When all you have is a hammer, everything looks like a nail." In government's case, when it's armed with tax monies, everything looks like an opportunity to spend public money. It's exceedingly rare for legislators and bureaucrats to resist throwing money at some new social problem, or hesitate to "invest in our communities." Why should they? It's not their money.

The very basis of entrepreneurship is, "If you build it, they will come." Did Ray in Field of Dreams seek public funding for his baseball field? Well, why shouldn't his state and local governments have supported him? Public funding would have eliminated any possibility of Ray's bankruptcy while waiting for business to get going. It could have paid for nicer bleachers and a parking lot -- in fact, why not enough public money to build an entire stadium? Think of how many more visitors would come. Meanwhile, Ray would make a fortune selling tickets, and he'd pay taxes, so the government would make back its "investment." Right?

But if a business venture is as profitable as government claims, private investors would have already been all over it. Second, how many years of "millions in tax revenue" will it take for a government to earn back the hundreds of millions it spends on a project? After 40 years, will Shea Stadium II need replacing?

This is all notwithstanding the very big assumption that the stadium would be more successful, and generate more tax revenue, than the private businesses which are deprived of the money that government taxes and spends. This is the arrogant side of government spending, that leading politicians know best for the people.

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