Stimulating Failure

Steve Malanga writes in the Wall Street Journal How Stimulus Spending Ruined Buffalo Four decades of subsidies and high taxes haven’t arrested the city’s decline, but here comes New York’s governor with another billion dollars. 1/14/12

Excerpt:

Buffalo may be the paradigmatic example of why expensive government revitalization efforts often fail. Back in 2004, the Buffalo News estimated that the city had garnered more federal redevelopment aid per capita than any other city in the country, a total of more than half a billion dollars since the 1970s. Yet, the paper noted, the city had virtually nothing to show for the money.

Officials squandered millions granting loans and subsidies to projects that went bust. There was a proposed trade center near the famed Peace Bridge that was never completed even after the city granted it federally backed loans; a failed shopping plaza on William Street; and several hotels that defaulted on their government loans. Among the past three decades’ failures have been a dozen or so businesses in the theater district—”one of Western New York’s most heavily subsidized stretches of real estate,” said the Buffalo News.

HKO Comment:

This tale has been told a thousand times across America. Towns spend government money to stimulate cities and the problem only gets worse.  People move to cities with low crime, good schools, low taxes, good BASIC infrastructure (that means roads and water, not music and sports museums)  and low taxes.  Shills for government development organizations ask me what incentives they can offer to get businesses to grow and hire. My answer is always the same. Do what government is supposed to do, then get out of the way.  The best and most stable local economy will not be dependent on ephemeral government programs.