What could possibly go wrong?

astrodome-fest-plan Earlier in the week, Steve Malanga wrote about the municipal debt racquet in this WSJ op-ed. Not surprisingly, a good part of the article examined dubious decisions that local governments have made in financing sports palaces:

State and local borrowing as a percentage of the countryís GDP has risen to an all-time high of 22% in 2010 from 15%, with projections that it will reach 24% by 2012.

Even more disconcerting is what the borrowing now often finances. One favorite scheme for muni debt is giant and risky development projects.

Californiaís redevelopment regime is an object lesson. Starting in the 1950s, the state gave localities the right to create public agencies, funded by increases in property taxes, which can issue debt to finance redevelopment. A whopping 380 such entities now exist. They collect 10% of all property taxesónearly $6 billion annuallyóand they have amassed $29 billion in debt never approved by voters for projects ranging from sports facilities to concert venues to retail malls, museums and convention centers.

Critics, including taxpayer groups, say most such agency projects add little economic value. Sometimes the outcome is much worse.

In 1999, Fresno conceived plans to revive its downtown area with various projects, including a baseball stadium for the minor-league Grizzlies, which it had lured from Phoenix. The cityís redevelopment agency floated some $46 million in bonds to build the stadium. But the Grizzlies fizzled in their new home, demanded a break on rent, threatening to skip town and stick taxpayers with the entire $3.4 million annual bond payment on the facility. The team is now receiving $700,000 in annual subsidies to stay in the city.

Adding to the cityís woes: Last June, another development project, the Fresno Metropolitan Museum, went bust, leaving the cityís taxpayers on the hook for three-quarters of a million dollars in annual debt payments.

Cities now also use taxpayer-financed debt to engage in fierce bidding wars that benefit private enterprises. Charlotte, N.C., for instance, won the bidding for the new Nascar all of Fame with a $154 million offer, funded by a new hotel tax dedicated to servicing bonds for constructing the hall. But the venue employs only about 115 peopleóand an economic development study estimated the increased annual tourism from the venture wonít even equal what a single Nascar race generates.

Why did politicians offer the deal? For the dubious and hard-to-quantify purpose of ìbrandingî the city with a major attraction, according to the Charlotte Observer.

Yeah, we in Houston know all about financing those minor league stadiums. Anyone taking into consideration what we are going to do with that thing if the Dynamo and/or the MLS doesnít make it?

If that werenít bad enough, the WSJís Chris Rhoads chimed in yesterday with this article on the wasting, publicly-financed ìassetsî that Greece built for the 2004 Olympic Games:

Georges Kalaras used to view with pride the sports hall built near his home here for the 2004 Olympic competition in rhythmic gymnastics and ping pong. Now, he gets mad every time he jogs by.

"Look, it’s locked!" shouted the 38-year-old Mr. Kalaras, who works for the Athens city water company. Two stray dogs tangling with each other behind a padlocked metal fence accounted for the only activity in the complex, which seats 5,200 people.

Mr. Kalaras figured the steel and glass hall, costing taxpayers $62 million, would provide recreational space in his neighborhood. Officials envisioned concerts or shops.

Instead, when the Olympic torch went out after the Athens Summer Games six years ago, the doors closed here, as well as at many of the 30-odd other sites built or renovated for the Olympics that summer.

The vacant venues, several of which dominate parts of the city’s renovated Aegean coastline, have become some of the most visible reminders of Greece’s age of excessive spending. Sites range from a softball stadium and kayaking facility to a beach volleyball stadium and a sailing marina. [.  .   .]

Even boosters of the Olympics are having second thoughts.

George Tziralis, a technology investor, in 2007 co-authored a glowing report declaring the venues as "greatly improving the quality of life of the inhabitants of these areas, providing valuable resources to the community and the economy."

On a recent afternoon, staring at a pile of bricks on the unfinished entrance behind a locked metal fence encircling the Olympic sailing marina, he was less upbeat.

"I hope you’re calling this article ‘The Nonsense of the Olympics,’" he said. Boats filled about a third of the 120 slips at the marina, which remains closed to people who aren’t boat owners.

Later, Mr. Tziralis, 28, gestured out the window of his Opel Corsa at a huge, locked complex of mostly vacant Olympic properties, located on the former site of the city’s old airport.

"There’s no way there shouldn’t be a park here six years after the Games!" he shouted.

That complex, which cost taxpayers $213 million, includes stadiums for field hockey, softball and baseballósports with little or no following in Greece. The facility for canoeing and kayaking slalom at the site was to become a water amusement park. It didn’t.

In light of the foregoing and last weekís lessons on governmental decision-making, what could possibly go wrong with this?

On Leadership

drking2 If you read just one article this week, make it this one (H/T Mike at Crime & Federalism)  ñ William Deresiewiczís lecture to the plebe class at the United States Military Academy at West Point last year. A snippet:

Thatís really the great mystery about bureaucracies. Why is it so often that the best people are stuck in the middle and the people who are running thingsóthe leadersóare the mediocrities?

Because excellence isnít usually what gets you up the greasy pole. What gets you up is a talent for maneuvering. Kissing up to the people above you, kicking down to the people below you. Pleasing your teachers, pleasing your superiors, picking a powerful mentor and riding his coattails until itís time to stab him in the back. Jumping through hoops. Getting along by going along. Being whatever other people want you to be, so that it finally comes to seem that, like the manager of the Central Station, you have nothing inside you at all. Not taking stupid risks like trying to change how things are done or question why theyíre done. Just keeping the routine going.

I tell you this to forewarn you, because I promise you that you will meet these people and you will find yourself in environments where what is rewarded above all is conformity. I tell you so you can decide to be a different kind of leader. And I tell you for one other reason.

As I thought about these things and put all these pieces togetheróthe kind of students I had, the kind of leadership they were being trained for, the kind of leaders I saw in my own institutionóI realized that this is a national problem. We have a crisis of leadership in this country, in every institution. Not just in government. Look at what happened to American corporations in recent decades, as all the old dinosaurs like General Motors or TWA or U.S. Steel fell apart. Look at what happened to Wall Street in just the last couple of years. [.  .   .]

We have a crisis of leadership in America because our overwhelming power and wealth, earned under earlier generations of leaders, made us complacent, and for too long we have been training leaders who only know how to keep the routine going. Who can answer questions, but donít know how to ask them. Who can fulfill goals, but donít know how to set them. Who think about how to get things done, but not whether theyíre worth doing in the first place. What we have now are the greatest technocrats the world has ever seen, people who have been trained to be incredibly good at one specific thing, but who have no interest in anything beyond their area of expertise. What we donít have are leaders.

What we donít have, in other words, are thinkers. People who can think for themselves. People who can formulate a new direction: for the country, for a corporation or a college, for the Armyóa new way of doing things, a new way of looking at things. People, in other words, with vision.

The futility of regulating failure

failure-300x300 David Warren makes a remarkably lucid point about the dubious notion that governmental action is the proper remedy to any wrong:

Politicians try to pass laws against it; to create rules and regulations so complex and cumbersome that (as we saw in the BP disaster) an easily-corrupted "judgement call" bureaucracy must grant exemptions from them, in order for anything to function at all. When disaster strikes, they add more rules and regulations.

But more profoundly, the rules and regulations — once they pass a point of irreducible complexity — create a mindset in which those who should be thinking about safety are instead focused on rules and regulations. To those who see danger, the glib answer comes, citing all the safety standards that have been diligently observed.

From what we already know, this appears to be exactly what happened aboard Deepwater Horizon, and will not be rectified by the U.S. government’s latest, very political decision, to use means both fair and foul to prosecute British Petroleum, and punish the rest of the oil industry for its mistakes.

Let me mention in passing that President Barack Obama was in no way responsible for the catastrophe, and that there is nothing he can do about it. He is being held to blame for "inaction," as wrongly as his predecessor was held to blame over Hurricane Katrina, by media and public unable to cope with the proposition that, "Stuff happens."

In a sense, Obama is hoist on his own petard. The man who blames Bush for everything now finds there are some things presidents cannot do. More deeply, the opposition party that persuades the public government can solve all their problems, discovers once in power there are problems their government cannot solve.

Alas, it will take more time than they have to learn the next lesson: that governments which try to solve the insoluble, more or less invariably, make each problem worse.

I like to dwell on the wisdom of our ancestors. It took us millennia to emerge from the primitive notion that a malignant agency must lie behind every unfortunate experience. Indeed, the Catholic Church spent centuries fighting folk pagan beliefs in things like evil fairies, and the whole notion the Devil can compel any person to act against his will — only to watch an explosion of witch-hunting and related popular hysterias at the time of the Reformation.

In so many ways, the trend of post-Christian society today is back to pagan superstitions: to the belief that malice lies behind every misfortune, and to the related idea that various, essentially pagan charms can be used to ward off that to which all flesh is heir. The belief that, for instance, laws can be passed, that change the entire order of nature, is among the most irrational of these.

Sheer human stupidity is the cause of any number of human catastrophes — including the stupidity of superstition itself. We need to re-embrace this concept; to hug the native incompetence within ourselves, and begin forgiving it in others.

Amen.

Obfuscation is government’s secret weapon

Paulsen Over the past couple of years, Bill King has done a great job (and see generally here) of explaining how Houstonís unfunded public pension obligation represents a horrific burden on the city governmentís financial condition.

Given that such obligations are clearly unsustainable, why does the city government continue to provide them?

Edward L. Glaeser provides the following particularly lucid explanation of the dynamic that leads to such profligacy:

On Friday, The New York Times ran a front-page article about pensions that took note of a 44-year-old retired police officer who receives an annual pension of $101,333 despite never having earned more than $74,000 a year in base pay. The article reported that in Yonkers alone ìmore than 100 retired police officers and firefighters are collecting pensions greater than their pay when they were workingî and that ìabout 3,700 retired public workers in New York are now getting pensions of more than $100,000 a year, exempt from state and local taxes.î

The emotional response of many people is to vilify the retirees, but thatís a mistake. The individual police officers and firefighters were following the rules. They have jobs that require them to risk their lives in service of their communities, and large pensions are one payoff for accepting those risks and accepting relatively lower wages up front. Iím sure many of them are no less impatient than the rest of us and would have preferred to get more money in their 20s and less in their 50s.

The fault lies in the political process that makes their negotiating partners ó state and local governments ó more impatient than their employees. State and local governments donít want to face the short-term consequences of paying higher wages, so they structure compensation in ways that defer the costs of each new deal for years.

Politics doesnít just favor delayed compensation; it also favors forms of compensation that are particularly hard for people to evaluate. Governments almost always love obfuscation. The appeal of Fannie Mae and Freddie Mac was that they could subsidize homeownership without appearing to cost the taxpayers anything. Of course, they ended costing us plenty, just like hard-to-evaluate pension promises.

The rest of Glaeserís post is here.

Sort of reminds one of this, this and this, eh?

Is freedom possible without wealth?

From the fine HBO John Adams mini-series, Thomas Jefferson and Alexander Hamilton debate the relative importance of the creation of wealth to American society. Amazingly, the debate lives on today.

The shameful state of the Incarceration Nation

mentally ill prisoners The troubling U.S. incarceration rate ñ a direct result of the governmental policy of overcriminalization ñ has been a frequent topic on this blog (here, here, here, here, here,here, here, here, here, here and here).

In this post from last fall, Scott Henson notes that Kings College in London now has available here its latest "World Prison Population List" that reflects that the United States remains a world leader in incarceration rate by a large margin:

The United States has the highest prison population rate in the world, 756 per 100,000 of the national population, followed by Russia (629), Rwanda (604), St Kitts & Nevis (588), Cuba (c.531), U.S. Virgin Is. (512), British Virgin Is. (488), Palau (478), Belarus (468), Belize (455), Bahamas (422), Georgia (415), American Samoa (410), Grenada (408) and Anguilla (401).

Americaís dubious drug prohibition policy is one of the reasons for the high incarceration rate. However, as this Houston Politics/Chronicle blog post notes, this National Sheriffsí Association survey (H/T Doug Berman) reports that the United States imprisons many more mentally ill citizens than treating them in hospitals. This press release on the survey summarizes the sad story:

Americans with severe mental illnesses are three times more likely to be in jail or prison than in a psychiatric hospital, according to "More Mentally Ill Persons Are in Jails and Prisons Than Hospitals: A Survey of the States," a new report by the Treatment Advocacy Center and the National Sheriffs’ Association.

"America’s jails and prisons have once again become our mental hospitals," said James Pavle, executive director of the Treatment Advocacy Center, a nonprofit dedicated to removing barriers to timely and effective treatment of severe mental illnesses. "With minimal exception, incarceration has replaced hospitalization for thousands of individuals in every single state."

The odds of a seriously mentally ill individual being imprisoned rather than hospitalized are 3.2 to 1, state data shows. The report compares statistics from the U.S. Department of Health and Human Services and the Bureau of Justice Statistics collected during 2004 and 2005, respectively. The report also found a very strong correlation between those states that have more mentally ill persons in jails and prisons and those states that are spending less money on mental health services.

Severely mentally ill individuals suffering from diseases of the brain, such as schizophrenia and bipolar disorder, often do not receive the treatment they need in a hospital or outpatient setting. The consequences can be devastating ñ homelessness, victimization, incarceration, repeated hospitalization, and death.

"The present situation, whereby individuals with serious mental illnesses are being put into jails and prisons rather than into hospitals, is a disgrace to American medicine and to common decency and fairness," said study author E. Fuller Torrey, M.D., a research psychiatrist and founder of the Treatment Advocacy Center. "If societies are judged by how they treat their most disabled members, our society will be judged harshly indeed."

Recent studies suggest that at least 16 percent of inmates in jails and prisons have a serious mental illness. According to author and National Sheriffs’ Association Executive Director Aaron Kennard, "Jails and prisons are not designed for treating patients, and law enforcement officials are not trained to be mental health professionals."

Ratios of imprisonment versus hospitalization vary from state to state, as the report indicates. On the low end, North Dakota has an equal number of mentally ill individuals in hospitals as in jails or prisons. By contrast, Arizona and Nevada have 10 times as many mentally ill individuals in prisons and jails than in hospitals.

Among the study’s recommended solutions are for states to adopt effective assisted outpatient treatment laws to keep individuals with untreated brain disorders out of the criminal justice system and in treatment. Assisted outpatient treatment is a viable alternative to inpatient hospitalization because it allows courts to order certain individuals with brain disorders to comply with treatment while living in the community. Studies show assisted outpatient treatment drastically reduces hospitalization, homelessness, arrest, and incarceration among people with severe psychiatric disorders, while increasing adherence to treatment and overall quality of life.  .   .   .

More evidence of the myth of American exceptionalism?

The War on Drugs goes viral

drug-war The perverse damage that federal and state drug prohibition policies impose on American citizens and our neighbors has been a frequent topic on this blog over the years.

In this must-read Reason.com article, Radley Balko reviews how Americaís drug prohibition policies are increasingly being used as a basis for conducting Gestapo-like raids on American citizens:

Last week, a Columbia, Missouri, drug raid captured on video went viral. As of this morning, the video had garnered 950,000 views on YouTube. It has lit up message boards, blogs, and discussion groups around the Web, unleashing anger, resentment and even, regrettably, calls for violence against the police officers who conducted the raid.

I’ve been writing about and researching these raids for about five years, including raids that claimed the lives of innocent children, grandmothers, college students, and bystanders. Innocent families have been terrorized by cops who raided on bad information, or who raided the wrong home due to some careless mistake. There’s never been a reaction like this one.

But despite all the anger the raid has inspired, the only thing unusual thing here is that the raid was captured on video, and that the video was subsequently released to the press. Everything else was routine. Save for the outrage coming from Columbia residents themselves, therefore, the mass anger directed at the Columbia Police Department over the last week is misdirected.

Raids just like the one captured in the video happen 100-150 times every day in America. Those angered by that video should probably look to their own communities. Odds are pretty good that your local police department is doing the same thing.

Meanwhile, after suggesting on the campaign trail that drug prohibition policies needed to be changed, President Obama has cynically and hypocritically retreated and now supports the federal governmentís drug prohibition policy. Meanwhile, the enormous costs of the dubious policy continue to pile up.

Americaís War on Drugs is lost. It is way past time that we require our leaders to acknowledge that and end it. Their war has now become a war on us.

Update: Scott Henson has more.

My favorite Mayor

Oscar Goodman Is unquestionably Las Vegasí Oscar Goodman:

Q: Prior to politics, you represented accused organized crime figures. Whatís the biggest difference between politics and the mob?

A: My clients gave me their word, and their word was their bond. They always paid me. They always thanked me at the end of the day.

In the political world, none of that happens. A politicianís word usually doesnít mean a damn. His word is for the moment.