Wednesday, December 26, 2007

Fun With The Department Of Economic Affairs/(Development)

I have received some recent complaints that my posts are becoming increasingly over-the-top, riddled with partisanship and sensationalism. In an effort to appease my detractors, I will endeavour to abandon incindiary propaganda--instead relying on my stylistic and grammatical excellence to satisfy the ridid demands of this blog's vast readership.

With that bit of business out of the way, let's focus on this week's worst idea ever!

(Intermission #1: I thoroughly enjoyed writing those first 2 paragraphs! You see, I went through all these fancy words, in an effort to show that I don't have to make outrageous claims to make these posts good. But then, I went right back and made an outrageous claim that this idea was actually the worst ever! I even implied that there can be a new "worst idea ever" each week. Very funny stuff!)

Some time ago, Mayor Moyer determined that 'Economic Development' was a function worthy of its own department, apparently having outgrown its former role as a sub-office within the purview of the Mayorship. Along comes O-11-07, defining the duties of the new Department of Economic Development. Whoops!!....

"That stinking City Charter--it actually mentions precisely which departments may exist, and 'Economic Development isn't one of them. Curses on the Charter!", the mayor failed to say.

Along comes CA-01-07, a charter amendment to allow such a department.

Now, somewhere along the way, 'Economic Development' got renamed 'Economic Affairs', and I don't quite know why. I cannot think of any legal or perfunctory reason why such a change might exist, and I am somewhat reluctantly forced to conclude that ego and/or political hogwash are somehow involved. The 'Department of Economic Affairs' sounds like more of an ominous, far-reaching, and powerful entity, and if nowhere else than in my imagination, I think a belief in big government drove the name change.

Anyway, I don't much like this idea. It takes a too much time for me to present a flowing narrative explaining my arguments, so instead, I am going to present you with language from the actual bill, inserting my thoughts piecemeal, on a comment-as-you-go basis.

C. The department shall have the following duties and responsibilities:
1. To assist existing businesses to remain in business.

This should ring alarm bells for everyone who reads it. Using everyone's wealth to help certain people is a restriction of freedom, and prevents capitalism from working properly. Economic freedom leads to good things:

The green bars represent the highest levels of freedom--click here for the full scope of the information.

Let me elaborate using a first hand example. When I started my business, it was on a very small scale. I did not have a lot of overhead, and didn't need any startup capital. From year 1 to year 2, business increased by 500%!! I freaked out--heck, I was only 21 years old and didn't have any academic or on-the-job experience. I went to a bank and said "Hello, my name is Brian, I am 21 years old, I just started a company in the most competitive industry that exists, and I need $50,000". The bank promptly responded "son, there's a jar of tasty lollipops near the door on your way out".

So, I went to the SBA, which is a quasi-government agency. They didn't loan me the money, but they guaranteed repayment of 80% of my loan to the bank if I defaulted. The bank consequently gave me the money. I know this seems hypocritical given the case I am making at this very time, but hear me out. As time goes by, I tend to think this money actually hurt my operations. You see, since I had the money, I spent it. I hired more managers than I needed, and leased on office that I didn't need. I went into even heavier debt for 2 years, as these expenses caused me to earn losses for 2 years. As we speak, I have the proper amount of labor, and do not use the office--a profitable arrangement. Of note: the business model that I use now is the same model I used before I received SBA guaranteed financing.

This is precisely the point I want to illustrate: government involvement in the private market distorts incentives. If I hadn't received that money, I would have been forced to succeed using a different model. I might have found another way to get money, but more likely, I would have kept doing business following the original model, which turned out to be the correct model. See what I'm saying?

2. To promote the establishment of businesses that serve local residents.

Here are the steps to promote the establishment of businesses:

1. Have property taxes as low as possible.
2. Streamline permitting process.
3. Provide adequate parking and transportation access.
4. Sit back, smoke a cigar, and watch businesses thrive.

The city can do these things without a new department and a highly paid department head.

3. To recruit, assist, and promote minority and disadvantaged businesses and to enhance employment opportunities for all residents, especially women, minorities, and youth. For example, to develop and administer workforce development activities and programs as the programs relate to the economic vitality of the city.

Why is everyone except middle aged white males entitled to special treatment? Isn't this called racism?

4. To apply for and administer grants and loans related to the economic vitality of the city and to assist with various tax credit and loan programs offered by the County, State, and Federal Governments as these programs relate to the economic vitality of the city.

This sounds like a noble cause, but again, it seems that an existing city department could handle the load.

5. To work with other municipal employees or private parties in identifying areas in the city in need of economic revitalization and to cooperate in the preparation in plans to bring about economic revitalization to such areas.

(Intermission #2. Something good did come of the SBA money. Since I participated in their program, I was eligible for their rewards, and was recognized as Young Entrepreneur of the Year in 2003. Fancy.)

6. To work with businesses and residents to recognize and resolve differences over such matters as parking and special events.

What?? How did that get in there?! Why would the economic affairs department be officiating parking disputes.

I am imagining that the Mayor lost a bet to the person whose job this really is, and was forced to shift this annoyance, or else go back on her word and disgrace the memory of her ancestors.

7. To offer existing businesses and prospective businesses assistance in identifying sources of financing and obtaining professional and technical assistance.

The aforementioned Small Business Administration is a government agency that already exists to do this very thing. They will even loan you money. Then you can waste the money and go into massive debt. Then you can write a blog in lieu of making money to repay that debt. For expert financial advice, you can call me at........

8. To periodically prepare forecasts of economic conditions in Annapolis.

The state already does this.

9. At the request of the Mayor or City Council, to analyze the impact of proposed legislation.

Instead of paying a couple hundred thousand dollars to a department to do this, budget an intern position for some starving grad student to do the very same analysis while working in the finance department.

10. Participate in the urban and regional planning activities of the City, Anne Arundel County, and the regional planning organizations consistent with the character of the City.

I am quite confused. We are talking about Economic Development, right? Are these organizations going to plan the economy?? Or are they just going to overlap duties with the existent Department of Planning and Zoning?

11. Serve as a liaison to the business community through membership and support of recognized business associations in the city including such efforts as providing technical assistance and information to the business community and its recognized associations.

Membership to these associations is not free. Do you support your tax money funding the city's application fee for the Parole Business Association?

12. Assist those who desire to hold special events in the City by providing a single point of contact for the city, advising of necessary permits and City requirements, and assisting in the development of the special event application and necessary permit applications and fees where appropriate.

Again, good idea, but do this in a different department. Perhaps the Department of Neighborhood and Environmental Programs, WHICH WAS CREATED FOR THIS EXACT PURPOSE! Whoops, I forgot, it was created to give a job to a crony.

13. Administer, promote, and financially manage the Annapolis Sister City Program.


14. To perform such other tasks as directed by the mayor.

We could all be so lucky.


Anonymous said...

Brian, I'm a progressive, and I agree with you completely. "Economic development", which generally translates into tax breaks and giveaways to businesses with connections to government are not the appropriate use of government or quasi-government (see: organizations. Best to nip this in the bud. Besides, everyone already seems to want to be in Annapolis/Anne Arundel County, why do we need to incentivize it further?

Anonymous said...

The whole Economic Affairs Department is just another useless expansion of City Government that's sufficiently vague, yet broad enough in scope to allow the Mayor to blow any amount of money, in any way she pleases.

Also, I'm appauled that it actually mandates racism and sexism.

Finally, isn't one of the main complaints citizens have the overdevelopment of Annapolis. So, what's the Mayor's response, let's create a whole new department for a million bucks to help create more development.

What this City needs is a department of "Getting out of the Way". Business does well in spite of government, not because of it. I guess that's the difference between Conservatives and so called Progressives.

Bob McWilliams

Brian Gill said...

I think the dept. of getting out of the way is a great idea. I've always wondered if someone could get elected by running on a platform of "kicking my feet up and listening to music", because at least they wouldn't be making things worse.

Anonymous said...

Shouldn't the City figure out how it's going to pay its pensioners before it goes creating any new departments?

PAUL FOER said...

Whoooaaaa...What is the story with all of these anonymous comments? This is still a free country--sort of... The idea of government being involved with economic development is neither inappropriate or worthless, however, it of course depends on how it is done and who it serves.

In the case of this boondoggle, we take an office which as far as anyone can tell, has hardly accomplished anything except to provide some jobs for the Mayor to hand out. Now she wants to reward her top crony there even more by making him a department director, now with a guaranteed minimum 100k salary. This will be the second time she gives a huge job to someone with initials MM by making a new department. If this office does a good job (has it?) and it really helps build and develop, then what's the problem? But, if it's just more government expense and jobs with no clear or guaranteed goals, then....

Anonymous said...

Hey Paul go back to your own Blog. Most of us came here to get away from your wacko self

Anonymous said...

Hey, I agree with Paul, imagine that. I too fail to see anything of substance that has been accompished for the millions that have been spent to date on the Economic Development Office.

In fact, I think much of the Mayors office would have difficulty showing any real accomplishments. Conversely, it's easy to see the failures - huge tax increases, the Market House, the Police Station, and now the Pension Fund.

Why wasn't the Pension money being set aside, just in case they lost what was obviously a shakey legal situation. Talk about incompetent financial management!

Bob McWilliams

PAUL FOER said...

Thanks for your comments. Whether one is a D or an R, we all want to see our tax dollars used for effect and benefit and this administration has a terrible record in this respect.

As for "anonymous"---well, your words speak for themselves. After all, how can they speak for you, since you, like a cockroach or rat, only scurry around in the dark? From your cowardly position of anonymity, you have the audacity to call me "wacko" and tell me I am not welcome to post comments here?
I suspect you are the person who has widely come to be jeeringly referred to as the Ann Coulter of Annapolis. Of course, her legs are longer and her adam's apple is slightly larger...but you are both shrill, annoying and hateful.

Anonymous said...

Development indicates some sort of progress.

Affairs is more along the lines of the status quo.

Maybe there is not too much progress happening so a name change is in order!

Anonymous said...

I suspect you are the person who has widely come to be jeeringly referred to as the Ann Coulter of Annapolis. Of course, her legs are longer and her adam's apple is slightly larger...but you are both shrill, annoying and hateful.