Sunday, February 26, 2012

Examining the Argument Basis for the Continuation of Economic Development Authorities

State, local and municipal economic development authorities based on collective action and funded by taxpayer dollars come in many varieties. In the main one might categorize the central planning entities as:

(1)    those based on central planning techniques regarding urban planning,

(2)    those based on central planning techniques that attempt to attract private or public sector entities via industrial parks or site preparation,

(3)    those central planning techniques awarding tax holidays, subsidized loans and grants-in-aid to attract firms.

The three central planning techniques mentioned above have been challenged as non-effective and unrealistic based upon the position that the private sector will respond if a demand exists [let the market determine]. That is, the spontaneous/emergent order of the plans of the many will be more effective than the central plans of the few. (1)

One of the rebuttals to the argument that economic development plans are ineffective is:  “…others are providing central planning and collective action taxpayer dollar incentives hence one must compete with the other state, local and municipal governments”. That is, the basic debate point of “if they are doing it, we must do it too”.

Drilling down into the rebuttal’s debate point of “….since others offer taxpayer dollars, than we must offer too…” what if the debate point is a signal to consider/investigate the implicit assumption of “if they, then we” and that this aspect of the rebuttal in fact points directly to the summation of components of public choice theory? How so?  

If collective action by use of taxpayer dollars begets another set of collective action through another set of taxpayer dollars, and so on down the line, as argued in the above debate point, then the debate point boils down to  “perpetual” [if they, then we, and we become the next they, and so on]. However, is the underlying basis for the debate point a signal of “purposely perpetual”? Stated alternatively, is "if we, then they" no more than an exercise of purposeful perpetuation, which is a reflection of, and indication of, a purposeful spider web of rent seeking, special interests, politico enablers, and political constituency building through taxpayer dollars?  

Hence the rebuttal is merely based upon perpetuation which then leads one to consider the rebuttal as an indicator of a purposeful perpetuation of a pre-built network of rent seeking. That state, local and municipal authorities that argue they must offer taxpayer dollars in the form of economic development as an exogenous set of state, local and municipal authorities are offering taxpayer dollars in the form of economic development, is not an argument of the exogenous rather an indicator of a scheme of purposeful perpetuation.

One might consider taking the above proposition of a purposeful perpetuating scheme and putting it into “action”:

(1)    local economic development authority X is directed by politico enablers Y and made up of economic development authority employee group G, the summation of which is dispensing taxpayer dollars T.

(2)    one knows as a fact that anytime T is dispensed activities as evidenced by public choice theory emerge i.e. rent seeking, special interests, politicos acting as special interest enablers, crony capitalism, etc. That is, a special group is benefiting from the associated rent seeking and we will designate this group as RS.

(3)  the economic development authority X is necessarily  perpetuated as both Y and G have a vested interest in employment and power, respectively, and RS has an interest in the taxpayer dollars bestowed upon RS.

(4)  in order to legitimize and perpetuate the existence of X the group Y, G and RS merely point to the existence of another local economic development authority designated as A.

(5)therefore, as the argument goes, since A exists then X must exist and since X exists then A must exist.

However, both X, A and the multitude of other local economic development authorities B, C, D and so on do not exist because of one another. However, they may well exist as an emergent coordinated scheme. That is, once the multitude of local economic development authorities came into existence, then Y, G, and RS associated with each individual authority have a grand incentive to perpetuate their internal employment, politico external power and rent seeking activities of the taxpayer dollar. Their self-preservation then becomes a coordinated scheme of existence due to/based upon their own and other's emergence over time. The self-perpetuation of such authorities then becomes: since X emerged, and A emerged, then B, C, D and so on must exist due to the emergence of others. However, their existence is not due to greater emergence, their existence is due to their internal employment, politico external power and consequential rent seeking activities of the taxpayer dollar.

Which then leads one back to the proposition: it is not an argument of the exogenous rather an indicator of a scheme of purposeful perpetuation. That the separate authorities merely find themselves in a collection of authorities and conveniently point to the other authorities as the basis for their continued existence. That the convenience of other authorities as a basis regarding each seperate authority’s existence is fallacious. That the convenience of other authorities is more likely the knowledge that political power, rent seeking activities and internal employment of the authorities themselves can be perpetuated, in a coordinated sense, by each authority purposefully pointing the other authority as a basis for existence.


(1) The Use of Knowledge in Society, 1945, F.A. Hayek.

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