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Home > Politics
"Market forces" vs the "free market"
by Bob Powell, 10/15/14
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Below, see the letter submitted to the Colorado Springs Independent on 10/14/14.
Published 10/16/14 under the title: Bill the developers.

Comments:

Obviously, I didn't choose the title of the letter and I'm not fond of it. It implies "only bill the developers." Though we all have to pay for the sins of the past, going forward it's absolutely necessary to pay for needed infrastructure as growth occurs and have that payment be made as part of the cost of new residential and commercial properties in order that growth not degrade traffic levels of service, ability to handle drainage, supply water, etc. ... for the reasons I describe below.

By the way, I am somewhat torn about advocating a "No" vote. People are actually being flooded and having their homes and properties damaged through no fault of their own. The civic (yes, liberal) thing to do is fix it.

"Conservatives" complain that a "Yes" vote is a vote for "big government" by liberals who never saw a tax increase they didn't like. Doug Bruce said this when I got a call from him the day this was published. He wanted to enlist me in passing out his literature, which I declined to do. It's somewhat embarrassing to be on his side of the issue.

I requested that The Independent leave out the first paragraph, if they wanted to shorten the letter. Instead, they cut much more important sentences:

Those who tout the "free market" actually want business to be "free" to pass negative impacts and costs on to you. Calls for "deregulation" are actually calls for "lawlessness" to allow this.

Disappointing, but that's what one gets when being politically incorrect by explicitly critizing the "free market" even in a supposedly liberal publication. Also see, the Invisible Hand Drops Ball & Economics 101,

For more on growth issues, see Colorado Springs: A Broken Region, 10/26/10. While it's true that Colorado Springs government is broken, it's worse than that. The whole region is broken; its policies are structurally unsound. ... For even more, see the Growth facts of Life.

One more thought: The pro-stormwater tax signs around this libertarian-leaning town are incongruous. They say, "Let's fix this." I thought, "Who is this "us", eh? Some collective, communist "US"?" Yes, collectivist when it comes to the redistribution of costs, instead of income.

_______________

Summary: Reject the Stormwater Question 1B tax. The costs of infrastructure required to handle stormwater should have been included in residential and commercial property costs as they were built. Any initiative, like 1B, that does not impose impact fees on developers to pay for necessary infrastructure as they build should be defeated. Otherwise we violate fundamental economic principles that depend on market forces to properly regulate supply and demand. And we insure never-ending implicit growth subsidies, more growth, and more taxes. Don't just say "NO" to growth. Let market forces guide growth naturally.

Letter, as submitted:

"Market forces" vs the "free market"

The Sept 24 letter, "Not my problem," argues that those in areas not impacted by stormwater should pay less than those affected, so the vote should be "No." Others could argue that those unaffected are more likely to produce runoff and should pay more.

Regardless, voters should reject County Question 1B. Here's why.

It's totally obvious: the costs of infrastructure required to handle stormwater should have been included in residential and commercial property costs as they were built. Instead, the lack of required infrastructure to handle new growth resulted in enormous damage to those in low-lying areas. But 1B imposes those costs on everyone, instead of on those responsible.

A point on economics: for market forces to properly guide decisions, prices must comprehend all costs associated with the product or service. Otherwise purchasers are guided to make choices they may not otherwise make. The "invisible hand" doesn't have the necessary information. With all costs included, purchasers might make alternate choices or not purchase at all.

Developers not paying these costs as growth occurred increased their sales and profits by passing the burden of damages and costs to others. This cost redistribution produced enormous infrastructure backlogs here and nationally.

Those who tout the "free market" actually want business to be "free" to pass negative impacts and costs on to you. Calls for "deregulation" are actually calls for "lawlessness" to allow this. Yes, I know. It's politically incorrect to point out that cost redistribution is an integral "free market" feature: socialize costs and privatize profits.

Any initiative, like 1B, that does not impose impact fees on developers to pay for necessary infrastructure as they build should be defeated. Otherwise we violate fundamental economic principles that depend on market forces to properly regulate supply and demand. And we insure never-ending implicit growth subsidies, more growth, and more taxes.

Don't just say "NO" to growth. Let market forces guide growth naturally.

Bob Powell
Colorado Springs


URL: http://www.exponentialimprovement.com/cms/stormwatertax.shtml

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