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Brad Harrington

Cheyenne's Event Center: "Time To Pull The Plug"

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CHEYENNE'S EVENT CENTER: "TIME TO PULL THE PLUG"

By Bradley Harrington

“The essence of the interventionist policy is to take from one group to give to another. It is confiscation and distribution.” - Ludwig von Mises, “Human Action,” 1949 -

If Cheyenne residents ever wanted a real-world example of how government interference distorts supply and demand, thereby making all of us poorer in the process, the Taco John’s Event Center certainly provides a classic instance of it.

Here we have an ice-rink service that, when owned by private investors, lost $18,000 in 2005 and $64,000 in 2006.

What, in a free-market economy, is the course of events in such a situation? When private investors engage in development projects that fail to meet consumer demands, they lose money - and, in response, those investors will do one of two things:

(1) Determine that the losses are due to mismanagement, and implement a proper management scheme; or, (2), Will decide that it is the venture itself that is the problem and shut it down.

In this fashion, the results of poor market judgment operate as a self-correcting mechanism to dampen such errors in the future: those investors, you can be sure, will be a little more careful about when, where and how they place their dollars next time around.

But none of that ever happened. Nearly three years ago, you see, Cheyenne’s governing body, under the economically inept “leadership” of former Mayor Jack Spiker, decided that it had a better answer for city residents instead, and acquired the Event Center through a land swap to run for itself.

And the results? “Shortfalls are greater than when it was privately owned. In all, in the 2009-2010 budget year, the ice center made $379,000, with $603,413 in expenses - a net loss of $223,678.” (“Events center future unsure,” Wyoming Tribune Eagle, Aug. 28th.)

That’s nearly a quarter of a million dollars - poured down the toilet by “leaders” who, in their infinite wisdom, thought they had more on the ball than we consumers did when we spent our dollars as we saw fit. And that’s just for fiscal year 2009-2010.

Thus the original investors, by having their losing project absorbed by the city instead of having it fold as it should have, were spared the economic spankings that come along with poor market decisions, and therefore never learned the proper lessons that would have acted as a future governor on subsequent investment decisions.

And who, it bears asking, ended up shouldering that responsibility instead? The innocent taxpayer who - through the institutionalized use of force - has become victimized by an ever-widening spiral of losses that would never have occurred if dollars had been left free to flow as they would. And all in a time when city dollars have been supposedly tighter than skins on grapes.

So, what’s the lesson? When the market makes a mistake, the free interplay of economic forces quickly act to reduce the damage - and the greater the damage, the greater the forces at work to minimize it. Adam Smith’s “invisible hand.”

When the government makes a mistake, however, it simply loots more taxpayer dollars on a larger and larger scale - and the consequent dislocations, instead of being diminished by the forces set into motion by their very existence, spread without restraint like the ripples on a pond. And this, folks, is referred to as “planning.”

Councilman Jim Brown, to his credit, does appear to have learned the lesson, for he stated that “it’s time to pull the plug on the ice machine.”

Councilman Mark Rinne, however, does not appear to be quite as perceptive: “If the community wants it, they need to support it,” he said. To which I would ask of Dr. Rinne: Hello, are you living in a cave? Isn’t it blatantly obvious that the community doesn’t support the ice rink? Isn’t that what caused this boondoggle to crash in the first place?

Nor does Mayor Rick Kaysen appear to have a better grasp of things, for he said: “Anytime there’s a new enterprise, there will be some growing pains to get to a break-even point.”

“New,” Mr. Mayor? Are you kidding? The ice rink has been around for nearly 10 years. At what point in the quest for profitability would you consider such a venture to be a failure? 20 years? 25? 50?

To be fair to Mr. Kaysen, he did not create this problem: he inherited it from his predecessor instead, former Mayor Jack Spiker, who has never seen a tax dollar he didn’t like and wasn’t willing to fritter away. But by stating that he believes that a decade-long “enterprise” which has never made a dollar just needs more “growing pains” at continued taxpayer expense, borders on the ludicrous. Meet the new Jack Spiker clone.

Think this flop of an “enterprise” is worth more money, Mr. Kaysen? Great. Try spending your salary on it instead of ours.

--

Bradley Harrington is a former U.S. Marine and writer who lives in Cheyenne, Wyoming; he can be reached at timeforeverymantostir@yahoo.com.

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This sort of thing is chump change compared to the racket a lot of big cities play, subsidizing big stadiums for major league baseball and football teams. When I visited Kansas City a few years ago, I discovered that there was a huge tax on my hotel bill to pay off the stadium there. Needless to say, I hadn't come there, and never would have, to watch the Chiefs or the Royals.

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This sort of thing is chump change compared to the racket a lot of big cities play, subsidizing big stadiums for major league baseball and football teams. When I visited Kansas City a few years ago, I discovered that there was a huge tax on my hotel bill to pay off the stadium there. Needless to say, I hadn't come there, and never would have, to watch the Chiefs or the Royals.

I wonder if the same kind of pernicious nonsense goes on in Australia. I don't mean to say things don't get subsidised - they obviously do - but rather do stadiums and sports teams get money from the state?

Arnold: do you know if this goes on here?

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This sort of thing is chump change compared to the racket a lot of big cities play, subsidizing big stadiums for major league baseball and football teams. When I visited Kansas City a few years ago, I discovered that there was a huge tax on my hotel bill to pay off the stadium there. Needless to say, I hadn't come there, and never would have, to watch the Chiefs or the Royals.

I wonder if the same kind of pernicious nonsense goes on in Australia. I don't mean to say things don't get subsidised - they obviously do - but rather do stadiums and sports teams get money from the state?

Arnold: do you know if this goes on here?

I don't know all the details, but I think one can take for granted that the governments get involved with sports, as they do with promoting tourism. However, if there are any similar hotel type taxes, I am not aware of them.

One thing you may have noticed here during the election, is that government and opposition are required to show how their spending is financed, and what their borrowing (or surplus) will be. The electorate here hold politicians to account on their promises, as our ex prime-minister has experienced by his termination.

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It seems your local politicians need some history lessons and a good one to start with could be from Michigan of the early 19th century and it's "Boy Governor," Stevens T. Mason. In July of 1831 , President Andrew Jackson, appointed 19 year old Stevens T. Mason as secretary and acting governor of the Michigan Territory. When Andrew Jackson later appointed a new governor to the territory, George B. Porter, Mason remained as an advisor. When Porter died, Mason once again took charge as acting governor and then persuaded most territorial leaders that he was worthy of staying governor, of which he lost once more and was then elected once again as governor in 1835.

The young Mason came from a family in Virgina who were well know for standing on the side of a limited government as his granduncle, George Mason, wrote the Virginia Declaration of Rights, but that knowledge did not stop him from making mistakes. A few of those mistakes were starting a state funded railroad and canal system because he thought "internal imporvements shall be encouraged by the government" meant the government should tax the public to pay for those improvements. After seven years, and only 16 miles of digging of the canal the expenses amounted to $350,000 with only $90.32 worth of toll receipts. So, in 1843 the government board that voted for this government funded project decided to "cut it's losses" and abandoned the canal. And because the government abandoned the canal and left some workers unpaid those workers stole materials which left the canal totally ruined. This is a great and normal example of intervention and failure when governments do business in the market.

The government funded railroads of Michigan did not fair any better. The Michigan Central which was built thorugh prospering areas, unfortunately, was built with strap-iron rails which are thin strips of iron strapped to wooden rails. The rails were to fragile to carry heavy loads. The government board chose to run heavy shipments on these tracks and just reapair them as needed which was not only dangerous, but more costly in the long run. What a great example of government officials looking out for their citizens well-being! NOT! The Michigan Central did make money, but not enough to cover cost for repairs and rails.

The Michigan Southern, was supposed to run parallel and also became a wonderful example of government failure in the market. It had the same building supply problems of the Central such as cheap resources and it also had curves that were to sharp for safe locomotive travel. Along with the before mentioned problems, the government board sent the railroad through towns that were to small to load the railcars so as to make a profit. By 1846, the Southern which was supposed to cross the whole state, had only made it halfway across the state, but cost the taxpayers 1.2 million dollars to build with no profit in sight.

On the Clinton-Kalamazoo Canal, The Michigan Central and the Michigan Southern the state spent almost $4 million. The state of Michigan also spent $70,000 on surveying for the Michigan Northern Railroad, before abandoning it. And the state of Michigan also spent $47,000 clearing a route for another canal near Saginaw which was also abandoned and the materials were either stolen by the locals or rotted.

With the state of Michigan on the verge of bankruptcy the still young Mason (although he was begining to change his thoughts on government ownership in the market) was voted out as Governor and replaced by Thomas Cooley who was also raising doubts about government owership in the market. Alpheus Felch replaced Thomas Cooley and by 1846 Felch was pushing for total privatization of "the business of transporting passengers and freight by railraod." With the selling off of government entities that did not protect the citizens rights the state of Michigan was able to cut it's bureaucracy and avoid bankruptcy. And to quote Governor Felch, "A sale of these works would have the effect to simplify the operations of the state, to reduce the number of officers and servants in its employ, and to render less complicated the whole machinery of government." In 1850, the state of Michingan held a constitutional convention and redefined the role of their government from that which was written in 1835 and mandated "government support for internal improvements." The replacement was the following: "The state shall not subscribe to or be interested in the stock of any company, association, or corporation." And, "the state shall not be a party to or interested in any work of internal improvement nor engaged in carrying on any such work."

Now, fast forward 160 years and local, county, state and federal governments are all making the same mistakes that Michigan made, learned from and corrected so long ago. Maybe you can enlighten Councilman Jim Brown of these facts and get him to make further corrections. If not, I offer that we all do the same to our government officials as Michigan did to it's "Boy Governor" and boot them out.

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I don't know all the details, but I think one can take for granted that the governments get involved with sports, as they do with promoting tourism. However, if there are any similar hotel type taxes, I am not aware of them.

One thing you may have noticed here during the election, is that government and opposition are required to show how their spending is financed, and what their borrowing (or surplus) will be. The electorate here hold politicians to account on their promises, as our ex prime-minister has experienced by his termination.

I did notice that. It's refreshing and I find politics less overtly dishonest than back in the US. That isn't to say things are great, but never do I get the impression that we have a disaster brewing.

Happy to be corrected if I'm wrong, but those are my observations since I arrived a couple years ago.

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I don't know all the details, but I think one can take for granted that the governments get involved with sports, as they do with promoting tourism. However, if there are any similar hotel type taxes, I am not aware of them.

One thing you may have noticed here during the election, is that government and opposition are required to show how their spending is financed, and what their borrowing (or surplus) will be. The electorate here hold politicians to account on their promises, as our ex prime-minister has experienced by his termination.

I did notice that. It's refreshing and I find politics less overtly dishonest than back in the US. That isn't to say things are great, but never do I get the impression that we have a disaster brewing.

Happy to be corrected if I'm wrong, but those are my observations since I arrived a couple years ago.

Your observations are good. Australia has managed to survive much of the trauma that has crippled other economies. Our banks needed no help, and along with the Canadian banks are among the best in the world. We did not suffer a housing crisis either. Over here, you can't walk away from your mortgage, because it is not just your house at stake, but all your assets. Consequently there is more caution before signing for a house. The big positive deregulation changes for Australia happened during the Hawk / Keating years, with the momentum continued by Howard. We live well here, especially Queensland. Our tax laws are less oppressive than those of the USA, and I can't think of any liberties that the USA has that we don't.

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Your observations are good. Australia has managed to survive much of the trauma that has crippled other economies. Our banks needed no help, and along with the Canadian banks are among the best in the world. We did not suffer a housing crisis either. Over here, you can't walk away from your mortgage, because it is not just your house at stake, but all your assets. Consequently there is more caution before signing for a house. The big positive deregulation changes for Australia happened during the Hawk / Keating years, with the momentum continued by Howard. We live well here, especially Queensland. Our tax laws are less oppressive than those of the USA, and I can't think of any liberties that the USA has that we don't.
It's what I notice, too. What I also notice are the things one can get here that I suspect are a result of those freedoms. All over Sydney, shops and cafes of every type and catering to every interest thrive. In America a lot of these types of things have been regulated out of existence, and the onerous zoning laws have made it nearly impossible to mix business and residential neighbourhoods. Not so here. I live in an ostensibly residential area of the city, and yet there are all kinds of little businesses interspersed throughout. Downstairs from me is a cafe and a pizza shop next to it. Down the street is a little tax office, and then further on two friends of mine run a thriving photography studio.

It's true real estate in Sydney is very expensive, but without crippling regulations forcing banks to lend to the unworthy, people who buy properties actually can afford them. In the past several years there has been nary a mention of foreclosures in the press and I know of no houses anywhere near me that are in foreclosure. Another set of friends of mine down the street saved for TEN years to buy their house. I also reckon that credit debt is far lower here, but I cannot say that with certainty right now.

I couldn't have picked a better time to move here. I do make pretty regular trips back to the US, but I always feel like this is my home. After a long trip away, that glance out the plane window as the Sydney skyline comes into view always gives me that calm sense of home, of having chosen a wonderful place to live.

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Your observations are good. Australia has managed to survive much of the trauma that has crippled other economies. Our banks needed no help, and along with the Canadian banks are among the best in the world. We did not suffer a housing crisis either. Over here, you can't walk away from your mortgage, because it is not just your house at stake, but all your assets. Consequently there is more caution before signing for a house. The big positive deregulation changes for Australia happened during the Hawk / Keating years, with the momentum continued by Howard. We live well here, especially Queensland. Our tax laws are less oppressive than those of the USA, and I can't think of any liberties that the USA has that we don't.
It's what I notice, too. What I also notice are the things one can get here that I suspect are a result of those freedoms. All over Sydney, shops and cafes of every type and catering to every interest thrive. In America a lot of these types of things have been regulated out of existence, and the onerous zoning laws have made it nearly impossible to mix business and residential neighbourhoods. Not so here. I live in an ostensibly residential area of the city, and yet there are all kinds of little businesses interspersed throughout. Downstairs from me is a cafe and a pizza shop next to it. Down the street is a little tax office, and then further on two friends of mine run a thriving photography studio.

It's true real estate in Sydney is very expensive, but without crippling regulations forcing banks to lend to the unworthy, people who buy properties actually can afford them. In the past several years there has been nary a mention of foreclosures in the press and I know of no houses anywhere near me that are in foreclosure. Another set of friends of mine down the street saved for TEN years to buy their house. I also reckon that credit debt is far lower here, but I cannot say that with certainty right now.

I couldn't have picked a better time to move here. I do make pretty regular trips back to the US, but I always feel like this is my home. After a long trip away, that glance out the plane window as the Sydney skyline comes into view always gives me that calm sense of home, of having chosen a wonderful place to live.

Well, thanks a lot, guys, for making me feel like I'm living in the wrong country after all. <huge grin> I'm beginning to get jealous!

Mind if I just kind of slide on in past your border patrol?? ;)

With Regards,

Bradley

timeforeverymantostir@yahoo.com

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Mind if I just kind of slide on in past your border patrol?? ;)
Well it's a bit tougher considering there's no bordering country, but hey give it a try! ;-)

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