This story in Wednesday's Denver Business Journal highlights a question that's been nagging me lately: Why does it take a catastrophic economic downturn for governments to start thinking seriously about the merits of deregulation as an economic development strategy?
The city of Denver is temporarily waiving certain building fees, in an effort to encourage home improvement projects, as a way of boosting the local economy. And it seems to be working, according to the Journal:
"The free permits issued under the city’s “Home Renovation Bonanza” program saved residents an estimated $85.774 in fees, officials said. Building-permit fees normally range from $20 to several thousand dollars, depending on the value of the project.
The program aimed to boost the local economy by encouraging home-improvement projects. The free permits, available June 1-15, are for common improvement projects involving single-family homes and duplexes.
“We wanted a bonanza and it seems we got one,” Denver Mayor John Hickenlooper said in a statement. “We hoped to stimulate the local economy by offering an incentive for residents to make improvements to their property. This is a good sign that people are moving forward and doing what they can to get our economy back on track.”
But why does it take an economic downturn before local governments begin to think seriously about clearing away the hurdles they erect to entrepreneurship, enterprise and personal initiative? Why are Denverites required to get permits and pay fees for "common improvement projects" to begin with? Hickenlooper's statement tacitly acknowledges that the fees are an obstacle -- a disincentive -- to home improvement and economic activity; he concedes that they're something the city can do without, at least on a temporary basis, in order to help kick-start the economy. So why not make Denver's "Home Renovation Bonanza" a permanent thing? If it can do so much short-term good, wouldn't the benefits be multiplied over the long haul?
This isn't tenable, from the average politico's perspective, because, in Denver's case, the fees fund a city bureaucracy. If you permanently slash or eliminate these fees, you would also have to slash or eliminate the bureaucracy they sustain, and you would relinquish control over something -- in this case home renovation activities -- that the city and the politicians who run it want to control. It's become a racket, in other words -- one legitimized by official sanction. That's why Denver's "Home Renovation Bonanza" can only be a temporary thing; can only be a tease to the public about what life might be like if it didn't have to jump through so many hoops, and pay so many bribes, to get through the bureaucracy.
Imagine how much more robust the American economy could be if governments at all levels made clearing away economic disincentives a top permanent priority, rather than a short-term respite, to be continued, an anchor on the economy, once the crisis passes. Obamanomics focuses on massive government spending in order to prime the sluggish pump. There are other ways to skin this cat, however. The economic benefits of slashing red tape, eliminating onerous fees and taxes, clearing away the myriad economic disincentives that government creates -- of instituting reforms that get the government off the economy's back, in short -- aren't even talked about, at least at the federal level. Doing this would mean admitting that government is far better at killing jobs than creating them. And that flatly contradicts the statist world view.