Monday, July 17, 2006

Poverty, Jobs and Economic Development

The NY Times is reporting today that the mayor is about to embark on his own "War on Poverty." He has set up a commission to attack the problem of poverty in this city. As Linda Gibbs, deputy mayor for health and human services (is this the right porfolio for this work?) explains, the focus is "what we can do to direct investments im poor households in a way that improves their earning capacity."

Hold on to your wallets everyone, "We're from the government and we're here to help you." As the Times points out; "The effort is not without minefields. Mr. Bloomberg has charged the commission with finding ways to diminish or eradicate poverty without significantly increasing the size or cost of government."

Ho! Ho! We've heard this mantra before and the results are predictable. The mindset and approach pretty much insures that the only real beneficiaries will be the service providers. Just take a look at the members of the commission. Old government hands and academics along with one time-honored member of the permanent government, the venerable Bill Rudin. Not a single small businessman or, God forbid, an economist like E. J. McMahon. Just a round up of all the old Good Society types who misread the problem in the past.

Which brings us to the previous comments that we have made about this mayor's basic economic philosophy. He simply does not see the correlation between the size of government, over regulation and taxes and job growth.

In today's NY Post Steve Malanga of the Manhattan Institute makes the point (and why is no one from here included on the panel?) that the city's relatively poor job growth is the direct result of its record nearly $2 billion real estate tax increase in 2002. This tax, passed on directly to each and every retailer in this city, when combined with increased fines and fees, is the direct cause of the city's poor job development.

Today the city's relatively robust wage picture is a feature of one or two high income sectors, insuring, as Malanga says, that "the city's tax base is also growing ever narrower." Not everyone, however, is as gloomy as Steve. In today's Times our good friend, and Bloomberg toady, Mitch Moss writes a letter that started our day off with a good chuckle.

As Moss and his collaborator point out, New York "is not in a jobless recovery, but New Yorkers are deriving their income from a variety of sources." As they go on to tell us, intrepid New Yorkers are simply relying on "the strength of the cash-based underground economy."

So, "Thank God for the peddlers!" We don't need to worry about job loss because "immigrant entrepreneurs" are flooding the city's streets with pushcarts. New York doesn't need a poverty commission. It needs an economic development policy that understands the correlation between job growth, tax relief and less government regulation.