Monday, February 08, 2010

Retarded Economic Thinking

Mike Bloomberg will never help NYC recover from its own severe economic downturn-he doesn't have the good judgment or proper philosophical outlook to do what's necessary; and what is truly necessary is the reduction of the high cost of doing business. In yesterday's NY Post, the paper does a great job at focusing on one area that we have constantly highlighted-the use of the regulatory mechanism to make it more difficult to operate a business in the city.

As the Post points out, the mayor is using the regulatory regime to raise revenue so that he can posture about his holding the line on new taxes-ignoring the extent to which he has raised local taxes to the breaking point already: "The cash-starved city is socking New Yorkers with a massive ticket blitz in a bid to pump an extra $80 million into its depleted coffers, records show. Reluctant to raise taxes publicly, the Bloomberg administration is pursuing a “stealth tax” — launching an unprecedented squeeze on Big Apple residents and businesses, cracking down on parking, health, safety and quality-of-life infractions with a vengeance, the data shows. The ongoing blitz has worked so well that City Hall bean counters expect to rake in a record $884 million in fines by the end of this fiscal year, which runs from July 1, 2009 to June 30, 2010."

Now whether you appropriate money from the private sector by direct or indirect methods, the results are always the same-less money for local business to expand and hire new workers. And any cockamamie scheme to increase small business lending is fraudulent, and truly beside the point.

But to recognize the fraudulent nature of this process, would be to acknowledge that the entire enforcement enterprise is to maintain the municipal Leviathan's insatiable appetite for more money to fuel the governmental machine: "The city’s Independent Budget Office predicted the mounting wave of fines in a recent study, but found most violations cost more to issue and collect than they raised. The report warned that “the push for more fine revenue appears to be under way.” The city’s fiscal situation has led many to look to fine revenue as a potential source of help in filling the city’s budget gap,” the report scolded. “[But] the purpose of enforcement programs is not revenue generation.”

But it is in Bloomberg World; a world where misdirection about the mayor's own role in exacerbating the city's economic climate has to be carefully camouflaged-and the grandiosity of the government structure needs to be defended at all costs. But when fines and violations are not correlated to any real enforcement objective, you get the litany of absurdities that the Post reporting uncovers-along with the collapse of faith in the integrity of the system itself.

As the Post points out: "Hordes of ticket fighters pack hearing rooms across the city, pleading to have violations dismissed or fines reduced. Some say they’ve been rapped for petty or made-up offenses. “I’ve been in business for 10 years and this is the first time I feel the city is looking for ways to make money,” said Johnny Koljenovic, owner of Locale, an upscale Italian eatery in Long Island City, as he waited to contest nine violations for $2,500 at a Health Department tribunal.
An inspector ticketed his chef Jesse Davis for not wearing a hat — even though Davis, who trained at the French Culinary Institute, is bald. “It’s for stopping hair from falling into the food, but my chef has no hair whatsoever,” said the restaurateur. “The inspector said he should still have a hat, which I found completely absurd.”

And then there's parking tickets: "Parking tickets, which raise more for the city than all other fines combined, also are busting out big. They’re on pace to reach an eye-popping $610 million this fiscal year, up from $560 million last year, a 9% increase."

But what really caught our eye in the Post's expose, was the following comment from a Bloombergista: "We need to get the revenue from somewhere,” said a City Hall source. “We could just tax people and take it out of your wallet or we can be aggressive in enforcement.”

This totally captures the Bloomberg mindset-and this should be his mayoral epitaph:"we need to get the revenue from somewhere." Well, there is another approach, and that path would be in the direction of a smaller government, lower taxes and smarter ways to deliver services-an approach that appears to be catching on all over the country.

Perhaps, given all of the controversy over the use of the retarded word, we should have re-titled the post, substituting "mentally challenged" for retarded. But as one former great NY governor once said: "No matter how you slice it, it's still baloney." So, while Bloomberg postures as a shrewd fiscal steward, the reality is that, in the current recession, his enforcement policies are nuttier than squirrel poop; and he's clueless about the policy direction that the city needs to take in order to more forcefully emerge from its current economic downturn.

Tragically, all of the mayor's personal wealth that was put to such good use in his magical mystery re-election tour, covered up the reality of his misrule-and the local media played willing accomplices to this charade. At least the Post appears to be making up for its original sins here, but the Daily News continues to maintain its Code of Omertà when it comes to speaking truth to Mike Bloomberg's failings. The public deserves better-and kudos to the Post for its rediscovered voice.