I have a question about government "encouragement" of the private sector -- the type we've seen plenty of lately and will see still more of shortly. It is my suspicion that changing where people spend their money does not make them spend more money. They aren't going to spend more than they were to fix up their houses because the big-box home-supply store is eight blocks away instead of three miles away. They aren't likely to go to more ballgames than they would have because the stadium is in one place instead of another. People tend to have fixed budgets -- they don't change much from year to year the percentages of their incomes they spend on things like housing, entertainment, food. That being the case, moving people's spending habits around geographically isn't really economic development -- it's simply, as a couple of libertarians have pointed out lately, economic relocation.
So, what we are left advocating is helping one area of town by hurting other areas of town. You can't argue that more money being spent in an area will help it without accepting the notion that less money being spent in an area will hurt it, right?
My question: Is this a legitimate role for government? Can one area of town -- whether it's downtown or the southeast side -- be deemed to be so important or in such bad shape that it is necessary to hurt other areas to help it? How much hurt is justified for how much help?
Governments already play this juggling game. They take taxes from all of us equally, for example, but do not spend them equally. They might decide that the streets in one part of town need immediate work but that streets in another part can wait a few years. Such inequality -- establishing a triage based on perceived needs -- is inherent in most things government does.
But what is called economic development these days takes that mindset to a new level, and government should at least acknowledge what it is doing so we can confront the core philosophical question instead of arguing around the edges.
