Economic development by government does not work

The latest news on Shreveport’s convention center’s finances contained more bad news than boosters of it imagined. Brought to fruition along with its associated hotel by former mayor Keith Hightower, with legislative assistance by current Mayor Cedric Glover, it ran up a larger deficit for the past year than predicted, nearly $2 million – despite the fact it did more business than predicted.

City and operating officials naturally found a number of extraneous factors to try to explain this away, but in doing so ignored the reality that the benefits brought about by the center and its accompanying hotel never will bring greater benefits than costs to the city. Even the simplest analysis of the numbers, using just rough estimates of debt repayment, operating expenses, and generous guesses about tax revenues generated, show only the most unrealistic assumptions forecast anything but annual losses from significant to staggering.

Meanwhile, the city carries a huge debt approaching $1 billion thanks in part to the approximately $150 million spent on these items, while simultaneously it needs hundreds of millions of dollars in infrastructure repairs with little left on its debt ceiling to take care of them in the near future. Spending the amounts the city blew on these items, combined with the extra borrowing capacity that would have been freed up could have taken care of about half of the infrastructure problems, and the $1 million annually the center is expected to lose (within a decade; officials admit losses will exceed that for now) could have paid for things like improved crime-fighting and athletic conference headquarters with plenty left over.

Policy-makers knew these things, yet built the center and hotel (when the private sector refused to do so) anyway, because of reasons of ego, political gain, and to put more money at the trough so that their friends and special interests could benefit at the public’s expense. But, most importantly of all, they tried to justify this with the ridiculous notion that it is government, not people, who provide the spark for economic development.

Unfortunately, this behavior is not limited to the west bank of the Red River. Bossier City’s leaders also have committed follies of this sort, spending about half of what Shreveport did on an arena and parking garage that also never will have the benefits of their operations exceed their costs without similar wildly optimistic and unrealistic assumptions. Their stupidity is only slightly less because they did it with cash rather than debt – but cash that could have been used to make Bossier City an economic development dream rather than a home for revenue-draining monuments to elected officials.

Both cases should provide ample warning to the citizenry and the prospective voters among them to beware politicians who say economic development comes from spending the people’s money in building buildings rather than allowing citizens to keep it and getting government out of their way.