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The Upside of the Chavez Debacle

Mises Daily: Wednesday, January 10, 2001 by

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Linda ChavezWhen a presidential nominee is shot down for a post in government, the person’s first reaction is sadness and regret. But a person like Linda Chavez should look on the bright side.

As an opponent of much of the policies of the Department of Labor, she won’t have to face four years of relentless frustration and anger that comes with attempting to make a bureaucracy do what it is not established to do.

In a recent article on these pages, Shawn Ritenour told of his life as a bureaucrat deep within the bowels of the Bureau of Labor Statistics.  His experiences were yet another classic example of what Ludwig von Mises wrote in Bureaucracy regarding what goes on in the government and why such a system is inappropriate for productive work.

I, too, have a bureaucratic past.  Once upon a time, I labored on as a government bureaucrat and, like Shawn, I could see the absolute uselessness of my work.

This sojourn into the nether land of government occurred in 1984, shortly after I received a master’s degree in economics from Clemson University.  I was hired by an agency of the City of Chattanooga (Tennessee) to be an economist.  As I went into the job, I had visions of preparing cost-benefit analyses, making recommendations, and guiding city officials down the paths of economic efficiency.

My department was the Office of Economic and Community Development, and we were responsible for disbursing federal grants to give the city an economic boost.  Chief among our tasks was the preparation of Urban Development Action Grant (UDAG) applications.  We also used other grants to repair roads and do other amenities, include fixing dilapidated housing, in poor minority neighborhoods.  Thus, we engaged in pursuing welfare for both the wealthy and the poor – and were bitten on both counts.

Both the UDAGs and Community Action Grants were awarded by the U.S. Department of Housing and Urban Development, one of the veritable snake pits of Washington, D.C.  (The grant supporting my position, I found out, came from the U.S. Department of Commerce.)  The UDAGs were especially obnoxious.  They consisted of grants awarded to cities, which then loaned money to developers at low rates of interest in order to "leverage" larger amounts of money being spent on for-profit retail projects, mostly in the relatively depressed sections of downtown, along with office buildings.  

They also went to building hotels, and before long, few hotels were being constructed in major and mid-sized cities that did not have some UDAG funding.  Because hotels hire low-paid staff to change bed linens and the like, they could qualify as eligible projects, since they would be "creating" a large number of jobs for low-income people.  (Please remember that the very definition of a "low-income job" was a job that paid at or near minimum wage.)

As developers began to tramp regularly to our office, I noticed a number of similarities.  First, nearly all of them were Democrats.  Second, they tended to be people who had inherited wealth or were developers who had devoted their business careers to building office buildings to house government workers.  In other words, they knew how to work the political system.

Lastly, nearly all were ostentatious in their dress, their mannerisms and in their choice of automobiles.  These guys knew how to live the good life and they were determined to do it with government money.  

Alas, their abilities to understand the market were less than adequate.  Before long, a number of their projects were either bankrupt or nearing that condition, the one exception being an office building and parking garage built by the sole Republican among our corporate welfare recipients.  

One urban mall, created from an old freight train depot, was supposed to house a number of startup businesses.  True to form, the tenants soon found themselves with too few customers to stay afloat, and it was not long before the building was nearly empty.  After a few years, another developer purchased the depot property at bargain basement prices and filled it with established manufacturing outlets.  It worked, but only after the taxpayers had taken yet another bath.

Not content to loan grant money to immature developers who had little business savvy, we also poured money into neighborhoods.  It was here that I had my first experience dealing with white "community activists" who were able to bring elderly black protesters to our public hearings.  These activists were even more fraudulent than the developers, I found.  

Since our plans were to spend money in the neighborhoods, anyway, there was no reason to protest.  The folks were going to get "their money" whether they demanded it or not.  The protests changed nothing in our plans, yet the white organizers somehow were able to take credit for the disbursement of funds.  It was another example of how these folks used black people to further their own political agenda.

As for my hopes of dispensing the Wisdom of Economics to city officials, they, too, went up in smoke.  It soon became apparent that my job was to type some forms and do minor tasks about the office.  While auditing the projects was interesting, it was also depressing, as I could see that taxpayers were being dunned to provide corporate welfare benefits to wealthy, white developers who were irresponsible with the money loaned to them.  While the pay and perks were not bad, I knew each day that my presence in that office perpetrated a fraud on the taxpayers.

When I left 19 months after being hired, I must admit that I never looked back.  As a bureaucrat, I discovered that not only was I wasting tax money, I was irrelevant in any real "economic development" taking place.  The government can never foster true economic growth the way that the free market does it, nor is there any legitimate thing called a "public-private partnership."  Instead, it is a partnership of thieves, both of whom are intent upon looting productive people called taxpayers.  

For years Republicans have worked to install their people in the bureaucracies in the hope of making them work better. It is a vain hope. The only real way to turn around government policy is with the budget axe, not the personnel board.

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William Anderson (send him mail), is a former Mises Institute scholarship student who now teaches economics at North Greenville College. See Anderson's Daily Article Archive