In Wichita, capitalism doesn’t work, until it works

Attitudes of Wichita government leaders towards capitalism reveal a lack of understanding. Is only a government-owned hotel able to make capital improvements?

One of the problems Wichita faces as it decides the future level of government involvement in its economy is an anti-market and anti-capitalism bias of many council members. It’s also characteristic of city hall bureaucrats. The basic belief is that government is not hindered by the demands of businesses, such as profit. Therefore, it is able to do things that the private sector cannot, or will not, do. Wichita City Council Member Janet Miller (district 6, north central Wichita) recently provided an example:

Council member Janet Miller called the Hyatt a special case and said she’s opposed to selling it.

“We have to maintain a high quality convention hotel,” she said. “The hotel makes a profit, but we reinvest the profits back into it. If we sell that property, a hotelier is unlikely to invest as much back into it as we do — debt service, stockholders, things like that. We don’t have that burden.” (Hyatt Regency Wichita focus of debate as council examines city-owned real estate, March 28, 2014 Wichita Eagle)

I don’t know if Miller reads the Wichita Eagle, but less than one month before, that newspaper reported this:

A $5 million renovation project at the Wichita Marriott hotel near east Kellogg and the Kansas Turnpike is complete.

The 10-month-long project encompassed nearly the entire ground floor of the 11-story, 294-room hotel at 9100 Corporate Hills Drive, said general manager Michelle Ruffin-Stein.

“We basically tore everything down and started from scratch,” said Ruffin-Stein, who added that the hotel remained in operation throughout the renovation.

She said it was the first extensive renovation of the hotel’s ground floor since the hotel opened in 1987. It follows a renovation of the hotel’s guest rooms about four years ago, she said. (Wichita Marriott hotel’s $5 million renovation complete, March 3, 2014 Wichita Eagle)

You draw your own conclusions. Here are a few that I’ve drawn.

If I owned or worked at the Wichita Marriott or other hotel in Wichita, I’d be offended with Miller’s implication that the Hyatt is Wichita’s only “high quality convention hotel.” Why did we pour millions in taxpayer subsidy into the Broadview and Ambassador hotels?

Even though it has the “burden” of being in the private sector, how was the Marriott able to invest millions in renovation?

How would you feel if you owned a high-quality convention hotel, like the Marriott, and the city operates a competitor that doesn’t have to worry about profits, debt service, and stockholders? Does that create an environment that encourages private investment? Perhaps this is why so many of the hotels that have opened recently in Wichita have sought and received millions in government subsidy.

The expressed attitude of Miller towards business and capitalism is common among government officials and bureaucrats. Yet, we are expected to trust people with these beliefs to lead our economic development efforts. It’s little wonder that the only solutions considered involve a greater role for government, including greater revenue for government.

Finally, I wonder if other hotels are more diligent than the Hyatt in keeping people from establishing meth labs in their rooms.