A recent column by economist Walter E. Williams (Why we're a divided nation) strongly makes the case for more decision-making by free markets rather than by the government through the political process.
Voice For Liberty
In the November 7, 2004 Wichita Eagle, columnist Mark McCormick again confuses the proper role of government and individual.
He starts by talking about the spirit of the people in Wichita, how they will help you push your car, how they will hold open the door for you, etc. He refers to this as "neighborliness." He labels Karl Peterjohn, Executive Director of the Kansas Taxpayers Network, as not belonging to this group, because of his opposition to tax increases.
Because Peterjohn opposed the arena and a school bond issue a few years ago, McCormick thinks he also opposed the wheel and fire. This type of ridicule does not advance Mr. McCormick's argument.
Writing in the November 3, 2004 Wichita Eagle, columnist Mark McCormick labels the vote in favor of a taxpayer-funded, government-owned arena a "rebirth of city's pioneering spirit." In this column, Mr. McCormick mentions our famous entrepreneurs and aerospace industry pioneers. Although he explicitly denies comparing the building of a downtown arena to the genius of Beech and Cessna, this article claims that the downtown arena will somehow lead to a rebirth of Wichita.
What I think Mr. McCormick has overlooked is that the people who in the past made Wichita great were people working as individuals, not as governments. Now, when we look to get something done, we look first to the government, and we seem to think that's a good thing. The entrepreneurs and risk-takers of the past were investing their own money, their own sweat and toil. Our government leaders invest none of this.
The streets and highways, and certainly the public parks, are examples of public goods. Public goods are characterized by two things: nonexcludability, meaning that non-payers can't be excluded from enjoying and using the good, and nonrivalrous consumption, meaning that consumption of the good by one person doesn't reduce the availability of the good to others. Neither applies to an arena.
The WSU Center for Economic Development and Business Research study (reported by Fred Mann in the September 5 Wichita Eagle), showing a small loss for the proposed downtown arena, does not account for the cost of building the arena. Neither do the Qwest Center in Omaha nor the Alltel Arena in Arkansas when they report their profits. How do I know? I wrote to each of these facilities and asked. None include any expense for depreciation, debt service, lease payments, or anything that recognizes the tremendous amount of capital consumed by building these arenas. Yet, these facilities report a profit, or perhaps a negligibly small loss.
I have found that the arenas I have looked at (Qwest, Alltel, and the proposed Wichita) don't account for the cost of the capital consumed in building them. For example, the projected profit (actually a small loss) for the proposed Wichita downtown arena includes no expense taken for depreciation. Now it is true, that being a government entity, the downtown arena wouldn't pay taxes, and therefore depreciation expense doesn't help it reduce its income taxes. But an allowance for depreciation helps us to recognize that a large amount of money was spent to build this arena, and that money has a correspondingly large opportunity cost. Indeed, GASB 34 requires governments to start depreciating their assets, and Mr. Chris Chronis, the Chief Financial Officer of Sedgwick County, has told me that the county will take depreciation expense for the downtown arena, or for a remodeled Kansas Coliseum, for that matter.
My investigation and a series of email messages with Mr. Ed Wolverton revealed that the WSU center that prepared the estimate of profitability for the proposed downtown arena wasn't aware that the county would be required to calculate depreciation expense.
Government Accounting Standards Board Statement 34 requires governments to account for the cost of their assets, usually by stating depreciation expense each year. Through a series of email exchanges with Mr. Ed Wolverton, President of the Wichita Downtown Development Corporation, I have learned that the WSU Center for Economic Development and Business Research was not aware of this requirement when they prepared their forecast. Mr. Wolverton admitted this after checking with the study authors.
Mr. Chris Chronis, Chief Financial Officer of Sedgwick County, in an email conversation told me that the county will take depreciation expense for the downtown arena, or for a renovated Kansas Coliseum, for that matter.
I appeared in a story on a local television station where I presented research I had read showing that if new development occurs around a downtown arena, it would likely be economic activity that formerly took place somewhere else in town. This is the "substitution effect." Mr. Wolverton appeared in the same story and state that due to time constraints, the WSU study did not study these effects.
It is clear that our local government leaders want a downtown arena in Wichita. Just read their remarks in the Wichita Eaglenewspaper. Since the Sedgwick County Commission has promised that they will proceed with renovation of the Kansas Coliseum if the downtown arena vote fails, it is in their interest to make the Coliseum renovation option look as bad as possible. In my opinion, they've done a pretty good job of this.
It seems that the best argument that arena supporters have for asking the entire community to pay for the Downtown Wichita arena is that it will somehow pay for itself through spillover economic benefit. That is, through increased economic development around a downtown arena, the citizens of Sedgwick County will somehow be repaid for their investment in the arena through the taxes they paid.
One of the factors that usually plays a part in an economic impact study like that used to promote the Downtown Wichita arena is the "multiplier," which accounts for the fact that money spent once is spent again, and maybe yet again.
Kansas Attorney General Opinion 93-125 deals with "the use of public funds to promote or advocate a governing body's position on a matter which is before the electorate." In its summary, it states "However, public funds may be expended to educate and inform regarding issues to be voted on by the electorate."
I've never met Walter E. Williams, economics professor at George Mason University, and I don't suppose I ever will. But I think I would like him if I met him. I certainly admire his writing. In his columns he has a way of writing very plainly, where everything makes sense. These are some of his columns that I have thought important:
I happened to hear this radio show one day when Mayor Carlos Mayans was a guest. He was promoting the downtown arena. Bob Lutz, one of the hosts, invited opponents of the arena to contact him, and he might invite them on the show. I did, and he issued the invitation. I was a little nervous, not having much experience being on radio or television.
Image what our town could be like if the downtown arena in Wichita vote fails and the county commissioners put aside for a moment their plans for the renovation of the Kansas Coliseum.
A voice for individual liberty, limited government, and free markets in Wichita and Kansas.
I started this website in October 2004 in response to what I felt was a misunderstanding of the important issues in the November 2004 elections, especially involving the proposed downtown Wichita arena.
The debate over the arena was wide-ranging, involving factors such as its cost compared to the cost of renovating the existing Kansas Coliseum, its seating capacity, traffic and parking problems, whether it will sellout or not, who will profit from building it, whether a sales tax is better than a property tax, and other such factors. Our local government leaders and media seemed to believe whichever convenient set of facts supported their position, and almost all seemed to be endorsing the downtown arena.
I too became involved in arguing issues like these, even when I knew in my heart that the most important issues are these: How much government do we want, at the expense of how much personal liberty, and what is the proper role of government and individual? I saw very little discussion of these important issues, and most importantly, very little media coverage.
So I started this website to explore and report on issues of government, media, and individual liberty in Wichita, Sedgwick County, the State of Kansas, and, to a lesser degree, the United States.
Email to firstname.lastname@example.org
Skype bob.weeks. AIM WichitaLiberty.
October 28, 2004
|Bob Weeks, and with his ragdoll cat Tippy|
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