If a person saw what I described yesterday – a small sign, a ramshackle cluster of dull yellow motel buildings, a small cluster of private, single family homes, etc. – what should he reasonably conclude? First, he might see all of this as a failure of public development, a lack of sidewalks, street lights, directional signs, and other public improvements. If only Whitewater would spend more, then there would be more; public spending as an incentive to private property.
Alternatively, there might seem to be too few private homes, and someone might suggest to replace the old motel with another housing development. The theory goes like this: if more people lived here, our community would
have more money, so what we need to do is encourage private housing.
A third suggestion would look like the idea of more private homes. If only we had more, and more lucrative, businesses, our workers would earn more, and they could buy better homes, and shop for more goods in our retail stores, and also have more tax revenue.
Here are two useful, general principles: private growth is better than public spending, and public regulation and planning should exist only to establish the rules by which private growth and investment take place.
Public works, however, are more than planning: they are expenditures for supposed improvements in the place of private investment. There’s no exception to the truth that a public expenditure, for example, on boat dock prevents a private developer from building on that same space. They’re won’t be two docks, one on top of the other. Either a private dock was not built because it was not profitable, or the public dock was constructed at a lower level of efficiency when a private builder saw no value in competing.
In a small city, most public works outside of sewers, streets, or municipal buildings, are small – flags on lampposts, flower baskets (and ornamental birdhouses, chairs, and fish). They’re also usually ineffective and futile substitutes for new shops, stores, and factories. That’s why I quoted blogger James Lileks of the Bleat on the inadequacy of these public works gestures. (They may also come as private contributions from several businesses, but with likely the same results.)