Bottom Line: There Is No Such Thing As “Free Money”


Mayor Janice Daniels & Oakland County Executive L. Brooks Patterson

It’s about damn time.

Not everyone is addicted to the idea of “free” government money. Believe it or not, there are still some people out there who think there is no such thing as “free” when it comes to government handouts.

At least, that’s the message that was sent when City Council members in Troy, MI, voted to reject a federal grant worth millions of dollars.

Read that first bolded sentence.  This is not about what you think.  It is about what is.

There is no such thing as “free money” or “free handouts” by government.

Government must do one of two things to obtain money — it must tax it from someone or it must borrow it.  In the latter case it is actually worse at a larger economic level to taxing it, because the borrowing both comes with interest costs and results in either higher taxes or lower purchasing power, which from the individual’s point of view is exactly identical to higher taxes!

Therefore Mayor Daniels is exactly right.  If the people of Troy want a transportation center then they should vote to pay the taxes necessary to build it in the present tense.  This is the lowest-cost form of acquiring the money to do so — it has no interest expense and it is immediately visable, which means the city will take great care to not waste any of the funds.

The Blaze also understates the maintenance and upkeep cost, probably by a factor of ten or more.  $31,000 eh?  Nonsense; that’s not even one salary (with expenses.)  Maybe in the first year that might be the capital maintenance spending.  But as we’ve seen repeatedly everywhere in the country, that’s not how it works.  What happens is that sinking funds that should be allocated instead get raided.  That is, funds intended for things like roofs, road and parking lot repairs and similar.  Here in Okaloosa County [Florida] they did this with funds that should have been put aside for school maintenance and then tried to raise taxes to obtain the funds they knew in advance would be necessary and had blown on other things.

The lunacy of “more leverage” (debt) as an answer to all economic conditions must end.  If there is demand for a given good or service from government then the people will consent to paying the taxes to provide that good or service.  If that is not the case then the demand is not there — period.

Word is that the government whiners are out trying to have her recalled. The truth is that she’s right and if there really is demand for this thing in Troy then the citizens will buck up and pay for it without complaint, as there will be plenty of economic benefit to them that will justify their doing so.

We need hundreds, if not thousands, of Mayor Daniels’.

Karl Denninger
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