Politicians, or Economic Prognosticators? The Convention Center Bill Provides an Answer

Last year’s convention center subsidy proposal is back, and it passed unanimously out of committee yesterday. Remarks made during the discussion make clear our point, once again, that legislators should not be economic developers.

Trained economists who (claim to) understand market trends consistently fail in their predictions. Why, then, do we place any stock in the predictions of politicians who do not have sufficient training and background to even make an educated guess? More importantly, why do we allow them to use the tax base as a slush fund with which to incentivize certain businesses in hopes (yes, mere hope) that their predictions are correct?

Yesterday’s discussion highlighted competing claims from either side of the discussion, with opponents arguing that the government-backed project would entail a transfer of wealth from existing hotels to the new one, and with proponents arguing that the project would cause “a rising tide that would lift all boats,” bringing additional revenue to Utah businesses.

And then came to the motion to pass the bill out of committee favorably. Representative Brad Last made reference to these competing claims and then altogether dismissed them in favor of his own unsubstantiated economic opinion:

One of the things I’ve noticed in my 12 years up here [as a legislator] is that we get into a situation like this where there’s two sides and you’ve got data coming from both sides and sometimes it’s really hard to figure out what the truth might be. In this case, I think we don’t really know the truth because, to a large extent, we are hoping that by building a convention facility that we bring additional business into the community. I guess, given that judgment, I believe that we will actually improve the market over time and that everyone will benefit.

Again, not to say that there’s not some reservation, because you just don’t know. I mean, these are the kinds of decisions we’re faced with all the time. But I’m sufficiently convinced that this will be a good thing for Salt Lake, and the other hotels, and the state of Utah.

This can be rephrased this way: “We have no clue whether this project is going to do what proponents say it will, but I think it will, so I’m going to support it.”

The problem here is exactly as Rep. Last said: politicians are faced all the time with these kinds of decisions. But they shouldn’t be. Government exists to protect life, liberty, and property—not to incentivize business growth and develop the economy. Basic free market principles require opposing this bill, as existing businesses should not be disadvantaged on the hope that they will start to benefit a few years down the road, along with other businesses in the area.

Private parties who have the resources to invest, and are willing to assume the risk, should be left free to bring competition, make these types of decisions, and reap the profit or suffer the loss. In fact, the committee was told that a company was looking into buying land next to the Salt Palace to do exactly this type of project, but that they would obviously not proceed if this bill passes and a government-supported option is constructed instead.

We share the end goal of the convention center’s proponents—we want to see increased business growth and economic development. We would love to see more conventions come to Utah. We disagree, however, that tax advantages should be given to one business while disadvantaging competitors. It’s not enough to lightly reference the proper role of government and claim to support a free market. We should instead demand fidelity to these principles by legislators who have taken an oath to support the Utah Constitution which states that “It is the policy of the state of Utah that a free market system shall govern trade and commerce in this state to promote the dispersion of economic and political power and the general welfare of all the people.”

One bill after another makes clear that this is in fact not the policy of the state of Utah. It should be.