Lee Friday – July 25, 2017
To build a set of stairs over a rocky path in a community park, the City of Toronto estimated the cost to be in the range of $65,000 – $150,000. Stunned by this estimate, 73-year-old Adi Astl, who said “I’ve been watching people tumbling down the slope and hurting themselves,” took it upon himself to build the stairs, at a cost of $550. (See here, here, here, and here)
“Astl says members of his gardening group have been thanking him for taking care of the project, especially after one of them broke her wrist falling down the slope last year.” But the City of Toronto quickly removed the stairs, claiming them to be unsafe. They said they will build new stairs by the end of this week, at a cost of $10,000.
Let’s assume, for the sake of argument, that the City-built-stairs will be better constructed, and safer, than Astl’s stairs. With that said, there is no doubt that Astl’s stairs were much safer than the sloping rocky path which the City was content to live with for many years. Astl’s wife, Gail Rutherford, said “These people in the park have been asking for stairs for 10 years. It’s a long time. So now they’re being done in 10 days.” I think Gail knows the City of Toronto is acting quickly because it was publicly embarrassed by the actions of her husband.
GOVERNMENT LACKS THE PROPER INCENTIVES
Why were the stairs not built years ago? Because the incentives within the institutional structure of government are completely different compared to the rest of society. Citizens had been asking for the stairs for many years, but their supposed representatives, the councillors, were not incentivized to actually represent them. Astl’s neighbours contributed to the cost of the stairs he built – clearly, they had an incentive to increase the safety of the route to the park. It is very revealing that they voluntarily dug into their own pockets to fund this project – a project that is supposed to be funded by the City with taxes coercively extracted from these same citizens.
When people voluntarily contribute their own resources to a project, they are much more likely to get what they want, when they want it. If they didn’t, they would not contribute, or they would stop contributing. In contrast, when resources are coercively extracted (taxes), inaction, lengthy delays, and exorbitant costs are the norm. In every country, at every level of government, bureaucracies are inherently inefficient, counterproductive, and expensive. This is because the government forcefully extracts its revenue from the people, then arbitrarily decides what it will provide in return. In this way (unlike the way private companies operate), service is severed from payment and perverse incentives arise.
Recall the City of Toronto’s original estimate for the stair project – as much as $150,000. As Edward Keenan of the Toronto Star wrote, “If this is the kind of cost inflation the city faces for a small job, many ask themselves, what kind of money is being thrown around on the big ones?” Toronto Mayor John Tory issued a statement on Friday,
calling the original cost to build the stairs “absolutely ridiculous and out of whack with reality.”
“I want to thank Mr. Astl for taking a stand on this issue. His homemade steps have sent a message that I know city staff have heard loud and clear,” Tory said. . . .
. . . “I’m not happy that these kinds of outrageous project cost estimates are even possible. I’ll be working to identify what changes we can put in place to make sure this doesn’t continue to happen.”
The City had been embarrassed. Tory had no choice. He had to say what he said. However, he cannot implement changes to fix the system. “Outrageous project cost estimates” are normal at every level of government, because government is simply a mechanism for the transfer of wealth. But it is not normal for the public to hear about favoured contractors reaping massive benefits at taxpayer expense. The optics on this story are not good. The stench of corruption is overwhelming. It is blatantly obvious that the City of Toronto is quickly building the stairs at a cost ($10,000) far below its original estimate only because of the actions of Astl.
When they spend money in their personal lives, most politicians and bureaucrats are probably very cost conscious – because it is their own money they are spending. But when they are in charge of the public purse, they are incentivized to be spendthrifts. This simply reflects the nature of government incentives. They vote themselves raises. They hand out lucrative contracts to special interest groups who make generous contributions to political campaigns etc. etc.
A REFRESHING STORY
It is good to hear the story about the park stairs. It highlights the wasteful, inefficient operations of government, and it reminds us that we do not need the government to solve problems in our communities on a timely, cost-effective basis. As such, in the absence of coercive taxation, our standard of living would be higher.
The story about the park stairs is not unique. In 2014, a private citizen in the U.K., frustrated by a lengthy detour because of government delayed road repairs, built his own bypass toll road, without seeking the required government permits. This attracted many commuters and embarrassed the government. Read about it here, here, and here. The government delayed road repairs had a negative impact on the local economy.
We occasionally hear such stories about frustrated citizens taking action in response to the government’s inaction, but only occasionally. Citizens would act more frequently if they could afford to do so – that is to say, in the absence of coercive taxation, money wasted by the government.
Simply put, the park stairs fiasco in the City of Toronto reflects the nature of all governments. Such behaviour is common, everywhere! We must recognize that ordinary citizens have virtually no influence over the operations of government – how money is spent, policies adopted, laws enacted etc. (I have written about this here).
Many people look at the government, and say it is inefficient, which it is, from the perspective of the people. However, politicians and bureaucrats are not incompetent. They are very competent at what they do, which is to serve special interest groups, not the people. The government is a mechanism for the transfer of wealth. The system is working exactly as it was designed to work. Therefore, do not believe a candidate who says he will implement policies and procedures to minimize waste. There are no policies or procedures which can effectively alter the perverse incentives which accompany the power to spend other people’s money.
There is only one way to reduce the waste, only one way to reduce government expenses. We must reduce the government’s budget. How much? The sky is the limit. When we decrease the size of government, we increase the freedom and prosperity of the people.