Our Government's Confidence Deficit

The following appeared in the local newspaper, the Argus Leader, on Saturday.

August 20, 2011

My Voice: Our government's confidence deficit

Robert E. Wright
People in Sioux Falls and nationwide have a low opinion of the federal government right now, and justifiably so. Recent declines in the stock market have more to do with that "confidence deficit" and the uncertainty it spawns than Standard & Poors' recent downgrading of U.S. bonds (which actually rallied on the news of the downgrade). Sioux Falls city government also is suffering from a confidence deficit that threatens to negatively affect the local economy.

Thankfully, Sioux Falls is better governed than the nation, but residents whom I have spoken to note that their city government is far from perfect. So I decided to put the city government to a small test and am chagrined to report that it failed miserably. I chose the simplest issue that I could find - the lawn watering restrictions - on the presumption that if the government can't fix a minor problem undefended by any obvious entrenched interests, it won't be able to fix a major one defended by big bucks. (Like, say, construction delays on a $100 million plus events center.) The City Council not only did not resolve the minor issue that I raised, it did not even show that it understood it and instead made a series of ad hominem attacks!

What I pointed out to the council was that limiting lawn watering to every other day was not likely to conserve water, the ostensible goal of the restriction, because lawns can be watered without limit every other day, and nobody monitors nighttime watering. The local water authority admitted that there is no evidence that the restrictions, in place since 2008, have conserved any water. The effects of the restrictions are difficult to parse because it has been fairly rainy since then (so lawn watering has been less necessary) and water prices have increased a little (so people are conserving to save money). But absent any logical reason for the restriction to limit consumption, it is safe to say that, like low-flow toilets that simply induce more flushes, the city's restrictions might make some people feel good but have no real effect on water consumption.

Instead of removing the restriction as an unnecessary intrusion on residents' civil liberties, as I suggested, the council retorted with claims so outrageous that I will not repeat them here for fear of not being believed. I will note, however, that the council thinks the restrictions are a serious matter: one council member went so far as to relate how Harrisburg almost ran out of water "on a hot Sunday night a few years ago." Unfortunately, it never responded to my assertion that the best way to ration water is by price, not by making arbitrary decisions about what types of consumption are more important than others. I personally believe that homeowners should keep their lawns just green enough not to spontaneously combust but, unlike the city, I am unwilling to force my values onto others. Rationing by price allows people to decide whether they want to use more of their income for water use or whether they want to conserve, and if so how, be it by reducing lawn watering, closing the family pool or showering only once a week.

If the city ever shows that it can fix the many little annoyances such as the watering restriction, more residents might find a city-sponsored events center a project that they can support. In the meantime, however, many wonder why the city should take the lead on the project. If private investors cannot raise full money for the events center in a low-interest environment, can the project really be expected to turn an actual profit?

Moreover, even if Sioux Falls truly needs an events center, and even if the city government is the only entity that can create it, why should that particular need take priority over the city's many other needs? Many of its residents, for example, really need low interest mortgages so that they can find a buyer for their home, afford to buy a new one, avoid defaulting on an existing mortgage, or extricate themselves from lawsuits vigorously pursued by the same rapacious banks that received TARP money in 2008-09. Shouldn't such a need be fulfilled before the city launches into the entertainment business? I can't answer that because, again, unlike the city, I am unwilling to force my values onto others. But I suspect if a poll were to ask whether Sioux Falls residents would rather have a better-functioning housing market or an events center, housing would win, probably pretty handily.

Also, I recently received the following email regarding my book Fubarnomics:

Prof. Wright,

I have just completed reading ‘Fubarnomics’.  Sir, a brilliant book, I laughed, I cried, I wet myself, I learned. 

I learned and surmise, that our government and the governments of other nations will NOT try your ideas for a lasting change to ‘’’’’’economics’’’’’’.

As the individual is afraid of change, governments will only change if pushed to rebellion.

Per your suggestion, I want to read the book called  ‘’ Nudge””.

Thank you for taking the time to write this book.