Office space was at a premium in East Podunk, Kansas. Approximately 90% of the buildings were occupied on any given day. The building owners were getting fat and sassy. There was no need to reinvest or renovate their properties. At least, that’s what the mayor was saying. How could the mayor and city council solve this problem?
The mayor of East Podunk convinced the city council to strengthen the zoning laws. The new regulations were a hassle, but the building owners quickly adapted, made the required renovations, and profitably passed the costs to their tenants. Rents went up. The mayor seethed.
An office in East Podunk, Kansas carried a certain cache. It also carried a heavy price tag. The mayor heard the complaints. None of the councilmen worked in East Podunk, not even the ones who owned their own businesses. Something had to be done to make East Podunk more affordable without reducing the quality of the office space. How could the mayor keep the building owners honest? The landlords needed competition.
East Podunk, Kansas needed a public option.
The city of East Podunk purchased a building and began to compete with the landlords. The building owners immediately noticed:
1. Their new competitor, the government, owned a building that couldn’t pass the new code.
2. Private businesses must build property tax, snow removal, and other maintenance costs into their rent. The city did not.
3. Private businesses pay property taxes which benefit the schools. Again, the city did not.
4. The city fathers of East Podunk, embarrassed by the prospect of a large empty building, cut any deal to find tenants.
Yes, the city of East Podunk succeeded in keeping the building owners honest. Honestly mad. Governments can compete, one city or one state versus another, but they don’t compete with businesses.
Building owners? Health insurance companies? You can change the names. You can change the venues. What won’t change is the behavior of government entities with too much money and too little talent.
We all live in East Podunk, Kansas.
By the way, I heard from a lot of people who wanted to post a comment to one of the last few blogs. I am trying to see if there is an easier way. My offer still stands. You may email me at email@example.com and I will post your comment for you.
If I get your point it is that government can find a way to screw up anything. I think that all of those people who want a public option in health care are really hoping that government will help the people who are falling between the cracks. It's a nice thought. I hope it works out, but people should study Medicare/Medicaid fraud and government incompetence in those areas before they get too excited.
I think it is unfair to say that everything the government touches turns to crap, just as it is unrealistic to expect that all government programs will be run efficiently and successfully. Reality is always somewhere in between. But people who think that a Public Option will compete with insurers and reduce costs over the long run don’t understand the market. Worse, some of their misunderstanding appears to be intentional. There was an amendment over the weekend to limit the salaries at insurance companies to $400,000 per year. I hate faux populism.