Same old story

Mark Luedtke

Dayton’s rulers have been saying the same prevarications about improving Dayton’s economy for 60 years while the city continually declines. They refuse to acknowledge crony socialism doesn’t work. It doesn’t work because it can’t work, but it makes them rich and powerful.

You can’t steal money from productive people, waste a bunch of it on politicians and bureaucrats who produce nothing then inject a smaller amount back into the economy into the hands of cronies and get more than you started with. You can’t make something from nothing. The laws of nature, be it physics, chemistry, economics or anything else, don’t work that way.

Crony socialism can only subtract from economic growth. It makes a growing economy slower and a contracting economy faster. It turns a marginally growing economy into a shrinking economy.

Right now, the U.S. economy is turning from phony boom to bust. During the boom, resources—materials and labor—were misallocated to unproductive projects because of zero percent interest rates. Projects appear profitable when interest rates are low, but prove unprofitable when rates inevitably rise. Rampant crony socialist projects like the ones in downtown Dayton exacerbate the misallocation, called malinvestment.

All phony booms, caused by artificial credit expansion—most recently, the Federal Reserve (Fed) printed trillions of dollars after the 2008 crash—must end in a bust. This bust has reached Ohio, but it’s coming in fits and starts. For example, only Pennsylvania suffered more job losses than Ohio in April, but in the same month local home sales hit a record.

So, the prevarications continue. The Dayton Daily News tells the same old story about the Arcade: “Housing will drive the redevelopment as the first stage on West Fourth Street, [Developer Vice President] Williams said.”

It’s always new housing and retail, also mentioned in the article, despite the city losing population and businesses for 60 years. The propaganda is like a broken record. Downtown is littered with abandoned housing and retail space, but our rulers keep forcing the building of more because subsidies make them rich while making the rest of us poorer.

What’s never addressed is where the wealth creation to support housing and retail will come from. Because of interminable looting by rulers, Dayton’s production continually falls. It never increases.

This is the third time since I started writing for the Dayton City Paper this same story has been told about the Arcade. It will prove to be false promises and malinvestment this time, as well. The DDN hints at the reason: “Work to redevelop eight buildings of the Arcade downtown is expected to begin in early 2017—if financing firms up.”

The financing is dependent on artificially low interest rates and subsidies. As the bust expands, both will disappear because you can’t make something from nothing.

Crony socialism expands the damage caused by the Fed’s boom and bust cycles to everybody. If private investors risk only their own wealth on a malinvestment, they absorb the entire loss, although everybody suffers the opportunity cost of the malinvested resources. But when rulers throw tax dollars at malinvestments, everybody loses. The damage from the grandiose delusions of rulers dwarfs the damage from private investors’ dreams. Think Egypt’s pyramids.

Irrational exuberance characterizes booms, and Dayton’s rulers exhibit that in spades. The DDN recently reported on 15 projects that would change the face of downtown Dayton. They include Water Street, new lofts and hotels, craft brewing businesses and more.

But the story is incomplete because it doesn’t mention boom or bust. The appearance of downtown will change, but not in a good way. Many of these bubble projects will be abandoned when the bust hits. Some will go bankrupt. Others will be underutilized. We will see new abandoned eyesores, wasted resources and lost labor from crony-socialist malinvestments. Hopefully some succeed.

If you’re not convinced yet, remember this article next summer.

You could go through 60 years of DDN articles and see the same cycle repeated throughout. Rulers proclaim crony socialist projects herald economic growth followed by stories about real, continuing decline as businesses go bankrupt or flee. The cycle repeats over and over, following the phony boom and real bust cycles created by Fed counterfeiting. Barely half the size it once was, Dayton exemplifies the broken-down, depressed economic consequences. Unfortunately for everybody, Dayton’s decline drags down the entire region.

The decline will continue until voters quit electing crooks and start electing only politicians who will dramatically cut spending, taxes and regulations and abolish bureaucracies wholesale starting with crony socialist bureaucracies.

The views and opinions expressed in Conspiracy Theorist are the views and/or opinions of the author and do not reflect the views and/or opinions of the Dayton City Paper or Dayton City Media and are published strictly for entertainment purposes.

Reach DCP freelance writer Mark Luedtke at

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Reach DCP freelance writer Mark Luedtke at

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