Monday, March 05, 2012

Which is worse - coordinated or parallel tyrannies?

On Thursday I was in an audience for a speech by  Bill Watkins,director of the California Lutheran University Economic Forecasting Unit.   He discussed some of the limits to economic growth.   What intrigued me about his talk was his reference to two types of tyrannies - parallel and coordinated.   He argued that corruption occurs in two forms.   The first is where a centralized authority controls access to the benefits of society through a single set of levers.   In those situations one goes to the central authority and submits to it, often with a bribe, and then things function well.   In the alternative, there are a series of powers that control small parts of the system and to negotiate that system one needs to go through a series of payments (in either time or money) to get something done.   He was arguing that California had devolved, as a result of its regulatory schemes, into the latter system.  

In June of 2010 the Association I worked for until my retirement made an offer to purchase a building in downtown Sacramento which had once served as a bus station but had not been occupied in several decades.  The station's fuel tanks had been removed several decades ago but there was a minor contamination of diesel fuel.   In order to "solve" that problem, the current owner was required to remediate the ground.   Almost two years later and for more than half the sales prices of the building, it is still in the process of being cleaned up.   Luckily the only cost to the buyer was time.  

I'm all for keeping the environment clean.  But this process has been one of parallel tyrannies.  Lawyers, environmental consultants of all types and other assorted consultants have each added to the steps in making the purchase.  The odd thing about this story is that an auto repair shop across the street changed hands in the last few years and was not required to remediate their property.   The combined "expertise" of all those consultants, including public officials (who seem to operate on their own time schedules), has delayed improving this eyesore into a showcase.

The talk got me to think about two bits of theory.   First, with the recent passing of James Q. Wilson, one could not help to think about his broken windows theory. (Link in a previous post)   This is a perfect example.  The building is graffiti covered and one suspects that if it were restored the block around would also improve.  Would the city be better off with the infinitesimal risk of trace amounts of diesel fuel contaminating ground water or an improved site at the edge of the city's business district?  The answer should be obvious, but it has not been to the officials (both public and private) who have wanted to have their say on this site.

At the same time, Mancur Olson's last book (Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships) seems to offer some ideas here.   Olson was a first rate political economist - in this book he discussed "market augmenting" governments which improve the right of private property and contracts.  The potential environmental harm on this site is minimal and has been the same since the building was last occupied but because of the relatively uncoordinated process of regulation between permitting and environmental review, that fact is ignored.   It is not hard to understand why California's economy is in the dumps.   So while neither tyranny is ideal, the uncoordinated alternative is often far worse.

1 comment:

Anonymous said...

The remedial measures sought can be challenged in a court and if your arguments are found valid, then your system of law would act on these. You are saying that the public interest, or the greater good applies here. It in the end is a question of fact and money is not always the key fact.

Laws such as you discuss and disparage have done much to improve life in California. It could have descended into a Mexico where pollution is evidence of corruption here.