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John Livingston

The Problem of “Social Cost”

In Idaho at all levels of government we are watching before our eyes a centralization of the political process. The State of Idaho budget is 55% funded by the Feds—with strings attached.

At the local level through government grants and incentives to participate in Federalized programs—think activation fees and matching funds for Medicaid and public education, politician’s votes are impacted by the “pay to play proposition”. At a Garden City council meeting recently the City Planner opined that if funds for a cross walk across Chinden Boulevard weren’t used they would not be available for other projects. The police opined that the crosswalk close to a school would be extremely dangerous to children. Guess how the vote went? Community Improvement Districts (CIDs)—incentives for real estate developers in Eagle and Boise City are commonplace across our State.

One of the mistakes people make is to assume that governments always pursue the public interest. In 1962 James Buchannon wrote a book entitled The CALCULOUS OF CONSENT. This book heralded the rise of “public choice economics”. The primary insight of this branch of economics stems from the truth that groups and governments—especially politicians in government acting on behalf of groups (citizens—constituents), simply by its’ presumed virtue of duty, cares little in the first instance for the public interest. The challenge that is before all citizens is to establish institutions and processes that will motivate, constrain, signal and incentivize government officials and agencies within government to act and behave in ways that are truly in the public’s interest and not in their own individual interest or in the interest of a select group of citizens (politicians) Groups that can leverage political and financial advantage over individual citizens are dangerous. They even have the opportunity of being corruptive.

It is interesting that rules governing the interaction of lobbyists and special interests at our State Capital are very different than the rules that govern the interactions between citizens and City Fathers or government agencies at the local level. Citizens in the Plantation Neighborhood for example have been told they can’t interact with City Fathers or government agencies during open Code changes or land divisions. Lawyers for developers are allowed such “carte blanche access.”

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An outside agent acting on behalf of a financier or developer has a smaller mountain to climb when influencing public opinion and City Fathers, than a lobbyist at the State House or a citizen. A $5000 campaign contribution to a City Council member in Garden City, or a “free meal at the club or a round of golf” may go further at the local level in influencing government policy, than the same “incentive”—there could certainly be another name for such influence peddling, at the State or Federal level.

Our case at the Plantation is not unique. Our research shows that a relationship was formed very early in the process—maybe up to 17 years, between several City Fathers on both the P&Z Committee and at least one elected official. A less than transparent process was initiated and pursued for many in lining up votes and policy. The attorney for an out of State Developer was even allowed to write the Special Area Permit(SAP) for the City, and this week they will present code changes that will bring the City Code into compliance with the (SAP). Should not the code and the (SAP) be the exclusive province of a City Attorney or at least a disinterested party to the transaction between the citizens whose neighborhood would be most affected, the City, and the developer? Should the code changes have proceeded the (SAP)? This is happening all over Idaho in urban and rural settings. An analogous process almost happened at Lava Ridge until the Idaho Attorney General (AG) became involved and protected citizens interests. What about citizens in the neighborhood who are constituents and voters? Their voices have been all but muted by the terms of the public private symbiotic transaction.

Noble Lauret Ronald Coase wrote a short article entitled the PROBLEM OF SOCIAL COST arguing that if “transaction costs” were zero, the transaction costs when property rights or contracts are changed would no longer be problematic to the allocation of resources. So “decision makers are constantly trying to achieve objectives that minimize the costs of securing the cooperation of others. Maybe a “round of golf, or a chicken dinner with blueberry pie at the club” is much cheaper than engaging a citizen with a property right or a right of contract—think Master Declaration Contract and CC&Rs. The ultimate danger is that the process itself may become corrupting. Corruption can be legal or illegal, but in the end, it causes citizens to be less trusting in the government institutions that are in charge of representing their interests—not special interests. I would love for the Idaho Attorney General to specifically review how the State SPECIAL USE Permit STATUTE (SUP) is being rewritten by private attorneys when rewriting City Codes, acting on behalf of city governments to the benefit of out-of-state developers.

I would like for the Idaho Attorney General to review the processes that local governments are using via City and County Attorneys to exclude citizens from participating in the process of land divisions and rezoning—Garden City is not unique in this instance.

Finally, I would respectfully request that a notice be sent out to all municipalities of recent District Court decisions directing them to follow the signaling of Homeowners Associations (HOAs) prior to voting on any land divisions or rezoning that affect the Master Declaration Contracts (MDC) and their “CC&Rs” of citizens within their jurisdictions.

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4 replies on “The Problem of “Social Cost””

When you don’t proofread what you write, you look foolish and unprofessional.

The second sentence in your third paragraph claims:
“In 1962 James Buchannon wrote a book entitled The CALCULOUS OF CONSENT.”

There is a Wikipedia page on the book, The Calculus of Consent. That author’s last name instead was Buchanan, and there also was a co-author, Gordon Tullock. The title does not say Calculous.

The seventh paragraph in your post begins:
“Noble Lauret Ronald Coase wrote a short article entitled the PROBLEM OF SOCIAL COST arguing that if ‘transaction costs’ were zero, the transaction costs when property rights or contracts are changed would no longer be problematic to the allocation of resources.”

The Wikipedia page for Ronald Coase says he won a Nobel Memorial Prize (is a Nobel laureate), and there is another page for his article, The Problem of Social Cost. That article is not short – it has a length of 44 pages. A few minutes of checking at Wikipedia would have led you to correct your very silly errors.

Mr. Garber is right. I noticed those errors, too. When I see errors in an author’s writing, in my mind, it detracts from the author’s credibility.

Richard and Sheila,

I very much appreciate your critique. I started writing 2000 words a day in 2002 after reading one of my own post op notes on a medical record. My spelling was atrocious and my sentence structure was embarrassing.
I have improved but I have a long way to go. I at one time hired an editor, but there were still problems with the final work product.

I have been inspired to continue writing and publishing in spite of my shortcomings by the list of important people including several authors who were also poor spellers:

List of bad spellers in history:

1. Jane Austen
2. George Washington
3. Winston Churchill
4. Agatha Christie
5. Albert Einstein
6. Ernest Hemmingway
7. Andrew Jackson
8. F. Scott Fitzgerald
9. Samuel Clemens “Mark Twain
10. William Butler Yeats

Thanks again for your readership and I will continue to try to do better.

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