Monday, April 06, 2015

The Central Texas Railway: A Case study in why entrepreneurism is dying.

"Misinformation".

Misinformation circles proposed Houston to Dallas High Speed Rail Line. Dug Begley, HoustonChronicle.com ($$$)

Normally, I'm not impressed by the transportation "reporting" that Mr. Begley produces. He's a fan of institutional sources and often seems to be doing little more than parroting the company line, with the company being either Houston Metro or local public transportation advocates such as Houston Tomorrow or other groups.

In the linked story above Mr. Begley refuses to acknowledge the elephant in the room.  Much of the opposition surrounding the Texas Central Railway project is focused on Government control. The biggest complaints of the municipalities, counties and other government groups is not that their constituents would be "disturbed for the benefit of the few" but is instead focused on the fact that they won't have a big enough influence over how the pie is sliced.

For all of the gripes about "foreign investment" what the local officials are really suggesting is that they can't use the procurement process as they wish.  And this is a big issue in massive construction projects as the rail is sure to be. Billions of dollars in contracts are going to be rewarded and there are many in the ruling class who will naturally resent that they are not positioned to have influence over that.

The administrative red tape in this is going to be unbelievably complex. And this in a state that often likes to beat it's chest about how "business friendly" it currently is.  The fact is Texas is only business friendly if you're willing to play ball with politicians.  For all of the chatter about "not picking winners and losers" the Governor's Economic Development funds have done this for years. It's one of the main reasons this blog has called repeatedly for their elimination.

Administratively, the State of Texas is broken, and the reason for this is not because Texas needs to "spend more money" which is the siren call of the Left.  The major reason for this is because Texas one-party domination of the political system has led to Texas Republicans getting lazy and Texas electing officials to positions of administrative authority for which they are ill-qualified. Jerry Patterson was more interested in his failed run for Governor than he was in being the Land Commissioner. We are seeing the same thing currently with George P. Bush.  In the cities it's not much better. Houston Mayor Annise Parker is more interested in establishing her progressive street cred for a future political office than she is in fixing pot-holes and City Controller Ronald Green might as well not even be present judged on the amount of fiscal watchdog work his office has produced.  Our City Councils have decided that the best way to solve problems is to pass an ordinance, often creating new laws and new regulatory hurdles for prospective business to navigate.

Want to start a restaurant in Texas?  Good luck.  Because once you clear the Byzantine Maze that are the state regulations you also have to comply with all municipal regulations (which, as we've noted, are likely to change on a whim) and we haven't even gotten to all of the Federal regulations which doesn't even begin to address the impacts of the ACA and other payroll withholding obligations.

And that's just for a mom and pop restaurant in one city. The Texas Central Railway is trying to build something that travels across several municipalities and counties and will be subject to that patchwork quilt of negotiation as well. Either they're certain that they can make money or they're masochists. I'm not sure which.

For all of the talk of "streamlining government" from the right and "better government" from the left what no politicians seriously addresses is the mostly broken system of regulation.  This is not just a Texas thing (spend a day dealing with a Federal regulator and you'll see what I mean) but it is growing slowly worse in a State whose economy seems to be thriving despite this.

I worry however that our well-meaning politicians are going to price small businesses out of the market, much the way the unproductive class has effectively priced the poor out of Houston's central core. More so than education the ability to open and run a small business is a stepping stone for the poor into the upper class. If you have a marketable skill, and can make money off of it, the government should not exist to prevent you from making that dream a reality. This is not to suggest that food safety standards should go away (although some will read this and suggest that's what I'm claiming) only that the permitting and regulatory framework for operating and running a business should be greatly streamlined and the permitting process be simpler, and cheaper.

Again, the cities, counties and State governments mainly object to this because they operate under the believe that they are entitled to their 'fair share' of any businesses profits. They feel this way despite the fact that they invested no money, took no risk, and did nothing to contribute to the businesses success.  Obama's "you didn't build that" quote was emblematic of this line of thinking.

It's as wrong-headed as the idea that profit is evil or that the game is rigged by evil multi-national corporations against the little guy.  If anyone is rigging the game, it's the government and over-regulation. Even in a supposedly limited government state like Texas.