Think back to your experience with cafeteria food when you were in elementary school. Cheapness and blandness were its most memorable characteristics. So while you didn’t starve at school, neither did you run home and ask mom if she could make you the same dish for dinner.
That is generally what we have come to expect from government services. They are cheap and they work, just not very well.
However, one thing we didn’t understand as 2nd graders is that those lunches were subsidized by our tax dollars; school lunches, and other government services, are not as cheap as they seem.
Governments engage in traditional service activities such as trash collection and road maintenance as well as high-tech ventures such as cable and broadband. In many of these areas they compete with private business.
Corpus Christi is one of the latest entrants into the world of municipal high technology. The city is investing $7.1 million to deploy a 147-mile contiguous Wi-Fi mesh network. While the system is intended to support municipal services such as public works, public safety and free Wi-Fi in libraries, its technology is perfectly suited to commercial provision of broadband services in competition with the private sector.
Legislation currently under consideration by the Texas Legislature would prohibit Corpus Christi and other local governments from doing this. Representatives of cities have complained that the provision would keep them from providing Wi-Fi hot spots for municipal employees and library patrons.
The author of the legislation, Rep. Phil King, R-Weatherford, said that is not the case, and that the provision was designed only to keep cities from competing with the private sector.
“What we’re struggling with is wanting to prevent cities from directly competing with the private sector where those services were going to be provided by the private sector,” King said.
The Texas Public Policy Foundation examined this issue in a 2003 study entitled, The Business of Government? Competition Between Texas Governments & the Private Sector, by Wendell Cox.
Our study found Texas governments compete with the private sector or preclude competition in a number of consumer markets. While most of these government enterprises are generally profitable or “break-even,” they are also usually exempt from taxes and regulations that are applied to their private sector competitors. As a result, these government enterprises have an unfair advantage over their private sector competitors.
There are also many examples of high-tech ventures such as broadband and cable where taxpayers are subsidizing operational losses of millions of dollars.
For example, after eight years in the fiber business, the city of Marietta, Georgia sold its FiberNet to American Fiber Systems for $11.2 million, at a loss of about $24 million. The city had invested about $35 million into building and maintaining the system which serviced only 180 customers along the 210 miles of deployed fiber.
Everywhere we look, the world is moving away from the government provision of goods and services. We are finding out that in today’s world, publicly operated or regulated services just don’t work very well.
While businesses don’t seem to have much to worry about, Texas consumers and taxpayers have every right to be concerned about governments getting into the high-tech business. We can’t afford – or stomach – any more cheap lunches.
Bill Peacock is the Economic Freedom Policy Analyst for the Texas Public PolicyFoundation, an Austin-based non-profit, non-partisan research institute.