Dayton's Advancing Decline

Dayton's Advancing Decline

by Mark Luedtke

Dayton leaders say they want the city
to become a center for high tech development. I spent 20 years
working in high tech in Texas, 15 in Austin, and I can tell you
Dayton leaders are not serious about making this happen. Compare
Dayton to Austin. In 1960, Dayton's population was 262,332, and Austin's was 186,545. During the high tech revolution
since then, Dayton's population declined by 40.7 percent to
155,461 while Austin's increased by 398 percent to 743,074.

The burden of
government made Dayton the 5th emptiest city and one of the 10 fastest dying cities in America according to Forbes.

From a purely economic standpoint, why
would anybody open a new business in Dayton instead of Austin? Ohio
has an income tax rate of 7.5 percent. Dayton's income tax rate is
2.5 percent. There is no income tax in Texas or Austin. Who wants government to confiscate 10 percent of their earnings if they can avoid it? The archaic income tax punishes productivity, savings and investment. It rewards
debt. Feudal lords sent armed horsemen to collect crops,
livestock, and anything else of value from serfs on their land. Professional politicians do the same thing today, decorated with the sophistication of civilization.

Dayton's per capita spending burden is
$1,049 annually. Austin's is $835. Texas's per capita spending burden
is $6,896 annually. I tried to find Ohio's fiscal 2008-2009 budget
numbers, but Ohio doesn't put them online. Our representatives
make the budget process ridiculously opaque, no doubt to keep
citizens in the dark, but does anybody think that the state
of Ohio has a smaller burden of government per capita than Texas?
I didn't think so. Taxpayers pay for all government spending. It takes money directly out of our economy. The cost of big government compounds
like debt, so small differences grow huge over time.

Austin's rapidly growing population supplies labor and customers. Dayton's turning into a ghost town. 53.7
percent of Austin's population is between the ages of 18 and 44. Only
43.2 percent are in that age bracket in Dayton. High tech
businesses are generally started by young, highly educated, individuals not tied to geographical locations. They seek out cities
that are most advantageous to their business. I bet plenty of UD grads prosper in Austin.

You don't have
to be Adam Smith to recognize the only way Dayton will ever reverse its decline and compete
for high tech business with a city like Austin is if Ohio and Dayton
abolish their income taxes and dramatically reduce the burden of
government on businesses and residents until they are comparable with
Texas and Austin, respectively.

So I was excited to hear Mayor McLin announced a
proposal to transform Dayton to a knowledge based economy. Until I read the proposal. I applaud the mayor and other
officials for cutting the budget by $5.28 million – a 3.1
percent decrease - but that's not nearly enough to compete.

Mayor McLin announced a public-private partnership called the Dayton Economic Attraction
Program (DEAP). The program rewards favored
businesses with payroll tax rebates if they hire enough people. The mayor
assures us these programs work in Cincinnati, Columbus, and other
Ohio cities. But work for whom?

Of course the favored companies
benefit from
the subsidy, but non-favored businesses pay
the price. If you're an individual taxpayer, own a business that's not
downtown or otherwise favored, or haven't been in business for 3 years,
Mayor McLin is
taking your hard earned money by force and giving it to favored
businesses. It's corporate welfare with a pretty name.

It's easy to see the benefits of plans
like this – new jobs at favored companies. It's hard to
see the costs – more lost jobs at non-favored companies. It
will take a new bureaucracy to manage this program.
Taking money from taxpayers so they can't spend, save or invest it as
they see fit, then giving it to others, makes our economy less
efficient since different goods and services are created than would
have been created naturally. And both tax payers and
recipients will have less incentive to work hard because of this
plan. All hidden costs. Government stimulus plans always take more than one dollar out of the
economy to stimulate a dollar's worth of economic activity.

The city is also creating the
new Dayton Business Resource Center bureaucracy to organize all the different ways it hinders economic development so business owners won't be confused. That's another hidden cost of interfering with the economy.

Mayor McLin knows reduced taxes stimulate business, but she's only giving them to her politically connected favorites. Every government interference in the economy harms the economy and
increases income disparity by enriching favored businesses and impoverishing non-favored. The
poor and minorities inevitably suffer the most. A lower burden of government for everybody attracts businesses and creates wealth for everybody. All non-marketing economic development spending should be cut from the city budget and taxes reduced accordingly.

Officials also lowered the priority of clearing streets of snow. After the last big snow, it seemed more like they gave it up completely. My little
street, streets in MacPherson Town, streets in the Oregon district, and
undoubtedly many others endangered drivers for ten days. Downtown
streets endangered drivers for a week. Lost economic
activity and revenue are a hidden cost of that failure of government
services. Heads should roll. Dayton's economy will never grow if the
streets are buried under ice.