George Leef’s latest Forbes column probes the long-term negative impact of government attacks on property rights.
Why are some American cities thriving, growing in population, investment, and incomes, while others are in decline with shrinking populations, crumbling buildings, and businesses fleeing?
For the answers, read Boom Towns: Restoring the American Dream by Stephen Walters, professor of economics at Loyola of Maryland. Based on years of study of cities, he concludes that the key to a successful city is to protect property rights and otherwise leave the people alone. “The record is clear,” he writes, “cities grow and prosper when they encourage the formation of capital in its many forms by securing the returns that flow from it.”
And what causes cities to go into decline is equally clear — it happens when government stops protecting property rights. People and capital don’t stay where they are poorly treated. Walters strongly argues his thesis with cases showing the various ways politicians, often in league with private interests, have turned growth into decay.
Probably the most widespread threat to a city’s continuing success is redistributive taxation. Accumulated wealth in the hands of business people and professionals is a tempting target for politicians who figure they’ll gain far more votes than they’ll lose by imposing high property taxes. The wealthy owners will have no choice but to pay and the increased revenues can be used for projects and programs most of the voters like and which also help to buy favor with important interest groups.
