The Monetization of Government
An Essay On
The Monetization of Government
By Alfred Brock
To be of true value local government must generate income.
Thomas Paine wrote, “It is the art of conquering at home; the object of it is an increase of revenue; and as revenue cannot be increased without taxes, a pretense must be made for expenditure.”
At this time taxes are increasing yet the perceived value received from that further expenditure imposed on individuals, households and businesses has become obscured.
The generation of income by local government provides true value to the taxpayer and society in general, which, in view of good government, is generally agreed to be the best result.
Income from local government comes in different forms and is not often a physical good like some commodity as sugar, juice, gold or wheat. As for the maintenance of public buildings, the operations of courts, collection of garbage, distribution of water – these things are tangible and have a ready bill associated with them.
These services are important but not the topic of this essay.
We are concerned here with the more intangible income generated from the operation of government which provides its true value.
This sort of income is represented in different forms, three of which will be briefly discussed here.
The first is the avoidance of costs by providing a means for public safety. Accidents to persons and property occurs and must be mitigated lest the area controlled by the local government concerned degenerate into chaos. This avoidance of costs is produced by the creation of circumstances to reduce the costs in the first place. These means to reduce future costs arising from accidents or criminal incidents include the maintenance of a police force, a fire department and emergency services.
Properly trained and equipped these groups, working alone in some cases and together in others, will allow for the reduction or elimination of long term costs associated with accidents or criminal incidents by responding to them and removing the immediate cause of the problem. Once this is done the action, like saving someone or putting out a fire, is often attributed to these departments as ‘their job’ and that ends it. In fact these actions have reduced costs overall into the future. This is the intangible value of these services and actions and source of income from local government.
Another reduction in cost, and so, value add to the community provided by local government is transportation. Good roads, well maintained, logically set out as well as physical means of transportation such as busses or access to rail and air travel provides a reduction in overall cost to individuals and businesses because the costs involved in providing these services through the infrastructure individually would be nearly impossible to obtain. By providing these services and infrastructure local government reduces costs and so provides an income to the community.
Reductions in costs are also achieved through standardization. In local government this standardization is often realized through local building codes which set forth the minimum and preferred methods of construction for roads and sidewalks, for example. These codes also impact water distribution methods and the delivery of energy. An excellent example would be the fire code which is a more visible and ongoing effort. This process of standardization and adherence to a certain set of rules allows for residences and businesses to take steps to avoid an emergency before it happens. By effectively executing this sort of activity the local government adds value to the community in an intangible way. The intangibility is that if an accident or criminal incident is averted by predetermined behaviors it will not be obvious that the reason for this was the cooperative use of the fire code.
As these intangibles are put in place it is also important that the local government ensure that income must be greater than the cost of maintenance for these structures and departments and more than the ongoing regulation.
Fees should be aligned to cost savings and represent the actual cost of setting up the deterrent processes such as inspection and recording of relevant information. This allows for the individual or business to be able to correct any violations.
Taxes also would need to be aligned to the minimum cost of maintaining the structure of government and these physical services. The temptation to provide other services in order to make up for the lack of tangible return from safety, transportation and sanitation is great but must be resisted.
Any charges or citations made for violations or lapses in adhering to the codes would need to be set so as to allow the error to be corrected without forcing the individual or business to redirect growth capitol. The violation or lapse will need to be addressed but the costs and charges, initially, should not be so heavy as to effectively ensure that the violation or lapse will not be corrected without driving the individual or business out of the community. A heavy handed approach in this manner would also dampen interest from new businesses.
Financing the costs should be on a near breakeven system with some years exceeding expenditures but most years with zero or less than equal income to maintenance with adjustments made as necessary.
Taxes and fees should cover operations while bonds and notes should be issued in alignment with project expenses and projected income. The expansion of the community should never be financed by increasing the fees for local services already in place. This will create an undue strain on the system and actually draw off growth capital.
It is clear that government is not bad. Government is not inherently evil.
In order to be of value and not a burden local government must generate income. It can best perform this by providing avoidance of costs and reducing delay for individuals and businesses as they carry out their everyday activities.
The Monetization of Government
By Alfred Brock
To be of true value local government must generate income.
Thomas Paine wrote, “It is the art of conquering at home; the object of it is an increase of revenue; and as revenue cannot be increased without taxes, a pretense must be made for expenditure.”
At this time taxes are increasing yet the perceived value received from that further expenditure imposed on individuals, households and businesses has become obscured.
The generation of income by local government provides true value to the taxpayer and society in general, which, in view of good government, is generally agreed to be the best result.
Income from local government comes in different forms and is not often a physical good like some commodity as sugar, juice, gold or wheat. As for the maintenance of public buildings, the operations of courts, collection of garbage, distribution of water – these things are tangible and have a ready bill associated with them.
These services are important but not the topic of this essay.
We are concerned here with the more intangible income generated from the operation of government which provides its true value.
This sort of income is represented in different forms, three of which will be briefly discussed here.
The first is the avoidance of costs by providing a means for public safety. Accidents to persons and property occurs and must be mitigated lest the area controlled by the local government concerned degenerate into chaos. This avoidance of costs is produced by the creation of circumstances to reduce the costs in the first place. These means to reduce future costs arising from accidents or criminal incidents include the maintenance of a police force, a fire department and emergency services.
Properly trained and equipped these groups, working alone in some cases and together in others, will allow for the reduction or elimination of long term costs associated with accidents or criminal incidents by responding to them and removing the immediate cause of the problem. Once this is done the action, like saving someone or putting out a fire, is often attributed to these departments as ‘their job’ and that ends it. In fact these actions have reduced costs overall into the future. This is the intangible value of these services and actions and source of income from local government.
Another reduction in cost, and so, value add to the community provided by local government is transportation. Good roads, well maintained, logically set out as well as physical means of transportation such as busses or access to rail and air travel provides a reduction in overall cost to individuals and businesses because the costs involved in providing these services through the infrastructure individually would be nearly impossible to obtain. By providing these services and infrastructure local government reduces costs and so provides an income to the community.
Reductions in costs are also achieved through standardization. In local government this standardization is often realized through local building codes which set forth the minimum and preferred methods of construction for roads and sidewalks, for example. These codes also impact water distribution methods and the delivery of energy. An excellent example would be the fire code which is a more visible and ongoing effort. This process of standardization and adherence to a certain set of rules allows for residences and businesses to take steps to avoid an emergency before it happens. By effectively executing this sort of activity the local government adds value to the community in an intangible way. The intangibility is that if an accident or criminal incident is averted by predetermined behaviors it will not be obvious that the reason for this was the cooperative use of the fire code.
As these intangibles are put in place it is also important that the local government ensure that income must be greater than the cost of maintenance for these structures and departments and more than the ongoing regulation.
Fees should be aligned to cost savings and represent the actual cost of setting up the deterrent processes such as inspection and recording of relevant information. This allows for the individual or business to be able to correct any violations.
Taxes also would need to be aligned to the minimum cost of maintaining the structure of government and these physical services. The temptation to provide other services in order to make up for the lack of tangible return from safety, transportation and sanitation is great but must be resisted.
Any charges or citations made for violations or lapses in adhering to the codes would need to be set so as to allow the error to be corrected without forcing the individual or business to redirect growth capitol. The violation or lapse will need to be addressed but the costs and charges, initially, should not be so heavy as to effectively ensure that the violation or lapse will not be corrected without driving the individual or business out of the community. A heavy handed approach in this manner would also dampen interest from new businesses.
Financing the costs should be on a near breakeven system with some years exceeding expenditures but most years with zero or less than equal income to maintenance with adjustments made as necessary.
Taxes and fees should cover operations while bonds and notes should be issued in alignment with project expenses and projected income. The expansion of the community should never be financed by increasing the fees for local services already in place. This will create an undue strain on the system and actually draw off growth capital.
It is clear that government is not bad. Government is not inherently evil.
In order to be of value and not a burden local government must generate income. It can best perform this by providing avoidance of costs and reducing delay for individuals and businesses as they carry out their everyday activities.
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