Political Decisions

The City Council has decided to close the Edgeware Swimming Pool. They claim that the pool is not well used and the costs of operation are increasing. The people of Edgeware are out protesting. A group is standing beside a busy road with banners calling for passing cars to honk their horns in support. Others have signs on their fences. This illustrates the problems that arise when economic decisions are turned into political ones.

Think about some examples. There is a video shop in Edgeware. This shop remains open, because the revenue received from renting videos exceeds the cost of running the shop. If people stopped using the shop and revenue declined dramatically, the owners would have to close the shop. The criteria for this decision are simple. If the people of Edgeware are willing to spend enough to cover the costs of running the shop, it will stay open. If they start spending there money somewhere else, it will close.

Consider a business thinking of opening a gymnasium in Edgeware. If the gymnasium can get enough paying customers to cover the costs of running the gymnasium, it will proceed. If the is insufficient people willing to pay the fee that the gymnasium charges, it will have to close.

When the city council provides services, economics is irrelevant. The politicians have no sensible criteria for deciding whether the pool should stay open, because the entry fees to the pool are totally unrelated to the cost of operating the pool (including the cost of capital). Politicians can only respond to political noise, but they never know how many people are making it. If the noise is loud enough, they have no choice but to keep the pool open, because their main objective is to not lose their seats at the next election.

The only way to find out how much the people of Edgeware value their pool is to look at how much money they are willing to pay to use it. Honking of horns tells us nothing, because honking a horn costs nothing. If people are spending their money on other things, they must value them more. From appearances, it seems that most place a higher value on videos than swimming.

Political decisions are totally detached from economic reality. They tend to be bad decisions, because they are based solely on political noise which is cheap.

City Councils should not be making decision about services like swimming pools. If there is sufficient demand for a swimming pool in Edgeware, I would expect an entrepreneurial person to provide one. If there are insufficient people in Edgeware willing to pay an entry fee that covers the full cost of operation, then they do not want a pool that badly.

No doubt someone will raise the issue of the poor with no place to swim. The answer is obvious. I doubt that the City Council has responsibility or authority to care for the poor, but even if it does, there are better ways of assisting the poor than providing a swimming pool at Edgeware. I suspect that the poor people in the area get more pleasure from the video shop down the street from the pool.