With unemployment at 9.2% and the United States’ collective noses pressed against the debt ceiling (we really really mean it this time), there has been no shortage of people with the answer to our economic woes. We really can’t blame people for offering their version of economic answers. After all, the history of this column is littered with such content.
Economics is a funny topic, where positive statements can be patently false. This contradiction creates a field where one is served just as well to poke holes in another’s theory, as opposed to offering one’s own. With that in mind, this sets up to be a self serving column where we will explore the fallacies of our time (Hey I once used this bandwidth to beg local merchants to carry teaberry ice cream, so this is nobler by comparison).
Chestertown’s July 4th of “will they or won’t they” has proven to be an exercise in fallacy. Readers would be well-served to read Daniel Menefee’s story on Chestertown’s last publicly funded fireworks display. The story and the discussion are good reads. Oddly enough, my company for July 4th weekend was eating at the establishment mentioned in the piece (operated by some of the nicest folks I’ve come across in Chestertown), and heard the same mantra brought forth by the restaurant’s owner.
“What business does the town have buying a Marina when they can’t even afford fireworks?” It’s a valid question, but not without an answer. Unfortunately, the question presents a false dilemma where the options come from an “either-or” world. It’s not that the Town can’t afford fireworks. It’s that there are dozens of “fireworks” in the expense ledger, and if anything is going to give, it’s the fireworks.
Intuitively, people trotting out the either-or fallacy understand that it is fallacy. They likely engaged in a practical application of it during the prior week. When one fills out an expense report, their employer likely has a $150 cap on hotels or a $30 cap on meals. It’s not that the employer can’t afford a $160 room, or a $32 meal. After all, the computer being used to create the expense report costs hundreds of dollars; however, the computer sends and receives dozens of daily office communiqués, houses hundreds of documents and spreadsheets, and provides a workspace for critical databases. Whether the meal costs $30 or $32, it all winds up in the same place (a new meaning to sunk costs!).
Readers have likely deduced that I perceive the fireworks to be the $32 meal, and that the waterfront project is the laptop. While the fireworks are not valueless, there are alternative funding sources. Moreover, if the waterfront project doesn’t move forward, is it fair to ask whether Chestertown’s waterfront would still be a compelling place for a fireworks display if downtown is dark and half the waterfront is occupied by condos? In other words, it can be said that moving forward with the waterfront project is not a matter of either-or, but both.
On a national level, our President employed this logic. He couched the debt ceiling talks as a matter of choosing to help corporate jet owners over helping disabled children. By introducing this false dilemma, the President was making it obvious which side he was choosing.
It did not help matters that the talk circuit took the bait. No fewer than two radio hosts defended the private aviation industry! The point that people were (perhaps) trying to make, is that there is a sense that the current administration has a knack for taking on industries they find undesirable without grasping where the industries fit into the larger picture. The argument closest to making any sense was a reading of Leonard Read’s “I, Pencil.”
Coming full circle, I discussed my son’s lemonade stand with our July 4th guests. I noted that the money was spent with the ice cream man. My guest was quick to point out that it was good to help out the economy the old-fashioned way (He actually expressed it in terms of red state/blue state, but that’s a separate fallacy). The old-fashioned way is rooted in Industrial Revolution America. Raw materials were bought, fabricated, and sold as finished goods where the producers would go out and buy their own finished goods.
As economic circumstances change, this model may no longer benefit everyone. But the insistence that it continues to do so, is a fallacy of composition. We continue to see the National Bureau of Labor Statistics dumbfounded by employment numbers. Why? Perhaps it is because too much importance is placed upon the American consumer. There is a laundry list of overly-quoted figures like consumer confidence, factory orders, inventories, that is written as positive statements. When other elements of the economy don’t fall in line, we act surprised.
In closing, I’ll paraphrase and enhance the opening story from Henry Hazlitt’s “Economics in One Lesson.” In a small town, the local baker has found that his window has been broken by vandals. Two passers-by take notice, and one notes, “At least this helps the glazers.” Left unsaid is the fact that the baker has it tough right now, and he suddenly must pay the glazer instead of buying a new suit from the tailor. And the tailor was going to take the proceeds from this sale to put back into his business, by buying a new store front window.
Too many people think that breaking windows is a solid economic plan. We could shoot $20,000 into the air every year. Or we could invest in a sustainable industry, which will help downtown merchants, provide job prospects, and enhance quality of life. Oh, and we could still shoot $20,000 into the air.
Troup’s Corner Not So Non-Sequitur: This was not a column about hating fireworks. In fact, I saw the displays on the 3rd and the 4th. While I disclosed my viewing spot in Rock Hall, I’ll never tell my viewing spot in Chestertown. I will say that it was a spot where I could see both sides of the river semi-detached from the town. When one takes in this view, one realizes the opportunity that Chestertown has to become a de facto capital for the Upper Shore region. So perhaps the key to this waterfront project is to take some of the risk of loss off the hands of Chestertown residents. It’s a fine line, and any answer I have would just be fallacy.
Next Week: How does “The old-fashioned way rooted in Industrial Revolution America” affect Maryland’s taxation strategy? And how does that affect the Eastern Shore?
Keith Thompson says
“We could shoot $20,000 into the air every year. Or we could invest in a sustainable industry, which will help downtown merchants, provide job prospects, and enhance quality of life. Oh, and we could still shoot $20,000 into the air.”
How eloquent…and says it better than I could say. Thank you.
Warrior Bob Kramer says
Monsieur Troup’er says: the question presents a false dilemma where the options come from an “either-or” world
I’m not sure which is the more operative word… ‘false’ (which ‘fallacy’ would be a nice sub) or ‘dilemma’, but combined they send a message that clearly defines what our pols want us to choose from. Obviously they couch their positive idea/solution with a seemingly untenable one… and pass it off as a ‘horns of the dilemma’ solution… a complied consent that they are offering the ‘real’ solution v the opponents bad alternative.
In any case, I can’t wait till next week’s real fallacy… Maryland’s taxation strategy.
MBTroup says
WBK – It won’t be the screaming and finger wagging that I have been accused of employing (and likely guilty of at some point in time). I’ll be pitching solutions – likely for catharsis. Think Mr Swann’s (or Mrs Wann’s?) trade gap analogy…
Warrior Bob Kramer says
Monsieur Troup’er: ” I’ll be pitching solutions – likely for catharsis. ”
Just don’t get caught in the dilemma of tax fallacies that the state wallows in.
Monsieur Troup’er also says: “Think Mr Swann’s (or Mrs Wann’s?) trade gap analogy”
H-M-M-M. Do we have to wait till Monday? I’m liking this set up more and more.
Scrapple Lover says
I like your analogy of the expense report, i.e. a limit of reimbursable items. What alarms me is that I have seen, and continue to see fewer signers of expense reports, and more filers of expense reports. The small businessperson is paying lots of expenses to a great number of people (that person is known as a Taxpayer), while more and more of those seeking reimbursement expect more and more. Some justify that as their right, due to years of paying into the system. Others work the system- a 95 year old getting a pacemaker, very expensive medicines, etc.
What concerns me about this country’s economy is that there are many more people who consume/order/spend a lot more because someone else is paying for it. Kind of like sitting at your company’s Christmas lunch and watching your coworkers order the most expensive item on the menu. It’s a different order than what they would place when paying their own check.
This applies to the marina too- if the town had to buy the marina with its own funds, the purchase would have played out entirely differently. Let’s be smart, and look at this potential acquisition like we were paying our own bill. Don’t get me started on the State’s tax situation- but when you look at the number of residents ordering steak when they can’t even afford a happy meal, how can taxes be lowered? Our area of the state, like many others, is heavily supported by government checks- if you don’t think so, check the grocery store parking lots on the 30th and 31st of the month, and then again in the first 5 days.
Scrapple Lover says
Unfortunately, most of the time your excellent pieces preach to the Choir. The Choir of what you call Economic Self-sustainability.
I’m with you. But I believe strongly that the prospect of economic strength for this region is unpalatable to the very vocal, very controlling, and very manipulative minority here in the Counties (counties being K and QA). The minority has differing reasons, whether it’s “Big Fish in Little Pond Syndrome”, a subliminal dislike of different races and creeds, or just a perfect excuse for 1950’s thinking, with its segregation and oppression, a fear of change, or just a contention that growth brings over Big City problems, there have always been those who work against improvements.
It’s a very destructive mindset, but has become the Elephant In the Room that hasn’t been openly discussed until the past few years, when this area has lost some of the best opportunites for stable jobs in a long time- Wye Mills Business Park, the State Department/FASTC with its 400 high paying jobs and transplanted employees, and a host of other opportunities that would have come hand in hand with those opportunities.
Conveniently in this state, ANYTHING can be fought in the name of the environment. Squirrels, mussels, snails, water pollution, acquifer shortage, sewer, light pollution, road systems, you name it. No one has said yet that the Marina plan could cause some pollution in the waterway, but it’s coming. Until the general public is made to see that these small-minded individuals are fighting THEM- the elite environmentalists dont want THEM for neighbors, it will never hit home. Its the THEM who need jobs, it’s the THEM who want jobs for their children, and it’s THEM who need to stand up and fight for the very small opportunites (like the Marina) still open to what we have all created by our avoidance of conflict and denial of class warfare in our little community.
MBTroup says
So is your handle of “Scrapple Lover” because you know who I am, and my affinity for that mystery meat? Or have we just found another member of “the lost tribe?” Oddly enough, I was about to delay this idea for another week, and write about “we vs. they” because I think it plays greatly into our plight.
Stephan Sonn says
Mr Troup, you make some very valid points from your perspective which is quite reasoned.
Charles Wilson, Ike’s Defense Secretary once said “What is good for business is good for America.
Actually I agree with that, if it were that simple.
Business has forged some bad alliances and made decisions that have not been good for America.
The same holds true for Chestertown. If there is a master plan for the waterfront that makes business and regional sense, where is it and when do we start an enterprise that works?
Keith Thompson says
@Scrapple Lover,
Congratulations, you have just laid out the best argument against the marina purchase I’ve heard so far. You’ve also outlined my greatest concern as well as what I believe the biggest obstacle the town would have to become in order to make the purchase and subsequent development plan a success. Still I think it’s worth the risk because I don’t think the status quo is sustainable and the marina purchase/riverfront development directly challenges that status quo. You have advanced the argument past the simple “just say no” mantra. Thank you for your contribution to the dialogue.
Scrapple Lover says
Chose the name bc I like scrapple too.
My opinion: the concept of a marina in a colonial town being used as a tool in revitalization and economic growth is a strong, commendable, achievable concept.
The actuality of reinvigorating Chestertown, specifically, with the marina is going to be an exercise in futility and failure, for two big reasons.
#1) while some may support town ownership of the area, those who live around it are going to be ballistic over trucks and trailers going through the streets days, nights and weekends. The noise, the trash, the exhausts, coupled with more people in general, will be a source of great angst. Just think: $800K colonial waterfront house on Water Street with a 20 foot Boston Whaler over, and over and over, whether its parked in front of the house, or driving in front of them at the stop lights. For those who will sail/motor in, that will be a culture shock as well- colonial house meets man in tank top. It’s going to be unpalatable to most, and those who will speak the loudest. Add a few beers, loud voices, motors, and a weekend…
#2) unfortunately most small towns hire advisors/managers who are known as “from here, nice guy, know his family, not going to cost a lot”. The manager who can take this marina on and turn it around is most likely not going to want to come work for a government and take direction from novices. Incentives for those sort of employees generally don’t mesh with a govt paycheck. Add the tendency to not fire and manage until way overdue, and you will most likely attract a second rate candidate who didn’t make it at a bigger private marina. I could be wrong, but doubt that Ft. Lauderdale’s Marina manager could be hired up here…
Concept is great in theory, but the reality isn’t likely. No doubt- it’s a done deal- I’d like to see discussion from us on Then What?- marina is bottoms up, and then what goes there?
Warrior Bob Kramer says
Monsieur Troup’er has laid out this discussion nicely and couched the marina issue in someways as a false dilemma because of the unbalanced ‘other horn’ that the opponents have offered… the ‘status quo’.
Mr Media Elite, aka Keith, has pointed out this imbalance from the gitgo that ‘status quo’ is not an option… and that no Plan B has been offered to balance the horns.
The fact is… the marina exists… unlike other economic opportunities that may have been squandered in the past. And the economic opportunity for Chestertown is in the incremental economic value a municipal river marina brings to the town and both QAC and CofK. I believe there is a much bigger economic risk for Chestertown by not taking control of their biggest asset… the river. It’s an ad naseum phrase… do they want to be a river front town and connect with their heritage… or a town beside a river. There is a price to pay for this decision and it’s the opportunity risk as with any investment.
The devil is in the details of this deal. (What we do know as a starter is that the current operation, for whatever reason, couldn’t crack it’s PITI nut on a $2 million note. It’s interesting that the appraisal matches the note value… but doesn’t match the business valuation nums.) Toby Tobriner’s crew did a nice job of uncovering many of these details and offering solutions. But… these solutions don’t happen by themselves… and don’t get solved by part time management.
Other municipalities are managing marinas and waterfront ventures very successfully, so there’s no intrinsic reason why Chestertown can’t do it also… especially if they engage a River Authority entity to manage the operations. But that’s another detail.
Keith Thompson says
@Scrapple,
Your comments echo some of the things I’ve said and addresses some of the issues I’ve brought up with the mayor and the council members. Their responses to me seem to indicate they understand this. Will they have the intestinal fortitude to take on the waterfront residents? That’s a huge challenge. I’ve said it before…the purchase of the marina is the easy part; making it work is the difficult part. The marina certainly purchase creates a cultural change in the town…thing is, not purchasing the marina also creates a cultural change in the town and there is a decided lack of a plan for that outcome. To me a risky plan trumps no plan. Assuming the marina purchase happens, I’ll certainly be out there asking the mayor and council members what the plans are. The purchase doesn’t end the dialogue, it’s only the first round. I’m not planning on putting the issue to rest.
MBTroup says
Stephan says ” If there is a master plan for the waterfront that makes business and regional sense, where is it and when do we start an enterprise that works?”
I pitched a vision here: https://www.chestertownspy.com/troups-corner-town-prosperity-means-winning-with-loss-leaders/
I’m probably pollyanna-ish, but I think it’s an opportunity to make the Town, and the County by extension, a low-impact leisure hub.
Keith Thompson says
Stephan says ” If there is a master plan for the waterfront that makes business and regional sense, where is it and when do we start an enterprise that works?”
On the flip side of that, is there a master plan for economic development of the town in the event that the town loses public access to the waterfront? So far I haven’t heard one. However, you ask a valid question and those are the kinds of questions I ask of town leaders when they come on the air. Part of me thinks that I don’t want to be bogged down in a very specific plan because a more general plan allows for the flexibility to adapt on the fly and to be open to out of the box ideas.