“One of the reasons I think that city officials like those in Glendale like to dabble in real estate and sports stadiums is what I call the “bigshot effect.” They don’t have any capital of their own, and they don’t have the skills such that anyone else would (voluntarily) trust them to invest other people’s money, but with a poll of tax money they get to play Donald Trump and act like they are big wheels. The Glendale city council did this for years, and when their incompetence inevitably led to things starting to fall apart, they have simply thrown more money at it to try to protect their personal prestige.”[More Glendale Follies]
This idea seems to be gaining a bit in discussions. It is about the use of money by people who have no stake in that money. They are using other people’s money obtained by coercion and force via taxation and other governmental means. They obtained their position to make decisions by means of popularity rather than success.
The entrepreneur and capitalist, on the other hand, uses his own money and builds on his successes. He may start with a popularity approach in obtaining venture capital but even there, he has to persuade rather than force. The venture capitalists are not going to invest in his efforts unless they think they can get a return for their investment.
The key to any system of governance is to limit and minimize the scope of that government to just those areas where private capital is inappropriate. Defining these areas are one of the major strengths of the U.S. Constitution. Stretching those areas is the stimulus for a concern driving the national debate about health care, energy policy, environment, and issues. What sounds good is one thing. Who should fix it is another. How it should be addressed is another. The core is in visions about the nature of governance and its proper limits.