A few years ago, the City of Oakland passed Measure DD, which permitted the city to issue about $200 million worth of bonds, the revenues being used to fund “safe parks and clean water”. A recent regatta hosted at Lake Merritt showcased the benefits derived from the spending.

The tour begins with the streets, approaching the boathouse. The sidewalks were renovated, narrowed considerably to make room for “multi-use” dirt paths for the benefit of cross country runners. Of course, few people actually use these “multi-use” paths – casual pedestrians always used the concrete, and the runners often aren’t willing to jog in the mud caused by the Bay’s frequently wet weather when there’s solid concrete one step away.

On entering the boathouse, two remarkable traits stand out immediately: first, that it doesn’t have enough bays to store all the boats at the club, and second, that there’s a rather large restaurant dominating much of the space. Clearly, money that could have gone to a boathouse’s essential function of storing boats was instead redirected toward something else. And sure, the restaurant has little to do with “safe parks” or “clean water”, but it contributes to the ambiance, so we like it anyway.

The inefficiency and impracticality demonstrated here are not uncharacteristic of government projects designed by committee with borrowed cash. Not only is there no coherent principle behind the project, each interest group can requisition its own favored expenditure, because no one feels compelled to think about how it is to be paid for. Unfortunately, since it’s paid for with bonds, the spending is not only wasteful, but also comes with some unpalatable strings attached. Because bonds are issued by governments, they can only be repaid with more taxes – the original spending, plus the interest. As it turns out, bonds make sense only where there is a budget surplus. Taking out bonds during deficit years leads to an endless spiral of taking out debts to service other debts, as we can see in the state’s budget. The spending must also be on infrastructure, which has a positive economic return, rather than amenities, which everyone likes but are a net drain when financed by borrowing. Of course, this kind of thinking lacks popularity; being against “safe parks” and “clean water” is like being against motherhood. A final consideration is the payback period relative to the lifespan of the project. If the payback period is Measure DD’s 46 years, everything the bond paid for will be replaced before the obligation is repaid, and that replacement will cost money too. Is that to be financed with bonds as well?

Perhaps more important than the mundane, practical issue of how projects like this are paid for is the question of whether it is appropriate to have such spending in the first place. How is it appropriate for the public to subsidize bays for private boats that the overwhelming majority of citizens will never row or paddle in? That money could be better and more equitably spent by individual private citizens than a grandiose “public project”. Similarly, how is it appropriate to use taxpayer money to subsidize a restaurant? Even if the restaurant was profitable enough by virtue of its waterfront location to repay its share of the expenses, what justifies the confiscation of some citizens’ wealth for the benefit of the users of the restaurant, and what justifies the artificial advantages granted to the restaurant at the expense of its competitors?

There’s not much of a solution possible for this particular measure, since it has already passed and the bonds will be issued and repaid over the next 40 or so years. At the very least though, citizens should learn two simple rules that will make them more prosperous and free: have a realistic plan for how to pay for all the nice things there are to buy, and keep the public public and the private private. Tangling the two together in any fashion just causes trouble.

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