As COAST has warned repeatedly, City meddling in the marketplace is not just a wasteful use of our tax dollars, it has market-warping effects that are not easy to control or predict.
This week's closing of Jeff Ruby's Walnut Street Grill is Exhibit A of why crony capitalism does not work.
We know it is hard for our elected leaders to see, but Cincinnati and Hamilton County families are hurting. They are having a hard time making their mortgage payments; they are driving that old car longer than they used to; they are buying fewer new clothes. Thus, they are limiting severely their spending for dining and entertainment.
The tens of millions of dollars in subsidies to numerous restaurants on the Banks are certainly helping open these shiny new establishments, but they are chasing a limited number of dollars spent on the luxury of an evening out. And while some new visitors are enjoying what Cincinnati has to offer, that's not nearly enough to offset the competition created by these subsidies.
Imagine you opened a new restaurant yourself, at your own expense, with private dollars on Main Street near Sixth. There, you employ a maitre de, chefs, waiters, and janitorial staff. With your own dollars, you took the significant risk of opening and operating a restaurant. And of course, you are paying property taxes, sales taxes and earnings taxes on all that economic activity.
Then, months later, six blocks away, the City decides to create a hip new neighborhood, with brand spanking new, shiny restaurants. The entire neighborhood is subsidized with tax dollars from the community, and the new restaurants specifically are given in excess of $1 million each to open their doors. Most of this is not loans, but outright grants.
How do you compete with a restaurant receiving massive subsidies, in a neighborhood receiving massive subsidies only blocks away?
The answer is you don't. You lose your private investment in favor of the crony capitalism going on just blocks away, and for which you are paying taxes to create and subsidize.
So, in the process of wasting tax dollars on a neighborhood and on businesses that may or may not succeed, we kill the very businesses that are paying the taxes to make all this possible. Freaking brilliant!