On Tuesday the Long Beach City Council approved one of it’s patented “HEY WE MIGHT BE DOING SOMETHING PLEASE WRITE ABOUT IT PRESS” pieces of legislation by unanimously passing a request for Pat West to “research” whether eliminating the license fees for new businesses would be a good idea for the city. Let me save Pat the trouble and answer that question in one word:
However given that I have more respect for the intelligence of Long Beach residents than the people who voted to even consider this horrendous proposals, allow me to elaborate exactly why this is a terrible, horrible, no good, very bad idea that should provoke nothing but eye rolls from the general public.
1. License Fees Are An Irrelevant Concern To People Looking To Build A Business In Long Beach
Yes a business is going to look to anyway possible to avoid incurring unmanageable levels of overhead, especially when it is considering whether to establish roots in the City or begin from scratch. However in truth the major, macro-economic concern for a business entity (especially one that is planning to hire locally and gain most of its revenue in the same area in which the business is located) is whether or not their is adequate demand for the goods or services that they are producing.
A lack of demand by local consumers, or local barriers to attracting a large enough number of consumers to make up for the deficit in demand, is the actual problem that a business has when deciding to establish operations in an economically depressed area like Long Beach. Efforts to put more capital in the hands of individual consumers, whether it be wage ordinances, increased social safety spending, or increases in public sector employment, are all MUCH more helpful to increasing the level of demand necessary to sustain new businesses in this city.
2. Eliminating License Fees Will Cause A Direct An Unnecessary Harm To Long Beach Residents
Take a look at this application form for a City of Long Beach Business License. Notice what sorts of things will trigger a higher cost to operate in the city? Things like the presence of alcohol and tobacco (which cause direct harm to the health of our residents), commercial activities that serve as an attractive nuisance to crime like second hand jewelry and collectables, and the handling of hazardous materials like biomedical waste probably do seem to the business owner as “hit(s) from every direction”. However to the people who LIVE near these business, these extra serve as the main way to either 1) prevent these entities from existing in the first place via an indirect Pigovian tax, or 2) allow the City to do it’s job by adequately regulating the negative externalities of these business via services like health inspections, Police & Fire monitoring, or even trash pickup. Giving a business a pass on these sorts of basic forms of regulation just because it is “new” is hugely irresponsible….
Which leads me into my final point
3. The City Of Long Beach Is Already UNDER Taxed For Businesses
Despite what Stacey Mungo or Suzie Price have said on this subject, the idea that the people suffering most in the City are our business owners is patently absurd. We still have an unemployment rate of close to 10% and an official poverty rate (which undervalues the “actual” levels of poverty by the way) of over 20%. This is a huge problem for the people of this City, and indirectly, any business looking to establish itself here and attract an adequate demand to sustain itself.
One basic way that a government can directly address this problem is by spending more and hiring residents directly in order to stimulate the local economy until private capital is properly redistributed to healthy levels. The City of Long Beach paradoxically, is NOT doing that. Instead we are more or less maintaining the bare-bones level of government that we adopted during the height of the post September 2008 recession. Even for policy no-brainers like spending a desperately needed $2 million on affordable housing, local legislators chose to avoid the issue entirely because of fears that THE DEFICIT would come and eat our children.
Now given this ridiculous and counter-productive obsession with fiscal neutrality, why would we eliminate this source of money for the General Fund during a time when even our conservative Financial Management Bureau is screaming for more revenue? Why aren’t we proposing reforms to these massive give aways that are keeping our city operating such an inadequate way compared to the reasonable demands of our residents?
The reason is probably quite simple; the deficit only matters when it involves cutting services that help poor people. It’s the old neoliberal policy dodge, whereby the legislator gets to look like they are making bold decisions when all they are really doing is facilitating the flow of capital to the people who already have enough to support themselves. It’s the reason this graph is as demonstrably horrifying as it is, and it’s the reason that a real economic recovery in the City of Long Beach will not happen anytime soon.