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By Al Jacobs
An interesting presentation appeared on television recently. It revealed the federal government owns thousands of parcels of property throughout the country, many with buildings that have been vacant for decades. As pictures of various boarded up structures were displayed, the show’s host remarked that the cost to the taxpayer amounted to billions of dollars each year.
I happened to drive by a multi-family residential building in the Inland Empire city of Hemet, California, that has been boarded up for many years. Though it’s a formidable structure in a favorable location, it simply sits there unused as it appears to deteriorate. It’s my guess it was acquired through a bank foreclosure during the Great Recession of the past decade.
After discussing with my wife what appears to be bungling by a pair of prominent bureaucracies, she casually remarked, “Why don’t both the bank and the government do something about it?” The reason they don’t do something about it is fundamental. It’s because there is no “they.” Search as you may, there’s not one government official, nor one bank employee, with a dime’s worth of proprietary interest in any of these parcels. If an individual must expend thought, time and effort in correcting a problem in which they receive no personal benefit, the problem will remain uncorrected. It’s for this reason money-losing operations of this sort continue indefinitely.
There’s a special significance when a negative cash flow comes out of your pocket. But when the cost can be spread to someone else, particularly the nameless and faceless taxpayer or permanently absent stockholder, the impetus disappears. This is why mammoth institutions, both governmental and corporate, function as they do.
If there’s a moral to be stressed, it’s that accountability cannot be collective. It must be singular.
Al Jacobs, a professional investor for nearly a half-century, distributes a monthly newsletter in which he shares his financial knowledge and experience. You may view it on www.roadwaytoprosperity.com.