RALEIGH – There are many reasons to prefer smaller government to larger government. If you spent much time at CarolinaJournal.com, JohnLocke.org, LocalInnovation.org, or other sites featuring free-market analysis and commentary, you’ll be exposed to the full spread of arguments. Smaller government means lower taxes and, thus, a more productive economy. Smaller government means less coercion and, thus, more personal freedom. Smaller government is more consistent with our state and federal constitutional framework, meaning that the government programs that remain are more clearly authorized by republican institutions.
One more compelling argument for me has always been that smaller government means less corruption. While poor choices, mercenary interests, and sinful behavior pervade the human experience, the possibilities for abuse of power and conflict of interest multiply in proportion to the ways that government taxes and regulations force their way into voluntary exchange.
A good example of government growth leading to conflict of interest can be found in Carolina Journal’s extensive coverage of the activities of the Northeast Partnership and its CEO, Rick Watson. Over the years, we’ve found numerous cases in which Watson, as head of a quasi-public economic-development agency mostly funded by taxpayers, has also angled to acquire a personal financial stake in prospective businesses with which the partnership deals.
The most recent case is the most blatant: Watson has apparently accepted an offer of employment from a private firm, the aptly named Midnight Bandit, while planning to continue working for the Northeast Partnership through 2007 – and while pressing, as head of the partnership, for state funds to subsidize Midnight Bandit’s planned theater operation near Roanoke Rapids.
As Don Carrington reported yesterday on CJ Online, Watson and Raleigh attorney Ernie Pearson – himself representing both the partnership and Midnight Bandit – arranged to have this obvious conflict of interest publicly discounted by soliciting a legal opinion from Robert Morgan, a respected lawyer whose previous public service included terms as attorney general and U.S. senator. The report from Morgan and his law partner concluded that there was no conflict, and it got wide circulation just weeks ago. But both CJ and the Elizabeth City Daily Advance discovered that, contrary to what Morgan was told, Watson was simultaneously seeking to get $500,000 in state funds released to assist the project. Indeed, Watson sought the $500,000 in paperwork submitted to the state Department of Commerce on Oct. 24. Morgan’s legal opinion that Watson had no conflict was released on Oct. 25.
Morgan and his law partner are not co-conspirators in this little enterprise. They are two of its highest-profile victims. More generally, however, all of us as taxpayers are being victimized by a system that allows state funds to be spent for what is clearly a private purpose – the creation of a private theater enterprise that will compete with other arts and entertainment offerings in North Carolina.
I am all for creating and enforcing a real conflict-of-interest policy for all entities receiving money from the state to carry out economic-development activities. But that’s just a bare-minimum response. The solution is not for the state to recruit and subsidize private businesses in a more ethical fashion. It is for the state to get out of the recruitment and subsidy business.
In an ideal world, I would care not at all about the financial dealings of Rick Watson. This is not an ideal world.
Hood is president of the John Locke Foundation.