Community View | There are too many middlemen when it comes to government contracts
When are governments going to learn that they don’t have to keep inviting do-nothing third-party bankers into their development projects? Here they have a captive taxpayer-based income stream that could be used to pay the contractors directly.
But does the city do this? Nooo, they sure don’t.
What’s wrong with this picture?
A beautiful school needs renovating.
Myopic city government decides, “We ought to fix this up. It really is a beautiful facility, and would be great benefit to our community.” True.
So they put out bids for the job. Best offer: $35 million.
So city says, “Hey, Joe banker. Will you hand our money to the contractor for us?”
Joe banker says, “Sure. I’ll just charge you 50% for several decades after the job is done.”
City says, “Fifty percent? Well, OK, we’ll have to take this to the voters.”
Voters see the value of the school, so the bond issue passes by a slim margin. ALL the taxpayers are forced to help do-nothing banker get richer, so the city can rush into the project.
Anything wrong here? Besides maybe the numbers? Would 5% instead of 50% make it right?
Netty mayor is standing in front of Ted contractor, who is eager to do the work. So she calls Joe banker over and asks, “Will you please hand these millions to Ted contractor for me?”
Joe banker says, “Sure. I’ll hand the money to Ted for you.”
He grabs the millions from Netty mayor, peels off a fat chunk of cash for himself, and hands what’s left to Ted contractor – the one who actually does something.
Having a steady captive taxpayer income base, why doesn’t Netty mayor just hand the money directly to Ted contractor herself?
The answer? “Because we’ve always done it this way.”
Look, if Joe banker is sitting on so many millions and the job could be rushed through, why doesn’t he just be a good community servant and pay for the job himself? Spare the taxpayers!
This is one reason why bankers have traditionally been considered evil. And cities, stupid.