Saturday, November 11, 2017

Side has another “moment”…


Well, wouldn’t you just know it.  We went out to replenish the firewood supply for our fireplace insert, and at the same time, replenish the front porch supply on standby.  It’s pretty brisk outside, especially in the waning daylight hour, or if you prefer, chilly.

But as soon as you start exerting a little effort, you warm right up, and your mind wanders to other subjects.  In this case, our post earlier today about Boutique hotel plans in Portland vs. school construction plans in Brunswick.

The simple explanation for the disparity we raised is this.  The hotel developer and operator aren’t going to move forward on the plan unless they have a viable business case. They have to demonstrate they can earn a return on the investment, and no lender is going to approve financing unless they do.  This is the implicit discipline, or the “invisible hand” if you wish, of the capitalist economic system.

Government school construction, in contrast, has no need to make such a case.  It has no need to seek private financing, because the government will sell bonds on the public market to cover the expense, and it’s pretty certain that no bond buyer will insist that there is an airtight business case.  Because this is not a business.

All bond buyers care about is the interest rate you and me and the guy behind the tree will pay for the use of their money.


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