June 22, 2020
By Timothy Sandefur
Taped on the door of a multimillion dollar facility in Tucson is a simple, misspelled paper sign that announces simply, “closed until further noted.” It’s a sad and all-too-predictable end to one of the silliest and most wasteful examples of politicians trying to gamble on the market with other people’s money. More than five years ago, Pima County’s board of supervisors tied $15 million in taxpayer dollars to a balloon—and now, as the nation enters one of the worst economic crises in its history, that money is floating away to Florida.
The idea was crazy to begin with: The county would spend $15 million to build a brand-new, tailor-made facility for a private business called World View, which would take rich tourists on rides to the stratosphere in specially modified weather balloons. This was supposed to somehow spur the economy and create jobs. County officials were so enthusiastic that they broke state and county procurement laws to secretly hire an architect and a contractor for the project, rushing to get the job done because World View threatened to leave the county if they didn’t. And despite the fact that Arizona law forbids counties from giving taxpayer money to private companies, Pima officials raced to complete a fancy headquarters building and a specially-designed balloon launchpad for World View’s exclusive use, all on the taxpayer’s dime.
And then—nothing. World View quietly erased references to high-altitude tourism rides from their website and failed to launch any balloons. When the first one finally took off, in December 2017, it exploded on takeoff, heavily damaging the building taxpayers had paid for. The company said it was going to investigate the cause of the explosion, but that investigation was slow-walked to stifle criticism. Then World View started launching balloons from a different location instead—in Page, which is about 400 miles away, on the opposite end of the state. And instead of launching passengers, the company launched…a Kentucky Fried Chicken sandwich. Yes, really.
World View was supposed to employ 400 people at its Tucson location. But it never did. In fact, it never came anywhere close to that number, and last February, it actually laid people off. Then it changed CEOs.
That’s not to say taxpayers got nothing at all for their $15 million. On the contrary, when the coronavirus pandemic started, World View used the material that it was supposed to be making balloons out of to make 9,600 “isolation gowns” for healthcare workers, instead. That comes out to more than $1,500 per gown—more than the price of an Armani suit.
Of course, World View hasn’t officially announced its departure for Florida, but its founders have unveiled plans to take their space balloon proposal to the Sunshine State, leaving it unclear what will happen either to the empty buildings in Tucson—or to the innocent and unsuspecting taxpayers of Florida.
But there’s a lesson here for those who want to learn it: When government officials think they know better than consumers and businesses how to run an economy, they’re not just gambling with other people’s money—they’re also giving themselves the power to be economic kingmakers. It means they get to decide, instead of you, what businesses succeed—and of course, they get all the perks of exercising that kind of authority. That’s both foolish and dangerous, because politicians are even worse than private companies at predicting the future—and unlike private companies, politicians get paid even when their predictions are wrong.
Pima County Administrator Charles Huckelberry, who was the foremost champion of the World View project and who makes about $326,865 a year (in a county where the median household income is $51,000), won’t lose his job for frittering away $15 million in taxpayer money. Neither will the county supervisors who blessed the project without having read the reports. (We know that, because Mr. Huckelberry kept his negotiations with World View and with the project contractors secret until the day the County voted on it.) Neither will the leaders of World View, who couldn’t get a loan from a real bank, which is why they turned to the government instead.
No, the only people who end up paying the cost? The hardworking citizens of Pima County, who just watched their money float away to the east.
Back in 2016, Goldwater Institute Chairman Eric Crown warned about all this in a Wall Street Journal editorial that pointed out that the World View venture was placing a dangerously foolhardy risk on the taxpayers’ shoulders, and that arrangements like this “always benefit insiders…. When you can’t get enough private venture capitalists behind your project, but you know how the game is played, you go to the government.” In response, Mr. Huckelberry circulated a memo angrily accusing the Goldwater Institute of trying to “‘damage the brand’ of Pima County,” and other county officials insisted that World View was a “robust” company and that the project would give the county “a foothold in the fast growing multi-billion dollar space market” that would “pull in other similar high-wage space-related companies.”
But now it’s clear: The people of Pima County are left holding the bag. Or, rather, holding ten thousand $1,500 plastic isolation gowns and an empty building with a paper sign on the door.
It might be funny, if it weren’t so sad. It was all preventable. Economists long ago explained that decisions about investment, construction, and business operations should be made by individuals—by consumers and producers, buyers and sellers, banks and investors and entrepreneurs—freely deciding between themselves, and not by politicians pulling strings through government subsidies, backroom deals, and special favors for their cronies. When politicians try to pick the winners—taxpayers are almost always the losers.
Update: World View contacted us to say that they remain in operation. The company has successfully launched two “stratolites,” and in May offered to fly payloads for free, if anyone’s interested.
Update 2: The County contacted us to state that Mr. Huckelberry informed the Board of Supervisors of his secret negotiations with World View and the contractors two days before the meeting, not the same day as stated above. The Goldwater Institute regrets the error.
Timothy Sandefur is the Vice President for Litigation at the Goldwater Institute.