First off, should you be thinking about any of what follows in this post?

Probably not.

Is it good to have a well thought out opinion on the topic at hand though?

Probably.

Is what follows a well thought out opinion?

Maybe.

Should you read on?

No.

Not unless you've already made ten outbound calls today.

Go.

Make.

Your.

Calls.

The Government Condo Deal

An email came my way this weekend about the federal government's proposed BC condo program. Call it a conversion, a buyout, or a bailout as you see fit.

As I understand it, the federal and BC governments are looking at ways to convert more than 2,200 vacant condos into affordable housing.

We can debate the definition of what 'affordable' is another time.

Noble intentions, it would seem.

There are questions worth asking, which I've touched on before, ones like: Are taxpayers being used to protect developers, lenders and investors from losses they should rightfully have to absorb?

Valid.

Not having given a clear program, with dollar amounts disclosed, some people have gotten antsy, and com up with new questions. Perhaps relevant, perhaps just stirring the pot.

Specifically we now have questions about where, or more specifically who, the idea came from.

The Commissioner of Lobbying is apparently being asked to investigate how the policy was developed and whether lobbying rules may have been breached.

And a few names, companies and individuals alike, are being thrown into the mix... or possibly under the bus.

Depending on your viewpoint.

To be clear, yes, if rules were broken, investigate.

If somebody received special treatment, expose it.

If there was a sweetheart deal, follow the money.

But there's something about the larger conversation that bothers me... a lot.

At what point did having a financial interest in solving a problem become evidence that you should not be involved in solving it?

Think about this for a minute.

We have a housing crisis.

Who knows the most about building housing?

Developers.

Who knows the most about financing?

Lenders.

Who understands buying and selling housing?

Realtors.

Who understands mortgage qualification?

Mortgage Brokers.

Who understands construction costs?

Builders.

Who understands why projects that looked viable four years ago no longer work today?

Probably the people who actually built, financed, marketed and sold those projects.

And guess what?

Every single one of those people has a financial interest in housing.

Of course they do.

It is their business.

It is our business.

This is not shocking information.

Their economic interest is exactly why we should question their advice.

It is not a reason to ignore it.

These are two very different things.

Disclose the interests, the conflicts, of course.

Tell us who proposed the idea.

Tell us who met with whom.

Tell us who owns the assets.

Tell us what government is paying.

Tell us who stands to make money.

Tell us who takes a loss.

Then put the idea on the table and judge it on its merits.

Because there's an enormous difference between having a conflict of interest and committing an act of corruption.

Increasingly, we seem incapable of making the distinction.

Someone makes money?

Suspicious.

Someone knows a politician?

Suspicious.

Someone from an industry proposes government policy affecting their own industry?

Really suspicious.

Everything becomes a conspiracy.

Nobody could possibly just be trying to solve a problem.

Nobody could possibly believe an idea would be good for the country while also recognizing that it might be good for their business.

But this is basically how capitalism works.

Someone sees a problem.

They think they can solve it.

They invest their time.

They invest their money.

They take a risk.

And if they are right, they make money.

That last part is not evidence that the first part was corrupt.

And if financial interest disqualifies expertise, who exactly are we supposed to ask for advice?

People who know nothing about the subject?

Imagine government trying to fix aviation while refusing to listen to airlines, pilots, airports or aircraft manufacturers because they all have financial interests in aviation.

That would be ridiculous.

We want qualified people in the room.

We also want to know what their interests are.

To be clear, I am not suggesting developers deserve bailouts.

They don't.

Real estate involves risk.

Developers can lose money.

Investors can lose money.

Lenders can lose money.

Mortgage Brokers can lose money.

We make decisions.

Sometimes we get them wrong.

We absorb the loss.

That's capitalism too.

If taxpayers are being asked to buy a condo with a market value of $900,000 for $875,000 so that somebody does not have to recognize a significant loss, we have questions.

Lots of them.

But suppose government can buy that same distressed property for $550,000, turn it into long term affordable housing and create a tangible asset taxpayers own for decades.

Same condo.

Same developer.

Same government.

Completely different economics.

I do not know enough about the details of this specific program to tell you which version of that example is closer to reality.

Which is exactly why we need transparency.

And expertise.

Question the experts.

Challenge their assumptions.

Disclose their interests.

But don't exclude them because they have interests.

Because there is a cost to treating participation itself as suspicious.

Eventually people stop participating.

If every businessperson who approaches government with an idea risks having their motives questioned, their relationships investigated and their reputation dragged through the mud simply because their company might also benefit, the safest move becomes keeping your mouth shut.

Let someone else solve it.

Let someone else take the risk.

Let someone else put their name on the idea.

There is irony in this.

Some of the loudest voices demanding that government get out of the way and let markets work seem increasingly determined to create a world where successful businesspeople would be fools to participate in public policy at all.

Expertise often comes with an economic interest.

Sometimes the person who knows the most about solving a problem is also the person who could make money solving it.

That isn't automatically corruption.

Sometimes that's just competence.

And if we reach the point where competence itself becomes evidence of conspiracy, we may eventually discover that the people capable of helping us solve our most challenging problems will just leave us to our own devices.

Next weeks post will be a whole lot shorter, of this I am not uncertain.

DW