If you build it they will come and exploit it

There’s no way to build a program for people in need that can’t be taken advantage of by unscrupulous people who aren’t in need. I have a friend, an attorney, who used to work cases involving people who defrauded the foster care system, taking state money for the care of children who didn’t exist, or who weren’t really in their care. It’s maddening. She eventually quit that job, partially because it was so dispiriting to come in daily contact with people being awful. But what can you do? You can’t build a fence strong enough to keep out all fraud without making the administrative burden impossibly high for the many honest people doing the hard, humane work of raising kids who need parents. There’s some optimal level of vigilance that leads to some optimal level of fraud and that optimal level of fraud isn’t zero.

I thought of my friend when I read this story, about developer Dan Gilbert getting an “opportunity zone” tax break officially intended for spurring development in impoverished areas:

Gilbert’s relationship with the White House helped him win his desired tax break, an email obtained by ProPublica suggests. In February 2018, as the selection process was underway, a top Michigan economic development official asked her colleague to call Quicken’s executive vice president for government affairs about opportunity zones.

“They worked with the White House on it and want to be sure we are coordinated,” wrote the official, Christine Roeder, in an email with the subject line “Quicken.”

The exact role of the White House is not clear. But less than two weeks after the email was written, the Trump administration revised its list of census tracts that were eligible for the tax break. New to the list? One of the downtown Detroit tracts dominated by Gilbert that had not previously been included. And the area made the cut even though it did not meet the poverty requirements of the program. The Gilbert opportunity zone is one of a handful around the country that were included despite not meeting the eligibility criteria, according to an analysis by ProPublica.

Maybe there’s no way to design a program like this without billionaires with phalanxes of lawyers and friends in high places being able to sop up some of the money. Even before the “opportunity zones,” Jared Kushner was able to game a similar program by drawing a gerrymandered “low-income district” that snaked its way through Jersey City to include the site of his luxury skyscraper and also some poor neighborhoods miles away. But I have to believe the optimal enforcement level is higher and the optimal malfeasance level lower than what we have now.

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3 thoughts on “If you build it they will come and exploit it

  1. JSE says:

    I mean, why do I think there’s too much malfeasance? Maybe Dan Gilbert and Jared Kushner are the only ones gaming the system and almost all the incentives are going to people using the program as intended! I don’t have any data on this. So maybe I’m being too cynical. My friend the attorney, hardened by experience, no doubt thinks I’m not being cynical enough.

  2. byesac says:

    Cynicism isn’t good for you. However, you’re right that there is an ‘optimal’ level of fraud. A conservative might say that any government p

  3. byesac says:

    rogram invites more fraud than a free market would invite. It is sad, though, that we can never completely fix these things.

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