Yes, earmarks are corrupting and costly; what we didn't know is that they also are damaging to communities that receive them

There are many reasons to oppose federal earmarks and pork barrel spending. They're wasteful and inefficient; they promote corruption and kickbacks; and, as was vividly demonstrated with the "Lousiana Purchase" and the "Cornhusker Kickback" during the Senate Obamacare debate, pork barrel spending can be used to persuade congressmen to support outrageously expensive legislation they would normally oppose. Further proof of the pernicious effect of earmarks comes from a new study by the Harvard Business School -- "Do Powerful Politicians Cause Corporate Downsizing?" -- that concludes federal pork kills jobs and stifles local economies.

Using data spanning four decades, Harvard researchers measured the effects on local businesses as their local congressmen grew in stature in Washington. The study correctly assumed that when a senator or representative acquired a powerful committee assignment, he would exploit his new position to funnel more money to constituents back home. But the Harvard researchers also assumed -- incorrectly, they would discover -- that local businesses in a member's home state or district would benefit from opening up the federal largesse.

"It was an enormous surprise, at least to us, to learn that the average firm in the chairman's state did not benefit at all from the unanticipated increase in spending," said Joshua Coval, one of the study's three principal authors. In fact, the study found that in the years following a congressman acquiring a powerful committee assignment, the average company in his state cut back capital expenditures by 15 percent. In one prominent example, Alabama went from receiving $6 million less in annual earmark spending than other states to $90 million above the state average after Republican Sen. Richard Shelby assumed the chairmanship of the Senate Intelligence Committee in 1997. Shelby earmarked $15 million for low-cost fabricated housing, but the study found that one of Alabama's largest suppliers of this housing, Homes Inc., correspondingly reduced capital expenditures by 79.5 percent and downsized its work force by 30 percent.

Coincidence? Not likely. "The pattern repeats itself across decades and over thousands of firms," notes the Manhattan Institute's Steven Malanga in his examination of the study, appropriately headlined "Businesses: Beware Pols Bearing Earmarks."

Mackinac Center questions Detroit downsizing plan

The geographical downsizing plan has the virtue of acknowledging, for maybe the first time within the confines of City Hall, the severity of economic and social conditions in Detroit. But it still places an as-yet unjustified faith in the ability of the city government to plan in detail the city's economic future. The People Mover was supposed to reinvigorate downtown. The construction of a GM plant in Poletown (which saw the city evict residents and raze a low-income neighborhood) was supposed to create new auto jobs. Neither has worked as intended. It remains to be seen if the city can plan decline any better than it can plan growth.

Speaking very broadly, what the city needs above all else is jobs and investment. The real source for both is to be found among entrepreneurs and investors whose efforts are more likely to be stymied than aided by detailed government planning. In the short-term the city may or may not benefit by writing off its worst sections and downsizing geographically. But if Detroit is to recover, the downsizing that will need to be done long-term is a withdrawal of city government from the issuance of detailed plans and regulations. By downsizing the ambitions of city bureaucrats, the city will give small businesses the flexibility they need to function, earn profits and create jobs for Detroiters, which is the key to the city's eventual recovery.