Wheat from the Chaff

The giant Ponzi scheme that is Florida

Florida used to be the golden child of free-wheeling neo-liberal capitalism: low taxes, little regulation and scant attention paid to the future. But now that people need help from their government, Floridians are reaping what they (didn't) sow. Here's a selection from a recent article:

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By Neil Macdonald
CBC News
http://www.cbc.ca/world/story/2009/03/10/f-rfa-macdonald.html

... Gary Mormino, a professor at the University of South Florida, has compared the economy here to a giant Ponzi scheme, the confidence game in which investors are paid with the money of new investors.

The Ponzi State. The phrase is catching on and it's making Mormino famous.

He says Florida's economic setup has always depended on ever more people, often retirees on fixed incomes, arriving from out of state with money to spend. Since 1970, the state has grown by an average of 350,000 new residents a year — or a thousand a day. To accommodate them, politicians in Tallahassee basically let developers build whatever they wanted just about anywhere they wanted. Usually, that has meant apartment towers and minimally inspected cinder-block homes on concrete slabs. The construction barely paused and neither did the waves of tourists — as many as 80 million vacationers a year, all ready to pay hotel taxes and rental taxes and restaurant taxes and sales taxes.

Now, everything's flat. In fact, more residents might be leaving than arriving. And the tourists are staying away. For Mormino, Florida is just a palm tree fantasy with a tax structure "that was insane." And now, he says, "we're paralyzed." Unemployment is nightmarish and rising. Tax-hating Floridians, turning to their government for help, are finding a stunted, business-driven entity with nothing to offer. "When people began looking behind the palm trees and into the account books," says Mormino, all they discovered was "massive fraud and lack of oversight." ...