It has been suggested here by a local government official that cities need to spend money to make money. Will it work? "Don't know" was the answer, which is true. Public officials at the local level rarely, if ever, even bother to measure whether or not something is working before they proceed confidently to the next big thing.

This mentality has infected local governments across the country, where gambling with other people's money is seen as good stewardship, particularly if it is being done in service of the "right thing to do". This often pits different factions of society into arguments over what the "right thing to do is"—is it another highway lane or perhaps a streetcar line or maybe a subsidy to a new business or an emissions reduction program—without any objective understanding of what is actually working or what the trajectory of the public balance sheet actually is.

I've promised to describe how a local government can have growth without risk—can experience the upside of growth without the downside—and opt out of the gambling, Ponzi scheme approach. Before I do that, we need a common understanding of how to know whether or not a local government investment is "actually working".

We've developed three short videos that explain how this would be done:

REAL Return on Investment

The first is called the REAL Return on Investment and it explains the difference, as measured by a local unit of government, between investing in economic activity and investing in a project that pays an actual return for the taxpayer.