In its general form, Gresham’s Law tells us ‘the bad crowds out the good.’ Whether it’s in currency, politics or in the realm of ideas, this modest proposition warns us be diligent in promoting the good over the bad. This column is mindful of that caution.

Three years ago, the research center in which I work uncovered some serious skullduggery in Muncie. As time passed, I wished to let it fade away, but the unscrupulous behavior that was central to an effort to bilk taxpayers has re-emerged. So, I must share the fullness of what happened. 

In 2016 the City of Muncie sought to build some new apartment buildings they termed ‘executive housing.’ The challenge to that effort is that Muncie is losing population and awash in a shocking oversupply of housing. According to the U.S. Census, there are enough vacant homes in the city to comfortably house a third of its residents. 

Now, many of those extra Muncie homes could be bought for perhaps $25,000, while the same house would sell for more than $500,000 if located in Chicago. Housing is disastrously cheap in Muncie. After adjusting for inflation, homes in Muncie sell for maybe 2/3rds the cost of building them. Unsurprisingly, few real estate developers or bankers are rushing to build new homes in Muncie, and realtors are not excited about the commission on selling such homes. 

The cause of low home prices is due to two factors. The first is poorly performing public services, especially schools. The second is an excess supply of housing. Both conditions long afflict Muncie, so naturally, it requires government subsidies to build new housing. But, subsidizing ‘executive housing’ is rightfully unpopular, especially in a city then facing an imminent school takeover and where potholes are the most common form of road markings. So, to get around these political inconveniences, city officials decided to mislead taxpayers. 

The easiest way to do this was to find a consulting firm that would manufacture fake population projections so as to justify new housing. So, the city hired a firm, named Zanola, who did just that. Their study falsely claimed that the Census data reported a turnaround in Muncie’s population loss and that a Census population forecast projected Muncie to grow over the next few years. Both claims were provably false. At the same time, two local consultants, John Fallon and Tom Ferris, copied major parts of this study verbatim, in a study promoting their business of attracting “executive housing.” They also penned several Op-Eds making the same claims. There are doing this again, citing the same fabricated data. 

Now, at first, my colleagues and I thought this was a simple, though potentially costly, mistake. The city carefully hid the Zanola study, so only plagiarized excerpts appeared in the local paper. Only after a neighborhood association became angered at the subsidies, did the city release the Zanola study. At that point it was clear that a well-organized effort to mislead taxpayers was at hand. 

However, Ball State is a partner with the U.S. Census Bureau, and my center is obliged to provide Census data for local government decision making. So, after contacting both study teams for comment, we released a study in 2017 reporting the truth. Muncie’s population continues to decline, there is a vast excess supply of housing and the Census does not even do forecasts at the state or local level. 

These fabricated studies were intentional efforts to mislead Muncie taxpayers. They deceived the community about Census data suggesting there was a population turnaround and cited a wholly imaginary Census forecast that reported population growth in Muncie. 

In a better world, the City of Muncie would’ve thanked us for revealing this malfeasance and attempted to recover money wasted on these consultants. Instead, the City of Muncie, Zanola, Fallon and Ferris all threatened to sue Ball State, me and my staff for revealing their fictional data and imaginary Census projections. 

To its great credit, Ball State’s official response was essentially, “See you in court; make sure you bring your checkbook.” Unofficially, an administrator warned my dean to keep me quiet. To her great credit, she counseled me to remain resolute. Fortunately, after some internal messiness, Ball State adopted a robust freedom of speech policy. The community was not so lucky.

Since this saga began, another 1,500 folks departed Muncie, leaving behind their homes and vacant apartments. The schools continued to bleed students, and potholes grew more capacious. And yes, of course, the apartment project went ahead with taxpayer subsidies. This means that tax dollars that should’ve gone to schools, public safety and other purposes will now supporting new ‘executive housing’ in Muncie. 

It should be obvious that this project is the absolute antithesis of economic and community development. Any high school AP economics student can explain that increasing the supply of apartments when apartments are already oversupplied will further depress prices. This project will do nothing to stem population loss, while placing even harsher financial strain on the City and Muncie Community Schools. It will of course provide pretty, new ‘executive housing’ in Muncie. The benefits are well beneath the costs, which is why taxpayers were misled from the very beginning. 

To be clear, this is a problem of the previous city administration. The new administration differs in every important way. Still, there are still those in the community who supported this project long after its lies and fabrications were revealed. They need a period of intense self-reflection. Some will have this opportunity as a by-product of federal indictments; some because voters are unlikely to again place them in an elected position; the rest because without doing so, they’ll repeat the same mistakes, again and again.