The United Nations is reportedly scrambling to find office space on the commercial market now that it has become less and less likely that the taxpayers of New York are going to permit their agency, the United Nations Development Corporation, to build the office space for the anti-American diplomats and international civil servants. It makes you wonder what the government was doing in the office space business to begin with.

It turns out that government in New York city and state has expanded from doing things that government can do best – fight crime, collect taxes, provide a basic safety net for the deserving poor – into a lot of things that private business can do best, like the real estate business. So employers in New York find themselves negotiating with the government instead of running their businesses.

It isn’t just the United Nations. Goldman Sachs reportedly put its plans for a new headquarters building downtown on hold this week after failing to reach a deal with Mayor Bloomberg and Governor Pataki on street design and traffic issues. Instead of running a football team, the Jets management is spending its energy negotiating with politicians over a site in Manhattan. The company that bought the Plaza Hotel may end up spending more on government relations consultants, lobbyists, and lawyers for dealing with the New York City Council and Landmarks Commission than it did on the hotel itself. So far as we can tell, the Plaza owners aren’t even seeking a subsidy, just to exercise their property rights.

Mayor Bloomberg, a businessman himself, has made it a priority to set a pro-business tone in the city, and Governor Pataki is also eager to bring jobs to New York. It’s great that they want to be supportive. But in some ways, the most helpful thing they could do is reform the process so that every effort to build something large and new in the city does not require a dozen trips to City Hall. The non-Bloomberg politicians like the current system so that they can wring campaign contributions out of all sides of these fights, and the entrenched lawyer-lobbyists-expediter types have an interest in the current system. The politicians can claim credit if these big projects ever get built.

For each of these projects that gets built with city help, there is a competitor who isn’t getting help and who might sue. There are individuals and small businesses whose taxes are going to subsidize the bigger fish. The projects have a way of getting entangled with each other – the city will have to spend more on a subway route to the subsidized Jets stadium because an alternate route is on the site of the under-construction subsidized New York Times headquarters. The U.N., the Jets, the Plaza, Goldman Sachs, the state-subsidized newspaper’s headquarters – all these projects underscore what a big role government in New York plays in the real estate business. If government were to get out of the way, as it did in the U.N. deal, the private sector would have a way of rising to the challenge on its own.