
But Rich People Live Here, So We Can't Be Going Broke - oftenwrong
https://www.strongtowns.org/journal/2018/9/5/but-rich-people-live-here-so-we-cant-be-going-broke
======
maxsilver
The ironic thing here, is that Carmel Indiana debt is so high in large part
_because it followed StrongTowns requests_.

StrongTowns is constantly telling everyone "you should densify" and "you
should slow down / tear up all of your streets" and "chase growth / YIMBY
everything" and "hyper-invest in Downtown, only dense neighborhoods matter,
middle-class housing is a worthless drain on all of society" \-
[https://www.strongtowns.org/journal/2017/1/10/poor-
neighborh...](https://www.strongtowns.org/journal/2017/1/10/poor-
neighborhoods-make-the-best-investment)

So Carmel does all of that, tearing out intersections for roundabouts,
creating bike lanes and dedicated paths, densifying everything, and more-or-
less following exactly what StrongTowns is constantly recommending.

But it turns out actually following the StrongTowns wishlist is _really
expensive_ , far more expensive than not doing any of it. Now StrongTowns
wants to complain that Carmel has a high debt load. If they think that debt
isn't worth it, _they should stop telling cities to do all of this StrongTowns
stuff in the first place_.

\---

The blog even complains that Carmel built "a New Urbanist downtown out of thin
air", but does not acknowledge that this exists _precisely because StrongTowns
demanded it_. StrongTowns _is_ one of many New Urbanist groups making those
sorts of demands on cities in the first place.

~~~
thescriptkiddie
Strong Towns preaches incremental development. Building anything "out of thin
air" is basically antithetical that that.

~~~
Spooky23
Sounds like the no true Scotsman approach to urban planning.

~~~
albedoa
Can you tell us how it fits the definition of a No True Scotsman?

~~~
pasabagi
I'm not him - but it's obviously something close, if not full NTS. Real
implementations always differ from ideals, so it's always possible to take a
divergence and say it makes the implementation antithetical to the ideal.
That's the heart of the fallacy. To counter, you'd have to identify the heart
of the Strong Towns idea, the 'spirit', and demonstrate how the implementation
violates that spirit.

~~~
mercutio2
Criticizing a specifically incorrect caricature of the tenets of an
organization by pointing out the actual tenets of the organization is about as
far from No True Scotsman as I can imagine.

~~~
village-idiot
It's actually a strawman, ironically enough.

------
Shivetya
funny thing about Georgia, or metro Atlanta that is. We just completed the new
Northwest Corridor Express Lanes, 30 miles of elevated reversible toll lanes
for a whopping eight hundred and thirty four million dollars.

however with regards to the story, Atlanta has its issues with old and needing
of repair infrastructure but mostly this comes about because politicians love
to cut a ribbon and money goes to new and expensive projects while maintenance
gets deferred. This is very evident in heavy rail metro transit systems across
the country where it is estimated that over a hundred billion dollars has been
deferred.

however the real bomb coming is the public employee pension funds running out
of money, from police to fire to teachers to city employees. Chicago has a
time bomb set to go off in just a few years [1] and if we thought
infrastructure costs were killer wait till the pensions collapse, here is a
hint : worn out sewers and bridges won't sue you. Already more than a few
cities and counties have filed bankruptcy because of these costs.

rich neighborhoods want more and more services but when the bill finally comes
due it is only then that they realize the true cost of that folly. it easy to
live on deferred payment plans until it comes due

[1] [https://chicagocitywire.com/stories/511130434-projection-
chi...](https://chicagocitywire.com/stories/511130434-projection-chicago-s-
police-pension-fund-will-be-broke-in-2021)

~~~
wahern
OTOH, how to fund pensions properly is a solved problem. A properly managed
pension fund will have fully funded (with a high degree of certainty) a
pensioners' expected payout by the time he retires, and indeed have fully
funded accrued liabilities at every point in his career. It's just a matter of
relying on a conservative rate of return with a proven track record. Something
like 4-6% per annum, IIRC. We know this because of the 200+ years of
commercial and regulatory experience with insurance, especially life
insurance. People trust their life insurance and annuity policies will pay out
because politicians from 100 years ago bequeathed to us a reliable regulatory
framework (forged by multiple crises) that penalizes insurers from being
"innovative" with the bottom line. That same discipline can and is used for
pensions, just not for public pensions at the state level because state
governments are often exempt from regulations controlling private actors.

Do we know how to do the same for infrastructure, especially large
infrastructure projects? Infrastructure needs and costs are much more dynamic,
which makes it easier to fudge numbers and avoid accountability--now and
later.

~~~
AmVess
There are many fixes. The employees at a company I used to work for funded
their own pension, with company contributions up to some thousands a year per
person.

The plan was fully funded, too...meaning that it would never run out of money.

~~~
caseysoftware
The point is that many cities did _not_ fund their pension funds to the levels
required.

Further, as cities employees (often unions) negotiated better payments and a
lower retirement age - because, it's all later! - the gap got bigger and
bigger.

------
nostrademons
The data in the "Lost in Place" report that the first point references seems
questionable. I spot-checked a couple municipalities I had firsthand
experience with (Boston, San Francisco, and San Jose). The worst "fallen star"
census tract was the Boston Harbor Islands, which ostensibly has gone from 9%
poverty to 82% poverty over the last 40 years. However, this is largely
because most existing private uses for the islands have been discontinued,
such that the largest complex on them is a sewage treatment plant on Deer
Island and a homeless shelter & public services complex on Long Island. When
most of a census tract of 1500 becomes a national park and the only thing left
is public housing for the homeless, of course the poverty rate is going up.

Similarly, the only "fallen star" in San Francisco was the area around SFSU.
If most of the population in a census tract consists of college students
without an income, of course the poverty rate is going up. That isn't actually
reflective of poverty as we know it, though, because it just so happens those
districts include people who are spending hundreds of thousands for a
credential that will hopefully let them earn more in the future, and isn't
reflective of their lifetime earning potential.

Makes me wonder how many of the other "fallen star" neighborhoods the report
references consists of colleges, prisons, or other social services.

------
acchow
"I have all this nice stuff, so obviously I was able to afford it. And because
I was able to afford it, it's not a problem that I have it. Nothing to worry
about."

Did they just make this up? What proportion of people actually think like
this?

I think normally you look at your salary (or bank balance) to see how "rich"
you are.

~~~
Johnny555
I think there are a lot of people like that. I've visited homes of plenty of
acquaintances that, based on their jobs, earn less money than me, but live a
much more luxurious life - for example, a 2700 square foot 4 bedroom 5 bath
home, $5000 viking stove (how do I know it was a $5K stove? They were sure to
let me know: "Gosh, $5,000 for this stove and it still burns the eggs!"), BMW
car for him, BMW SUV for her, private school for the kids (despite paying a
premium to live in a desirable public school district). It's possible that
they have some alternate source of income, but still I wonder how they can
afford all of that luxury.

I think there are more people that look at the equity in their home to see how
rich they are than look in their bank account.

~~~
danjoc
Who's really the sucker when they can just keep counting on forever increasing
real-estate valuations? Even in the 2008 collapse, banks got bailouts and the
market today is just as ridiculous as it was pre-2008.[1] "Too big to fail."
The cars, the private school, they're nothing but a couple years of home
appreciation with a generous tax writeoff discount. Free money, no work
required. Houses in the middle of the desert and homes that have burned to the
ground, are worth more than a garage full of Ferraris these days.

Savers are stupidly working hard and socking away meager sums rather than
hopping on the housing gravy train.

[1]
[https://www.washingtonpost.com/news/politics/wp/2017/06/20/f...](https://www.washingtonpost.com/news/politics/wp/2017/06/20/five-
years-ago-trump-made-a-prediction-on-twitter-about-housing-he-nailed-it/)

------
dexwiz
I find it hilarious Carmel, Indiana is featured so heavily in this article
without mentioning Roundabouts. I grew up near Carmel, and it was famous for
its Roundabouts. They have replaced almost every 4 Way Stop with a roundabout.
I believe they have more Roundabouts than any other town in the US. They have
gone so far as to replace classic overpass bridges over the two major highways
with Cassini Oval shaped Roundabouts.

[http://carmel.in.gov/department-
services/engineering/roundab...](http://carmel.in.gov/department-
services/engineering/roundabouts)

~~~
sjg007
Roundabouts are way better and safer than 4 way stops.

~~~
peterwwillis
Unless you're an American driver. Americans already don't know how to use
normal ones in Europe. Then in America they make them wrong, with big yield
signs that look like stop signs, unintuitive marking, confusing exits, and
giant obstructions to the view that force people to stop at the entry to wait
to see if a car is coming, and then refuse to enter if they see one far away.

~~~
albedoa
It is not true that those things negate the efficiency and safety of
roundabouts over four-way stops. Where did you hear that?

------
fallingfrog
"Poor neighborhoods subsidize the affluent; it is a ubiquitous condition of
the American development pattern"

I don't really see that as a positive, more as another symptom of the ongoing
pillage and exploitation of America's working class.

~~~
burlesona
Being familiar with Strong Towns I would say the author agrees with you. In
general Strong Towns tries to point out that the older and lower income parts
of town typically produce a substantial tax surplus while the newer and higher
income parts of town are a substantial tax drain. This is because, while each
individual homeowner may pay more in property tax, they live in much less
density and newer infrastructure is usually a lot more expensive (due to
increased engineering requirements, ie. more pavement, fancy street lights,
etc.) -- so there are fewer people paying for much more expensive
infrastructure.

This is obviously unjust, and the organization is trying to help bring
awareness to the problem to help create a movement for change.

------
iammiles
Although the article references Carmel and its relationship to Indianapolis, I
can't help myself from thinking everything written is analogous to Summerlin
and Las Vegas, the city where I currently reside. It's scary to think how many
other suburbs and cities across the nation where you could draw similar
parallels.

------
mushufasa
tldr:

a) city population density outweighs most other factors at producing overall
prosperity.

b) suburban development is a bad roi for public financing

c) therefore, a lot of seemingly affluent areas (think gated communities) are
actually going to ruin, because the roi on public financing can't keep them
affluent.

the article is interesting, but light on quantitative analysis. you're
supposed to accept that the author ran the numbers.

in particular, i doubt that misallocated public financing is the main reason
for a city to grow or shrink. the global economy is too strong.

there could even be reverse causation -- all the best urban planners left
cleveland as it shrank, which resulted in waste...

~~~
bilbo0s
"...all the best urban planners left cleveland as it shrank, which resulted in
waste..."

???

But if they all left Cleveland, wasn't that because the places they moved _to_
were more desirable for whatever reason?

And if those other places were more desirable, doesn't that imply that they
missed something in their planning? (Or else they would have done the planning
to make their _own_ place that desirable.)

Serious question BTW. I'm not trying to be snarky.

~~~
dragonwriter
> But if they all left Cleveland, wasn't isn't that because the places they
> moved to were more desirable for whatever reason?

Yes, for instance, jobs for urban planners, which are both more plentiful and
better paying in growing (both population and economy) areas.

> And if those other places were more desirable, doesn't that imply that they
> missed something in their planning?

No, in the same way that an investment planner that experiences a known risk
that would have been more likely under alternative courses, or who
underperforms other portfolios that benefited from access to investments only
made selectively available to people who owned particular investments before
that advisor came onboard have not necessarily missed anything. Unavoidable
risk and opportunities constrained by initial conditions definitely affect
urban planning.

------
purplezooey
Detroit has an excuse, it follows the auto industry's fate. Indiana just
elects too many republicans.

------
RickJWagner
Wow. I lived in west Indiana in the late 90s, remember Carmel as the 'new In
place'. Looks like they're headed for trouble.

Bummer. Hope city planners are taking note.

~~~
village-idiot
I'd bet that they aren't.

------
doombolt
Big-screen TVs start from $150 these days so I think they should not be
mentioned as splurge wealth anymore.

~~~
robotnixon
The "brand new car" thing isn't a great example either. You can lease a new
car for under $100/month which likely has lower insurance costs, is safer, and
no maintenance fees other than gas (which you'll also need less of since its
probably a more efficient vehicle).

An older car could end up needing several thousands of dollars in repair costs
at any time, and maybe more than once. I drive an older car because I could
swing a new engine or transmission if it came up. For a lot of people that
means they no longer have a car.

~~~
jstarfish
> The "brand new car" thing isn't a great example either. You can lease a new
> car for under $100/month which likely has lower insurance costs, is safer,
> and no maintenance fees other than gas (which you'll also need less of since
> its probably a more efficient vehicle).

Few people (like yourself) buy commodities in increments limited by their
needs. Most people buy commodities limited only by their total borrowing
capacity.

The unofficial Theory of Consumer Spending holds that "where credit is
extended, it will inevitably be utilized." It's no coincidence retail chains
push their own credit cards. Offered a $300K loan, people will buy a $300K
house.

Most consumers are ignorant of terms. If the possibility exists to literally
sign a dotted line and drive away in a new Range Rover, few people will opt
for your plebeian Accord.

------
PeterStuer
2 things that bother me in this article: misconceptions about the nature of
finance, and the role of real-estate brokers

The first one is illustrated in the 'hyperloop affordability' paragraph.

What bothers me here it the confusion about the nature of fiat currency. In
fiat currency based financial system, money is not realy a resource in the
true sense. You don't need 'work' (in the energy sense) to create it. One push
off a button can create limitless amounts of it. Money is 'merely' a means of
prioritization.

This is a subtle but essential difference. You can 'afford' something if you
have the knowledge and the free (prioritized) energy (work) to invest in
(choose to do) it. In classic balanced systems, where money and 'potential
work energy' are in balance, the difference is small. In our real world
financial system, where this is nowhere near close, both are very different.

The second thing that bothers me is the lack of highlighting the active role
of real estate brokers and speculators on the dynamics of rising and falling
'neighborhoods'.

These businesses live of fractional transaction fees. Some real-estate is
highly profitable as it generates a lot of transactions. A good-looking but
'bad' house where people often find out it is not so nice to live there and
move on asap is a start in the realtor market. It generates potential
transaction fees on the sale every few years.

By contrast, a truly good home is sold on the market maybe once every 2 or 3
generations if ever. The only way to 'unlock' these houses is to take away
their 'goodness'. Small things can be leveraged into high market dynamics.

Typical things are lobbying local authorities to divert go-through traffic.
Once peaceful and nice neighborhoods now become polluted and noisy, often
resulting in a mass exodus by those that can afford it. Previous traffic
hellholes that could be bought up for pennies suddenly become nice, relaxed
and very desirable. A decade or 2-3 later you reverse the process and hit the
jackpot again.

Another trick is to buy a house on a nice street, and rent it out to a toxic
person/family and let the butterfly effect do it's work.

Not nice, but unfortunately very effective

~~~
titzer
The point about transaction fees sound tru-ish...but do you have any evidence
to support any of the above?

