For those unfamiliar with Strong Towns, here’s a best-effort summary of what they do:
Strong Towns is a non-partisan non-profit that advocates for governments to build financially solvent towns. Many cities are perpetually broke because they owe more money in maintenance burden (fixing roads, pipes, etc) than they bring in through tax revenue.
This happens because towns in North America tend to build out large neighborhoods all at once (think: suburbia). At the start, the developers pay for all the infrastructure, and then “give” it to the city to maintain.
At first, everything seems fine. The city gets plenty of new tax revenue! But come 20 or 30 years later, it turns out that the tax revenue of the new development is not enough to replace the roads, fix the pipes, and so on.
And so to pay for the repairs, the city then builds yet another neighborhood in the same strategy to collect the initial tax revenue and use it to pay for the repairs of the previous neighborhood. It’s effectively a Ponzi scheme (as referenced in the article).
The gist is that many low-density spread-out suburban neighborhoods with expensive infrastructure are a huge cost center for a city. And since most North American cities build this way, we have a lot of cities that are “functionally bankrupt” or will be soon.
If you're a systems thinker who lives in a town that can't seem to fix it's potholes, you may want to check out the book they've published with the same name: "Strong Towns".
>Many cities are perpetually broke because they owe more money in maintenance burden (fixing roads, pipes, etc) than they bring in through tax revenue.
This is just flat out not true. For all of the ink Strong towns spills they can't point to one municipality that's gone broke from infrastructure costs. The reality is that infrastructure just isn't that expensive in the grand scheme of things. It's 10% or less of the budget. Most of the money goes to cops, courts firemen, teachers, municipal workers and so on.
I've read various reports from them and I've not seen numbers that stand up. I'm not going to go through 5 more of them in detail to find the same thing. If any of them have actual numbers showing infrastructure eating up say 30% of the budget id be happy to look. But I can all but guarantee that they'll be the same story. Infrastructure at 10% or less with criminal justice, fire, and schools eating up the money.
But the point is they are not spending enough on infrastructure.
Only paying 10% on maintenance and then having perpetually potholed roads or a bridge collapse means the true cost is much higher.
Infrastructure has a lifetime and it needs big capital infusions to replace, of that money isn't being stored away for that date then that's just hiding the spending problem.
>Only paying 10% on maintenance and then having perpetually potholed roads or a bridge collapse means the true cost is much higher.
The numbers out there suggest that for 50-100% more spending we could fix everything. That means spending 20% or less of the budget instead of 10% or less. Even a worst case scenario is not the apocalypse Strong towns suggests.
And more to the point it ignores the things that are a threat. As an example, today Flint spends half the budget paying pensions for retired workers. Then there's things like Social Security, Health care costs, education costs, and housing costs. We have a lot of large and looming problems that defy a simple solution. Infrastructure is easy by comparuson.
That's not really the point. A Ponzi scheme at some point blows up and everything falls apart. But their worst case is the suburbs have to fill <10% of their budget.
No, if the replacement cost is not being factored into to the ongoing costs then it isn't "they just need to double their infrastructure budget" to fix it. They needed to do that over 20 years, the entire lifetime of the infastructure. Every year where the 'true' cost is not being paid means even higher costs later.
You can cover a budget where you double a 10% entry by increasing taxes 10%.
Or increase taxes 5% and cut 5% over the remaining 95% budget.
Or a mix in between.
This isn't rocket science. It's politics. In a democracy it is literally nothing more than a matter of personal will by an elected official. Budgets are drafted every year.
Yes, and the history of municipalities raising taxes to actually cover the infrastructure/other costs is that residents that can move out to other municipalities still using the Growth Ponzi strategy to keep taxes low.
No, not really. That's just the strawman you've grabbed hold to. Quite literally every single government institution has its budget set each and every single year, and every single public institution has to allocate their resources to their programs. Even though it's politically easier to increase debt and spending, let's not fool ourselves into believing a fairytale about how no expenditure has ever been lowered ever.
> But the point is they are not spending enough on infrastructure.
OP said the point-- referenced in the article-- was that they are Ponzi schemes. If that is true then user treis is correct: we should see at least one municipality that went bankrupt from this problem.
Like I said, they are identifying an important problem that needs more discussion. But I do think think they're presenting the full picture, and either misattributing or distorting causes.
In some ways, we are poorer than our parents. Sure, we can buy TVs that are a ten times bigger for a fraction of the inflation adjusted price..
But we’re talking roads here, and roads are built with bitumen. The fact is that bitumen is getting scarcer and more expensive. Our cars are getting more fuel efficient and EVs don’t use fuel at all. But the cars still require the same amount of road, the same amount of bitumen, or maybe even more since cars are heavier and faster now.
We can’t extract oil just to make bitumen. That’s not economical. We primarily extract oil to get the fuel we need, and we get a certain amount of bitumen as a by-product.
Our parents generation was lucky that oil was practically pouring out of the ground..
Bitumen is such an insignificant portion of the price of a road that it can increase in price an order of magnitude with no noticable effect on the road price.
It would have an even smaller effect on road maintenance costs.
This is the most prosperous, generous, and advanced civilisation ever, with the largest number of billionaires.
But most people who are younger than Boomers are poorer than their parents, and public infrastructure and public services have somehow become unaffordable.
Let's use Carbocrete, made of co² sucked out of the air, powered by advanced high temperature fission or fusion. Mixed with remolten desert sand if need be, which is otherwise unusable.
Try comparing how many minimum wage paychecks you needed to buy a house then and with how many you need now and what is took to build a house (including permits and land) and what it takes now.
It will be different form country to country and the tech level was lower but the majority of the young ones these days will neven own (paid morgage) a house by the time they are 35.
Alas, roads are not built by minimum wage workers chipping in a little bit from their meager salaries. They are built using tax funds, most of which is paid by upper middle class and the rich.
While housing is extremely over priced right now, it is also important to note that a "standard home" has changed ALOT.
My Grandparents raised 4 children in a 2 bedroom 1 bath 900 square foot home, which was a "standard home" in the 40/50's
Today the standard home is 2x the size with more bathrooms, and larger lots. This is a source of alot of the problems as well. When developers build a subdivision they are not building small homes, they are building 4 bedroom, 3 bath, 2,000 square foot homes
To add to this: larger houses and plots hav the knock on effect of making under street piping need to be x3 or even x4 times longer to span the frontage, and have more complex outputs, and be larger with higher pressures - same but inverse for waste lines and their inputs.
Same for electric lines, and those lines have to carry _way_ more power. And Internet cabling, and road surface standards are higher, blah blah forever.
Size and modernity makes this not scale so linearly
The debt of modern development is higher than the debt of the previous cycles.
Home sizes in Paris haven’t changed much over the past 50 years.
Yet, prices have exploded. Heck, they’ve skyrocketed. For the exact same thing. Only a bit older.
New apartments, no bigger but built in the suburbs, far from the subway (and not close to the regional trains) cost the same as the old ones of the same size did in Paris 10 years ago (and they were already priced crazily).
With the same numbers of bathrooms but no job that could enable one to afford such a place less than 45 minutes away.
The 2.000sqft 3 bathrooms home with a lawn appears to be a very American thing.
All of that is true, my comment was based on US Housing trends as the context of this discussion is around the American Suburb.
Other nations have other issue, largely that they are locked in with limited amounts of land that can be repurposed for housing, thus this supply restraint is some of the cause of the price increases there. For example the nation of France is SMALLER in land area than the State of Texas yet has over 2x the number of people occupying that smaller land area
The US has TONS of underused land that is continually being developed for new suburban housing additions
Poorer in absolute terms, sure. But take a random sample of 100 people from the city population and compare inflation (calculated including housing!) adjusted income and you'll see the opposite.
But the demands on the roads are also higher. Cars have more horsepower, higher speed, more weight.
In addition, the roads are usually poorly repaired, so you have to repair them more often.
In addition, the contracts are often tendered for private companies and the cheapest company wins. Thanks to the poor quality, repairs then have to be carried out correspondingly often.
Isn't the vast majority of road damage done by trucks due to their much heavier loads per axle? There probably are more trucks on the roads today to serve our larger population, but at the same time we've also built more roads. No idea how to translate that into average wear over time though per road.
That's not how that works. Infrastructure is built with many years of a cities budget; they are maintained with the current years (and sometimes, the next 5 years) budget.
That infrastructure spend is too low. Steel and Concrete and buried utilities have a life. Many of the towns are up for significant capital investment beyond 10% maintenance. The spend is on 50s, 60s and 70s capex. It's getting old.
Surely, on the risk side the estimated repair and replacement costs for bridges alone could drive a truck through this?
The delayed capital works. If 10% is normal, off the back of the Eisenhower era spend, the JFK spend, the LBJ spend on infrastructure, then capital works budgets have been lick-of-paint since. They're overdue for significant re investment.
The federal capital works improvement spending proposed as recovery intervention identifies 100 major bridges nationally, and another 10,000 worth investing in.[1]
Since then 10% can't stop, the likely spend has to be more. It's that simple.
Your reply is useless, but I'll rephrase to clarify anyway: how would one determine what percentage is appropriate for planning long term? I.e. so that I don't see potholes in 10 years, would I need 12% or 18% or 44% or <>% ? What factors would this depend on? E.g. is it always above 10% or only if the town has a very low density?
Could it simply be that it's easier to cut costs at infrastructure than criminal justice, fire and schools?
Maybe it's just 10% of current budget, but actually needed would be 30%. Hence the streets with potholes.
Bingo! Delayed maintenance is an easy way to shift spending. You can put off that road resurfacing another year (maybe spend 5% of budget on asphalt patches), but can you just cut 10% of your police force this year?
Long before I ever heard of Strong Towns, probably decade(s) before it existed in fact, I observed a pattern as a teenager in my sunbelt home state in that there was perpetually a band of new development that was the "nice" part of town while previously "nice" areas were left to decay and become the "bad" parts of town.
I didn't know anything about how this was financed nor would it have crossed my mind at that time, but it was quite evident to me even without having ever left suburbia nor lived long enough to see more than one cycle of development that neighborhoods were essentially considered disposable, and it struck me as a bit strange.
That isn't a realistic failure mode; nowhere is going to spend their way into bankruptcy on infrastructure. A rational if cynical actor would go for handouts to political supporters at the last minute - if you're hurtling into bankruptcy, go out with a bang!
Realistically the mode is catastrophic failures on infrastructure. One might imagine a town descending into a public health emergency due to lead in the waterways for example. Or near collapses of major dams.
Now I have no idea if things like Flint or Oroville have anything to do with the sort of issues Strong Towns identifies. Hopefully they are just localised incompetence. But if Strong Towns is pointing at a real thing then the symptoms would look like that.
Flint in particular was incompetence at the state level, not local. Michigan passed a law saying that any bankrupt township can be run by an "emergency manager" who gets all local executive power. The mayor or city council no longer have any effective authority, nor do any other locally elected officials. It was the emergency manager for Flint who decided to switch water suppliers to reduce cost, and who decided not to use the chemical processing necessary for the new water supply to be compatible with the existing pipes. This was effectively a decision made at the state level that caused the Flint water crisis.
Might not be relavant to the discussion, but social supporting structures like police and schools is infrastructure too, as in they're part of a foundation for a social system. What you refer to as infrastructure, I take it, is roads, water supply, electrical grid, etc., which are static structures, but they're not so different from a school, since both have a static and a dynamic element: the building and the operators. Hm, this rant got away from me. Just wanted to argue some terms.
The fact that school buses are needed seems to be a sign that residential areas are not sufficiently dense for kids to walk to school. (I know that some cities use school buses to provide equal opportunity by randomly assigning kids to schools, which of course would continue to happen in high-density area too.)
And they done nothing of the sort. I have yet to see a place where spending on infrastructure maintenance is above 20% of municipality budget. Usually it’s around 10%.
$42bil to fix all structurally deficient bridges in the whole of the USA seems pretty cheap. I was expecting a much larger number considering the doom and gloom here.
First it's bridges, then it's roading, electric lines, gas lines, water lines, sewerage, civic buildings needing maintenance (schools, hospitals, community centers).
There are endless projects that need money to maintain and the current system of sprawl spreads that money too thinly.
Yeah, from the article the baseline for the big stuff is 5 trillion
> In America, we have a ticking time bomb of unfunded liability for infrastructure maintenance. The American Society of Civil Engineers (ASCE) estimates the cost at $5 trillion — but that's just for major infrastructure, not the minor streets, curbs, walks, and pipes that serve our homes.
>>electric lines, gas lines, water lines, sewerage,
All of these are for profit business that should not need tax money to maintain..
>There are endless projects that need money to maintain and the current system of sprawl spreads that money too thinly.
If you look at where the actual tax money is being spent, is not being spread thin due to "system of sprawl" far from it.
In fact if you look at the actual data most of the time smaller cities have better maintained roads, schools, hospitals, and community centers than the more densely populated area's.
There is somewhat of a bell curve here, there is a sweet spot in population density, too much is a bad thing, and to little can be a bad thing.
Aren't they run like state owner utility companies though? They usually have no competition, state mandated prices, profits enshrined in law, etc..?
> bell curve
How much high-density cities with infrastructure in poor shape spend on infrastructure in percent of their budget? It might be that they still get a better bang for their buck, no?
Yeah, my research shows me the same. Strong Towns is contributing to what I think is an important conversation about responsible planning, but the budgets I've read are unambiguously clear: the costs balloons are public sector labor, not infrastructure. My local county population has been unchanged in almost 40 years and though we've had a growing debt that needs to be taken more seriously, it's not a crisis, building had been stagnant, and despite us having the first or second highest property taxes in the nation, home prices keep going up.
I wanna give Strong Towns the benefit of the doubt, but there seems to be a palpable sub rosa hatred of the suburbs by urban planning blogs and academics, despite their intense desirability if you look at demand vs. supply.
While any muncipal might not be broken (can they go broken in the first place?) are there ones that are becoming unliveable and dangerous? Because infrastructure cost paid is not infrastructure maintenance debt owned. E.x. the recently collapse condominium in Miami.
If anything, the condominium collapse in Miami suggests that Strong Towns is worrying about the wrong things entirely. They've been pushing for denser development on the pretext that low-density, suburban single family homes are supposedly a Ponzi scheme with unaffordable maintenance costs, but maybe the real danger is all the high-density, privately owned reinforced concrete condo blocks. Past a certain point they're basically uneconomical to repair - the way governments often handle this for infrastructure like bridges is by just building a new one and demolishing the old, but there's no way a bunch of private individuals are going to be able to afford that out of the blue especially if they've retired. (Particularly given that they cost substantially more to build than detached single family homes in the first place!)
This is a legitimate concern and as an eastern european I’ve always wondered what happens to old condo buildings, of which we have plenty.
Turns out every once in a while the gov picks up the tab and performs the reparations, while giving the residents an option to pay for the expenses during the next eg. 10 years or when selling their property. Some do refuse of course but mostly it works because the added value is quite high since it happens in hot areas where price/sqm is above avg. There are also estate investors buying bulk property in these old blocks knowing they will benefit from it, pushing retirees aside.
There are still plenty of troublesome condo blocks laying around without anybody touching them, but this might be a decent approach.
In some areas it may be possible to increase average density of single family home developments using land value tax plus an occupancy deduction to discourage leapfrog development and excess vacancies, to bring commuter neighborhoods closer to the urban core, with infrastructure on grid or other cost minimizing geometry.
In inner city areas where wages make up a substantially smaller fraction of gross receipts in comparison wealthy suburbs, the excess burden of state and local sales taxes on workers is substantially higher. Replacing state and local sales tax with land value tax may reveal exurban sprawl was motivated by desire to avoid austerity rather than desire for more space, and that middle class really doesn't mind living a bit closer to cities.
It should be possible to design multi-story buildings which don't unexpectedly collapse in 21st century. Perhaps public sector urban building associations can construct and maintain high quality vertical apartment cores and elevators, but auction long term leaseholds which allow owners to privately renovate and mortgage improvements for their floor or unit similar to private condos. Partial local public ownership of building associations could then be used to assert leasehold fees are always sufficient to cover regular inspections and repairs. Partial public ownership could also be used to force a sale if owners have not occupied the property in several years, died, or emigrated in order to ensure increase housing availability.
Going straight from detached single-family homes to high-rise condos skips over a vast array of possibilities in between - duplexes, quads, cottage courtyards, townhouses, even the ubiquitous 4+1 with commercial space at ground level and living space above. I don't know about Strong Towns specifically, but AFAICT the modern urban-planning community is often critical of both extremes.
The condos in Miami are not density. The building itself might be "density" but the site is not. Look at how far it is to neighboring buildings!
We don't advocate for density. In fact, have specifically written against density as a metric. We argue for traditional development patterns, which look a lot more like historic Charleston or Savannah than Miami condos.
NYC has outrageous coop and HOA fees - way beyond what it cost to maintain SFH in most of US. With average HOA fee for 3bdrm condo probably north of $2k/month now (and often $3k+/month), you can presumably do a lot of very expensive maintenance. It’s working fine because there are a lot of money in NYC not because it’s economical or sustainable on average american income.
> A small, rural road is paved, with the costs of the surfacing project split evenly between the property owners and the city. We asked a simple question: Based on the taxes being paid by the property owners along this road, how long will it take the city to recoup its 50% contribution. The answer: 37 years. Of course, the road is only expected to last 20 to 25 years.
I’m not an expert here so I’d be interested in evidence to the contrary. But this sounds like a more nuanced point than the GPs TLDR.
This why here in Finland a lot of rural roads are being converted back to dirt. Basically keep the asphalt for as long as it can be with cheap repairs and once it needs to be redone just rip it off and put some gravel. Maintenance for these is cheap using existing infrastructure (trucks and loaders that the municipality already owns for winter/snow). Basically every spring just relevel it with a blade attached to a truck and add a bit of gravel.
Is tire wear => microplastics an environmental concern that has been quantified? This is a new concept to me and I have no idea how to weigh the potential costs of this factor.
You could just put the 3 words without the => between them into some search thing and get many hits. It's significant.
Maybe less so if country roads with low traffic as poster downwards suggested. But tyres are soft, so it seems only logically they are abraded faster by gravel which is harder and has sharper edges, than a more flat surface.
When my city digs up all the streets near me to replace the sewer, storm, and many of the water pipes, how long until it recoups those costs via those services?
At some point, cities make infrastructure expenditures and don’t treat them as a bond investment directly against future income. This means some people pay more than they get and others get more than they pay.
The pension systems across the West are fundamentally broken. If we're going to talk about ponzi schemes, pensions are the ultimate.
We need to privatise pensions completely, and encourage people to work later into life. Corporations and governments should have no responsibility for pensions - if someone can physically work, but doesn't have the money to independently retire, then they should continue to work.
Retirement is one of those things where it goes beyond raw economics into quality of life issues.
It feels like we've broken the social contract when we say to the prior generation "okay, you did your best and sacrificed to try to build a better world for us, now keep working til you're 80 in spite of failing health and diminishing capacity."
The problem with pensions isn't that the underlying math product was faulty. There are a bunch of assumed components in it-- expected retirement lifespan, rates of return on investments. There's no reason you couldn't build a robust and self-financing pension program by using conservative assumptions, but somehow the industry managed to consistently generate overly rosy models for decades. So who pays for the failure in due diligence and risk management?
(I am assuming we want to actually make good for the people who contributed to these programs in good faith. It seems that most charges to fix pensions are about replacing defined benefit pensions with something lesser that demands a much higher degree of risk tolerance to have any chance of the originally promised return.
I also wonder if there's some business benefits from retirement-motivated churn. At the top of the market, how much of high management is filled with people in their 60s who haven't had a fresh idea in years, but have reached a position of undisruptability? Having a low expected retirement age helps to cycle in fresh blood. Conversely, we've got a lot of seniors with cash crunches due to failed or insufficient retirement funding, stuck in low-skill jobs in a way that's likely depressing wages. The 72-year-old grocery cashier doesn't want to be earning $12 an hour, she wants to be at a rest home in Boca Raton. Send her there and the market wage rises to $15.
A country that can generate a trillion dollar bookseller can find a non-house-of-cards way to care for its elderly.
I’m going to make the stupidest comment ever here, but it’s obvious to anyone who’s played Sim City that you build out your revenue generating neighborhoods all at once, with all your money. I’m relieved that city managers in some places can do the basic arithmetic there.
The problem is not that the revenue generating neighborhoods are built in iterations but that they're financially unsustainable due to long-term maintenance costs.
That's far costlier than the Civilization tactic of letting your enemies build cities and their infrastructure while you build an army to conquer them.
This is a very good point, I was always wondering how this is financially maintained, especially because of the key word "low density" in the US, it sure looks beautiful compared to Europe's large cities.
Rest assured though, London, Paris, Barcelona all of whom I have lived in, the houses and the apartments are build like a sardine can and the roads are untidy, smelly etc. Bar maybe the tourist areas which are preserved in a better state no matter what, to present themselves in a good light. Looks like there is not enough money either, or it's funneled to the wrong places.
At least the US suburbia's look very nice, no doubt I would live in one of these if I ever go to live in the US, these places are unaffordable to mortals in Europe or associated with a large commute to work.
Looks like most government everywhere grab deep into people's pockets but don't have deep pockets themselves.
Perhaps London, Paris, and Barcelona are like that because there are so many tourists there. Many houses are rent out by airbnb. Living in a smaller European city I have to say that it is well-kept and charming and beautiful and I live in walking distance to the shopping center and in walking distance to the central square with the bars as well as within walking distance to a few nice parks. Really within walking or cycling distance to everything. The US suburbs really look pretty much dead in comparison to that.
I agree, the smaller cities are very well kept. The wealthy people in most chose some small city nearby, cept maybe London where it's prestigious to live in the west end.
Good point about the US suburbs they appear a bit lifeless and without a car, life and access to entertainment is difficult
O and don't forget the many events that are being held here. Or at least were, before corona. There is a jazz festival, a photography festival, an event in the castle every year. More or less some kind of event about every two weeks during all of summer.
As a perpetually urban European, American surburbia does not look beautiful to me. It looks depressing and empty, disconnected. Dense cities have their own problems caused by different economic fuckery, but I'll still choose living in what the article calls a "human scale" environment every time.
USA doesn't let people who want to live in a dense urban area live there, since they mostly prohibit construction of dense urban areas so those becomes extremely rare and expensive. Europe doesn't prohibit construction of sparse suburban areas, you can find them around every city just by driving a bit outside the city core, nobody is saying we must remove those.
That's fine as long as it's sustainable - environmentally, financially, etc. I don't think it is. The wealth transfers from urban areas to the ever-expanding fridge can't continue indefinitely.
Outside of zone 1 and 2, London stops being a European city and becomes square miles of single family houses, just like US suburbia but with a horrid weather.
> Many cities are perpetually broke because they owe more money in maintenance burden (fixing roads, pipes, etc) than they bring in through tax revenue.
How does this jive with say the Van Ness expansion in SF? It’s taken way longer and gone way over budget because the work is being done in a high density corridor with numerous utilities and such that have to be relocated. Apparently they’re finding stuff they never knew was there.
The same road widening would be cheap in a less dense area.
The Van Ness expansion part is only supposed to take a year, the rest of the previous 4~5 years was for a sewer replacement. It was done this way because of San Francisco's new policy requiring transit improvements to be coupled with large infrastructure maintenance (to minimize digging up the street multiple times) though in hindsight might not have been the best idea as it lengthens the amount of time the street is under construction.
Well, the budget in 2009 was $6.5 billion. It seems the taxes are growing for SF at a very high rate, and it would eventually become unsustainable. The taxes are certainly going up faster than population and inflation combined, and it sure seems like we're getting less for more money.
I think the reasons are very different though. For small towns it seems to be poor planning, for larger cities it seems to be corruption.
Not sure a $1B street update (literally 2 miles of street in a city with thousands of miles) could be regarded as "affordable" with a $12.6B city budget.
The overruns are because they decided to replace a hundred year old sewer system as part of the project. Along with a corruption scandal in the DPW.
Once they've gotten to the actual street widening part of the project things seem to move (relatively... to the 10+ year timeframe) quickly, a month or three to build the new bus lanes and repave the remaining lanes.
In practice debt restructuring and those providing the new/bridging loans (often the same banks that gave the old loans) putting down demands.
If the demands aren't accepted, loans aren't provided. If loans aren't provided, salaries won't be paid and city employees will be fired.
The demands will include cutting costs, defaulting on pension plans (and dealing with the legal consequences) and the like.
Since the city is in default, they won't have the same level of autonomy to accept or reject.
Capitalist takeover, basically.
Doesn't happen often though. You can find some accounts if you look for it. Detroit has gone through this recently, but there are other cities that dealt with issues like this in the past. New York had it at some point, though I think they narrowly avoided default by accepting the terms of the bankers.
The Not Just Bikes [1,2,3] YouTube channel also has an excellent series of videos based on work from Strong Towns. I link to these videos whenever a friend asks why I chose to leave the United States. :)
He recently did a great interview on the strongtowns podcast! Just got my EU citizenship and considering Utrecht. The US is a horrible place to try to raise an independent kid.
Indeed! I grew up in a typical suburb where my agency as a child was strictly limited by my parents' ability / willingness to drive me places. Most parents don't realize how hard this is for their kids, mine certainly didn't. It's no wonder kids trapped at home end up spending so much time on the internet.
I'm not old enough to really be thinking about kids, but I would never, ever inflict the suburban lifestyle a child of my own.
Counterpoint: I moved to England to a walkable town, but my kids still want to spend all their time on the internet. When I limit "screen time" they just want to hole up in their rooms and read the same books over and over again.
Sounds like your parents? The suburbs were great childhood for me. Lots of families so other kids to play with, lots of big parks, with a bike you could go anywhere.
Yeah, you're right there are other factors. My neighborhood had busy roads on both ends, and was mostly empty-nesters. There are certainly worse places to grow up, but I don't think we should be satisfied with the baseline set by suburbs either. In places like Germany and Japan, children walk themselves to school as young as 6 years old! I only experience that freedom after getting a license at 16!
I live in fairly typical wealthy US suburb, my kid is 7 (1st grade) and goes to school on her own - school is around 0.5 miles away. I have to pick her up from school (parents are required until 3rd grade to check out kid) but often just leave her on playground to play with other kids (unless she has activities that day - which frankly she has more and more of - chess, math, soccer, gymnastics and ballet right now). She walks back home whenever she is done playing. I see kids 10-12 years old biking everywhere and hanging out in Starbucks/restaurants on their own. There are busy roads but you can go around them on secondary roads with low/non existent traffic.
While not majority, there are quite a few people who give the same freedom to kids as us. So far we had zero problems but i am thinking about getting smart watch with GPS for piece of mind.
Might I ask roughly what region this is, or when it was developed? This sounds kind of like old-style suburbs, which were indeed quite nice. In most of California you can't buy a quart of milk without going over half a mile.
It’s in Westchester, NY - built mostly around 1920-1940 or about that time as train commuter suburb. I think it not unique - Palo Alto and Menlo Park in Bay Area are very comparable and very walkable/bikeable too.
For us closest grocery is 0.8 mile away which is borderline walkable but we bike quite a bit (highly recommend Radwagon - great for shuttling 2 kids around and light groceries).
Town is still car centric so still lots of driving but we carve out enough for us by biking/walking to not need car every day.
Sounds lovely. My favourite suburbs are streetcar suburbs - South Park in San Diego for instance. Narrow streets, shorter setbacks, rowhouses, and just nicer places to exist.
Depending on your need, I think the Airtag is a good usecase for this, since it doesn’t require a monthly subscription. I had the same question with my dog ;)
It's not about the nation, it's about the group psychology of parents in a local region. In NYC, nearly a million kids of all ages walk, skate, bike, whatever to school every day. Many take the bus or subways. While younger children can use a school bus, the city encourages independent use of public transport by children with free passes for them (and I think are allowed to ride alone by age 11 or 12). I'd be very surprised if other American cities didn't have similar systems in place.
That's great to hear! Unfortunately I think it's quite rare in the rest of the country for children to be able to walk to school. I've only ever been to places where school buses / cars are the norm.
I was interested to see if studies have been done. I found an article [1] claiming that as of 2009, only 13 percent of American children walked/biked to school.
I grew up in suburbia, but starting in high school just rode my bike everywhere. In retrospect it's hard to believe I survived, taking the lane on 55 mph roads (around northeastern Sacramento suburbs) was really dumb, in retrospect.
Tokyo! I'm not sure if I'll stay here forever, but so far I really enjoy life here. I had many reasons, including:
* Car culture was really grating on me. Before I moved to Tokyo, I lived in Atlanta, a city carved up by I-75/85, where getting almost anywhere takes a 15+ minute drive on the highway. Highway traffic regularly spills onto neighborhood streets, and I felt like I was risking my life every time I went out walking / biking. I've also lived in downtown Seattle and suburban Michigan, and the situation was slightly better, but with the same car-first paradigm.
* As I've gotten older it started to dawn on me how isolating American cities can be, especially without the community structure imposed by a school / university. People talk about America losing its "third place", and with permant-WFH we now seem pretty eager to get rid of our "second place" as well.
* By comparison, Tokyo is designed at human-scale. I have everything I need within a 5 minute walk, which means I regularly run into the people who live near me. When I want to go farther I can always choose the appropriate mode of transportation for the journey: feet, bicycle, train, car, all in perfect harmony. For this reason, I also found it easier to maintain and build friendships -- no need to organize transport, just hop on a train.
* I'm still young with few obligations and I want to learn more about the world before I choose a place to settle down. I know what life in America looks like. I'm learning about Japan. I hope to spend some time in Europe, eventually.
* The political situation in the US concerns me. I'm not confident the US will be a nice place for me to live/retire 40 years from now. So for me, choosing to stay put seemed at least as risky as moving somewhere unfamiliar. Even if I eventually decide to return, I'd like to know that it was my own choice and not just inertia.
The tax strings which tie me to every former country I’ve lived in is what keeps me from changing again… This, and retirement which is tied to a country, I can’t spend 4 decades in 4 countries and hope to have enough retirement at the end.
Interesting. Do you mind if I ask which countries? I did hear that the IRS 'gets you' where ever you are but I assumed it was sort of unique in that.
Aren't most countries either no longer interested in you once you leave (tax wise) or have tax treaties with one another? Including government pensions in the treaty?
This ‘Ponzi scheme’ (bond issuance) is the most efficient funding mechanism by far, and is proven to work sustainably within limits.
That limit is the marginal point where the expenditure equals the net asset value gain resultant from it, such as real estate prices. How can you know this limit? You can’t, but the bond market can guess at it.
Let’s say that you have a nice picket fence suburb with no police department and lots of robberies. You float a bond for your first police officer (not that this will help, but, run with it…). People buy it for nearly the risk-free rate. Why? Because they know that they will get paid back by the next bond, which will also get funded. Now the cop floats a bond for a Lamborghini. The demand is much lower, and the interest is unsustainable, so it doesn’t get funded.
Now here’s where it goes wrong. The mayor sees that nobody wants to pay for the Lambo, and solves the problem by packaging it up with everything else. This works for the first Lambo, but they want 10 Lambos, so the bond interest rate is unsustainable.
So what now? Taxes. They put a bunch of taxes on the residents, and then tell the investors that the Lambo bond will now get paid by tax revenues, which they have ultimate authority over. Now the calculus is different. The value of the expenditures is almost irrelevant. The only thing that matters is the marginal point where an additional dollar in tax reduces the net asset value by the inverse of the tax rate (e.g. $1 in tax revenue at 1% => $100 value destroyed). Notice we’re no longer talking about increasing values by large multiples, but destroying value by large multiples.
Now the Lambo bond goes out supported by tax revenues. The casual observer might note that the people of the town are now paying the bond holders for their right to exist on the land that they ‘own’. The major innovation from feudalism is that now the peasants actually pay for the land up-front too, and they pay for any improvements on it, and then higher rent for the improved property.
But that’s only an illusion of sustainability created by forceful extraction of resources. It’s like a strip-mining operation on middle class wealth. Profits are great until the resource runs out. So what is the solution there? Growth. Bring in more people to extract resources from. This is a requirement of the extractive funding model.
Market forces create sustainable economies. Any use of force distorts away from sustainability, toward finite extraction, and extractive models require expansion.
> The major innovation from feudalism is that now the peasants actually pay for the land up-front too, and they pay for any improvements on it, and then higher rent for the improved property
If the replacement cost of the home is $200,000 and the sales price is $500,000 due to land scarcity there is a rent or excess value of $300,000. The rent is paid to the seller through surplus asset gains due land price appreciation and to banks through surplus interest payments or usury due to the capitalization of ground rent in real estate asset price.
> Market forces create sustainable economies.
There is no free market for land and money, these are social factors of production recognized by the state to help independent agents coordinate production. When banks lend against the present value of future rents the borrower is pledging the surplus labor of future generations of residents as collateral. In the ancient era this resulted in people being sold into debt slavery, which is why religions sought to establish various rules concerning land reform and cancelling debts.
> an additional dollar in tax reduces the net asset value by the inverse of the tax rate (e.g. $1 in tax revenue at 1% => $100 value destroyed)
Direct taxes on land can actually help discourage freeholders from holding land off the market forever if it is properly assessed, which can reduce excessive capitalization of ground rent in asset prices and reduce the long term rent and debt burden.
Taxes on excess value and rents which are spent back into circulation on infrastructure can increase real capital values and wages.
In my post, I explored the nature of ‘rents’ paid from property ‘owners’ to bond holders through property tax.
The ‘rents’ you are talking about are from land owners to future buyers. I am sympathetic to some of the ideas of the land tax, but the concept is rather antiquated for a number of reasons. Land is hardly a major category of economic value, and it confers no real power except scarcity and maybe thoroughfare if the right was absolute (it’s not). A land tax simply shifts the value extraction to bond holders, which is only possible using the government monopoly on legal force to extract payment. Bond purchasing power also directs the law itself (my claim is that this would be a good thing if it did not come with forceful value extraction).
More importantly, land tax puts no natural limits on the amount or value (or lack thereof) of spending. The biggest, most obvious problem, no matter which system of revenue is chosen, is wasteful spending. This can be tautologically defined as that which cannot be funded without use of coercion, deception, or violence. I posit that any system which relies on these, is fundamentally unstable, and ripe for exploitation.
> Land is hardly a major category of economic value
1. Real estate market is by far the largest market out there. 99% of people worldwide are involved in it with 10x leverage over their net worth or up to 50% of their paycheck.
Real estate is THE market where excess money ends up. It is the sink in the graph of money flows.
2. Real estate values are not created by buildings but by land values.
- as brokers say, the value of property depends on 3 things: location, location, location
- the actual price of buildings goes down to zero over a generation or so, or even below zero accounting for demolition costs for the next parcel tenant. See Japan
- the inflation of real estate over last 2 decades has been 100s of percent, while inflation of labor has been at most in 1s or 10s of percent
- a building can cost as much as 10x in a metropolis compared to the same building in a small town. Construction labor (imported from out of the country typically) and materials are extremely mobile, so the actual building doesn't explain the price difference. It is determined by land purely.
So no, land has always been and still is the largest market out there, the largest monopoly existing and the classical economists were right to include it as a factor of production alongside labor and capital, and modern neoclassical economics is completely wrong for ignoring the largest market in the world by a huge margin.
Sorry, I meant passive investment asset. You are correct in saying it is the primary economic value, but almost always active.
Government bonds are a special category though. They are the only asset other than gold certificates accepted by the federal reserve as collateral for issuance of legal tender.
This example is dumb. The problem you’re identifying isn’t with the bond issuance, it’s with the obvious municipal corruption you’re describing.
Corruption in government is indeed quite a hard problem, which exists in various corrosive amounts in different countries and societies. But it’s orthagonal to the basic concept of issuing bonds, except insofar as any pot of money anywhere in the private or public sector is at risk of being captured via principal/agent effects.
If you want to talk about corruption then talk about corruption directly. The solution to the above problem would be transparency of government actions, an independent press, and free and fair elections.
Strong Town's "growth ponzi scheme" isn't about bonds (from my understanding).
It's referring to the practice of inheriting or overbuilding infrastructure, and then being unable to afford the maintenance costs of that infrastructure because the surrounding area isn't financially productive.
I understand. It wends a bit, but the point is that growth is required by the use of extractive funding mechanisms. They say maintenance costs are the root of the 'ponzi scheme', but I'm not quite buying that. Modern cities are funded by bonds, and the bonds are secured by taxes, and the taxes are secured by force. No, the bonds are not the problem. The problem is that the spending can only be sustained through increasing use of force on an increasing population.
We are not at the end of easy money. International tolerance of our dollar and bonds show the perpetuation of easier money. The Federal Reserve can bail out every municipality if Congress got scared or convinced enough. The pandemic relief was prewritten and had nothing to do with the pandemic, almost no Congressperson read it. The extension of “credit”/unconditional Main Street bailouts was already pre analyzed to prevent private sector freezing of credit. Anything and all is possible as has been demonstrated. Econ majors have their university streaming subscription on pause because their professors have no idea anymore.
Centralization of money creation at the national level is not ideal. There are 3142 counties in the United States. If during the process of national credit allocation we forget to send money somewhere, we could accidentally destroy a small town or create a slum.
An alternate solution would be to establish state-owned public mortgage banks, which collect interest payments on publicly held real estate loans over land areas roughly the size of a federal congressional district, that spend the interest payment revenue back into circulation on state and local infrastructure.
Public mortgage banks could also be strictly limited to issuing real estate equity loans and mortgages at 100-200% of the replacement cost of improvements whenever that is lower than the sales price.
When banks lend against the present value of future rents the property owner is pledging the surplus labor of future generations of residents as collateral and encouraged to lobby for artificial land scarcity so that rents keep going up. Capping loans in reference to the replacement cost of existing capital would help reign in this dangerous incentive while still creating liquidity for asset holders and publicly capturing interest payments that would otherwise leak out to global financial system to generate additional revenue for local infrastructure reinvestment.
I'd argue that centralization of money creation at any level is not ideal and that the monetary landscape used to be more robust in the US when many different entities could create their own notes (even if some on occasion went out of business).
And that another alternative solution would be that anyone/any entity who is willing to put a portion of currency supply risk at t0 in order to potentially have a larger share of money supply t1 should be possible (in addition to other lending activities).
I see opposite, dollar may loose its status as sole reserve currency. It may take couple of years, but US is no longer perceived as bastion of stability. Countries are diversifying and dumping dollar assets. For example Russia recently:
Russia's $186 Billion Sovereign Wealth Fund Dumps All Dollar Assets
Its good to diversify, its also true that the Federal Reserve is the biggest market whale in the universe. The gravitational pull towards the dollar is unavoidable because there isnt enough liquidity for any other form of value that exists.
The signal to watch for is US Treasury yields being unsupportable by the Fed’s purchasing program due to a greater market consensus of selling. As this does not happen and the macroeconomic trend is for US Treasury yields to also flirt with negative rates, like the rest of the planet’s major economic unions, it shows the opposite of your view.
Somehow I found the article missing the solution, the organisation argues that "placemaking" [1] helps. They also argue that "Will this public project generate enough tax revenue to sustain its maintenance over multiple life cycles? Try asking that -- you will be amazed." is the question to successful public projects. But, I don't know if that holds true universally.
The strange thing is that people don’t normally ask the question. It’s just assumed that all infrastructure generates positive economic returns, which is far from true.
You asked “where’s the solution.” This post is one bit of a large volume of Strong Towns material, and this series is only meant to explain one particular problem cities face.
> our traditional pattern of development, one based on creating neighborhoods of value, scaled to actual people.
Aren't they just talking about density here? Denser neighborhoods pay more to the city in taxes and charges than big-lot single family suburbia I would imagine.
It's not just density, though that's part of it. A big part is walkability (and otherwise making the city not just car accessible). That can be done without increasing density, by for example, adding wide sidewalks and bike lanes, eliminating maze-like cul-de-sac-heavy street layouts, and decreasing speeds in commercial areas (i.e. enforcing a stronger divide between low speed streets meant for people and high speed roads meant for cars). Another part is mixed-use zoning, where small businesses are intermixed with homes instead of people relying on driving to megastores in shopping centers far from where they live. By decreasing the necessity of the car you decrease the cost of road maintenance and by making places more walkable you make businesses more accessible and therefore more successful.
I would suspect that many neighborhoods could be kept at the same density and be significantly rethought in line with the Strong Towns ethos to be more comfortable places to live.
Density increases might be necessary in high COL areas because those places are in high demand, but there's plenty of bad city design in places outside uber-expensive metropolitan areas. And there might be strong demand for missing middle[1] housing if only it were legal and frictionless to build it.
> eliminating maze-like cul-de-sac-heavy street layouts
You can actually do the opposite. You make suburbs heavily maze like to slow traffic down. Instead, you build plenty of shortcuts for bikes and pedestrians: the direct routes. That is: the incentives to bike or walk (short direct route to nearby locations) should outweigh the incentive to drive (twisted path that might be kilometers winding around a crow's flight of 100m).
Actually building separate paths for pedestrians and cyclists is a required ingredient in that recipe though.
I have seen it argued that heavily-curved suburban streets are safer because drivers have to slow down to see around the bends, etc. Highly-curved suburban streets also tend to avoid 4-way intersections and prefer T intersections. In theory both of these should make the streets safer, but in practice the streets tend to be built to highway-like standards, making many people drive over 30 miles an hour anyway. I encounter that on a daily basis. I would instead prefer for designers to make the streets narrower and to provide prominent sidewalks and bike paths, since that sends a much clearer signal that drivers should slow down.
Moreover, there is a second problem with these suburban street layouts. They tend to follow a hierarchical design. Each area is a separate "pod" that is disconnected from adjacent areas. To get to another area, you have to go through a limited number of "choke points" that feed you into a larger road or an even larger road or highway (traverse up the tree and then back down). This design choice inevitably leads to traffic at the choke points, since many drivers cannot possibly avoid these paths. A street grid avoids that since it operates in parallel; there are many equivalent routes. This is literally the same as running a program in serial versus parallel. So even drivers have good reasons to dislike typical suburban streets, since they do inevitably lead to traffic by design.
Ah, so I was more getting at a style seen in the Netherlands. The residential neighbourhoods have short sections of roads with frequent choke points (sometimes featuring speed bumps, but sometimes just narrowing of the road to a single lane), together with frequent one way sections and blocked routes for cars but continuations for lighter vehicles.
From the perspective of a vehicle, the neighbourhood is precisely a pod: disconnected from a neibouring region until they filter from the residential streets onto a more main road and then back into the neigbouring residential area. However, to pedestrians and bicycles, there is no real delineation. Mazelike to vehicles, multiply connected and convenient to pedestrians and bicycles.
Edit: so pedestrians and bicycles will typically avoid the choke points since more direct routes are available to them. On the main roads where vehicles become congested (and faster) clear separation of the traffic types becomes increasingly necessary compared to lazy back streets where bicycles and vehicles can intermix (these people will typically be neighbours anyways).
I was raised in a city that has one river that splits the city. Around this river is where all the biking centralises and cars are forbidden. The city is old and narrow too.
Thing is you are nearly everywhere faster by bike. And so the far majority of people has and uses one. People whine about their traffic there, not realizing how lucky they are.
Add bikeability. Anything to help getting people out of their car. There's something perverse about people using vehicles weighing 20x their own weight to move around such distances, where a vehicle weighing 1/5 their weight will do. Not to mention the ease of parking a bike.
True for places people visit frequently and for short durations (grocery stores, restaurants). But residential areas? pfft. And even if I could find a bike rack, I wouldn’t leave it overnight because of theft. Inevitably I find myself hauling my bike indoors whenever I visit friends. Whereas my friends with cars just parallel park without giving it any thought. I hardly have them beat here.
But yes, I agree with your premise. Biking is way more enjoyable than driving in a city, when possible. And in the end that’s a huge piece of winning people over. Electric bikes are helping more people discover this, though ironically, electric bikes are even worse when it comes to parking (larger theft target; harder to haul up stairs/indoors).
I live in a very low density area in Switzerland and I leave maybe once a month. There is big city infrastructure kinda nearby but I rarely have a reason to get there.
To be fair tho it's a farming area with many small unmanned farmer markets so it's easy to not leave and still get what I need. There are 2 'unmanned farmer markets' directly nearby, even thought there are maybe 200 people (and thousands of cows) living in a proximity of 20 miles.
'Have it now, pay for it later' has been writ large all over the past half-century. Call it 'Ponzi' or what you will, some people raked in a lot of money when it was worth a lot more.
That brand-new publicly-funded infrastructure did yeoman service for that approach.
Worked pretty well as long as people were having 3+ kids and resources had not been claimed/mined. I suspect post WW2 US was in the middle of the S curve, and in recent decades, has entered the top of the S curve.
I always have trouble with essays using accumulation of debt as the proof of systemic unsustainability. Debt is a construct made up on an agreed upon monetic system and the associated trust placed in its repayment, it's not a physical dimension that can be used to derive proof of sustainability beyond system itself. It can easily be changed, notably by printing money or forgoing debt.
While that is true on a higher level, individual cities don’t have tools like printing money or ultra-low interest rates available to them.
If you have a look at how municipal debt is rated, you’ll see that the rating agencies rely on projections of growth to determine how creditworthy a city is. It’s of paramount importance to spend borrowed money in an efficient way if the city expects to borrow more in the future.
debt is a promise made by some entity to another entity. Any forgiving is going to require the promise to be broken, or altered. So somebody gets the short end of the stick.
Printing money is similar, but instead of the entity lending the money taking the hit completely, the "loss" is spread out through all money users.
Neither is good - but sometimes it might be the only good option.
An awful lot of things these days get called Ponzi schemes these days which aren’t really, although they share some
superficial characteristics of a Ponzi.
This isn’t a criticism of Strong Towns so much as a call for a better development of terminology to describe a whole array of economic arrangements which privilege insiders and early adopters at the expense of everyone else.
As an environmental economist trying to write a book on the exploitation of nature to the benefit of a few at the expense of many -
I feel the dearth of commonly accepted language on the topic acutely!
> non-sustainable patterns of finance, such as borrowers who can only meet their debt commitment if they continuously obtain new sources of financing, often at an accelerating pace and/or ever-increasing interest rates until the borrower cannot secure more financing at any interest rate and becomes insolvent.
IMO more and more things are ponzies. Look at Dubai for example, only about 15% of their income is from oil. The rest is basically tourism. Yet they expand at a rapid rate, but only until tourists stop coming (which gets obvious when you followed their recent push to import influencers with an visa that forbids to talk bad about Dubai)
It's not exactly Ponzi. But whatever one says it's very ponzi-ish
With how expensive and overbooked everything is this summer, bet on continuous tourism may prove right and Dubai will continue to expand. Demand for year round beach destination is higher than supply.
These words have so many degrees of meaning they are practically meaningless for communication. Then on the other end, mathematical rigour goes too far.
The most import thing to take from this is that American pattern of suburbanization was a government choice.
Highways, suburbs, and car domminance would not exist anywhere near the scale that they do without massive government subsidies, or turning a blind eye to future expenses.
Theres also discounting the negative externalities of fossil fule emmissions on the planet and human health.
Ironically the libertarian types tend to prefer the type of development that 90% couldn't afford without subsidy.
Just like we shouldn't have bailed out the banks in '08 or junk bond holders in '20, we shouldn't bail out municipalities that borrowed too much from the future.
> Just like we shouldn't have bailed out the banks in '08 or junk bond holders in '20, we shouldn't bail out municipalities that borrowed too much from the future.
I agree. Alas, it is the public employee pension obligation that the municipalities will want a bail out on, infrastructure is peanuts compared to that.
When you have a period of high prosperity, you get used to it, making adjustments to your lifestyle. When that period is over, it's hard to accept it.
In the 50s, you could have a modest job, provide for your entire household with one salary, buy a nice house, a car, send your kids to college.
The government made massive investments on infrastructure, defense, science, space, etc. How was all of that paid?
From 1945 to 1971, the economic reality was: "It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries had to pony up $100 of actual goods in order to obtain one."
That system was known as the Bretton Woods system. Since its end in 1971, America has been struggling to adapt with its new economic reality. It is much harder to make a living in the US, buy a house, a car, raise kids and send them to college. Or even retire.
>From 1945 to 1971, the economic reality was: "It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries had to pony up $100 of actual goods in order to obtain one."
Is this not true after 1971? I would be surprised if it costs even $1 to produce a $100 bill today. Why would the cost of physical currency even be relevant when the government can digitally increase money supply?
The premise was that each dollar was backed by a fixed amount of gold. The only problem was: there was no way to audit how much gold the US had.
So when it became clear that the US was spending too much, France announced they wanted to cash out their gold and the US responded by suspending convertibility of dollars into gold (the Nixon shock).
Since then the US has a floating value instead of a fixed precious metal-based exchange rate.
I hope you're not suggestion that we go back to a gold standard? I wouldn't mind certain capital controls though, specifically limits on credit money issued for purchase of land.
The outcome of WW2 was extremely favorable for the US. WW2 is not happening again.
If the US is going to remain being as prosper as the period immediately after WW2, some economic miracle would need to happen. AI and robotics could be that miracle.
It is not just the US that experienced rapid economic growth in the post-war period.. From what I recall, growth rates in Western Europe were even higher, as were growth rated in Japan.
The best explanation for that growth is that the burden of regulations, including zoning restrictions on building higher-density housing, and the share of GDP consumed by government spending, was much lower, for nearly every advanced economy, in the 1950s and 60s.
With respect to growth in regulations that restrict expansion in housing supply, and how they have stifled economic growth in the US, I recommend this paper:
The developed countries also had much younger population. This matters for innovation, people over 65 rarely come with that kind of innovation that moves the needle visibly (e.g. semiconductors).
Not to take away from the MO strong towns publishes on their front page. And the topic at hand. One has to remember that strong towns origins are from a yarning to building human scale towns and not machine scale ones. I think any conversation about investments in our cities should be framed in that context as it paints a personal investment lens through which this overall topic of the success of our cities can be hashed about. Irrespective of whether you believe infra costs are 10% or 100% or other minutia details.
We simply aren’t building cities in America for humans. We’re building space for seclusion bunkers and advertisement and shopping Meccas.
You certainly can build more than you can reasonably maintain, but as in cities live humans workforce and ability to maintain follows. So something else must be the concern: inefficient patterns (urban sprawl) or imbalances in the wealth and liability distributions. The latter can be fixed at any moment in a functional society but can’t be fixed easily in a flawed democracy with powers hugely profiting from the imbalance
The difference between a legitimate investment and a Ponzi scheme is just profitability. Suburbs should increase revenue by promoting reinvestment in the form of backyard tiny houses with the side benefit of low income housing.
Today I learned that roads are mind bogglingly expensive to build and maintain. But without any clues to the reasons why. Labor? Materials? Something seems off somehow.
Labor here also includes:
- planning
- safety
- certification
For example; you are paying for a crew of 10 people to do a minor repair - people to manage traffic, people to do the planning and legal legalwork to shut down the road, people to assess the appropriate fix, people to do the actual implementation, potentially different people to redo any line marking; the running costs of the equipment, transporting it to and fro; etc etc.
A simple pothole patch might take a lot less; but is only temporary and you end up doing a bunch of them. Resurface a stretch of road or a kerb? Whole different set of people and tools.
Arguably we can make this cheaper, safer through automation in the long run, but simply having less to maintain is also a simple valid solution.
Worse, because its driven by weather events, you tend to get all of you bigger issues at once - ie, here, high rainfall took out roads in the hills; due to instability. To fix it became a much, much bigger engineering process than normal maintenance; and it happened to three critical roads in a short time frame; so various authorities had to scale up quickly; and presumably paid for that.
A solution that seems novel to me may be assigning higher property tax rates for parcels further from core services. If the city’s cost basis is higher to maintain services, why not align incentives to encourage infill?
Not sure about the US but normally your property taxes are linked to the property value or land value (I guess as an estimate of both how much you can afford and how much services you’ll use). This seems more progressive than saying “well you can’t afford to live centrally so we’ll charge you more for that sewer connection maintenance”
Actually, that is what happens. Initially you maintain your own water (well or cistern) and sewage system (a septic field), and when town grows out to you, you get hooked to the sewer/water systems.
It gets a bit tricky when those parcels also often have lower quality or fewer services. For example, no city water, 30+ minute fire and police response times, no local parks or libraries, etc. A fair formula would also have to take that into account somehow.
The property will be less desirable, and thus have a lower value, and lower tax assessment. You'll lose some of those savings by having to drive everywhere any time you want goods or services.
It’s not tricky at all. The fairness is already baked in. By choosing to live in a low density area far away from existing services, you’ll be paying more. A lot more.
Its not just anti-road. Its non-dense development. The more spread out services the more resources it takes to maintain them.
The fact of the matter is that we've been accumulating "debt" to build suburbs by ignoring the costs of C02 emmisions and letting the gov subsidise construction w/o plans for upkeep
This is precisely why San Francisco is so expensive relative to the rest of the country. SF's infrastructure seems expressly designed to prevent people from commuting from cheaper, outlying areas. This effectively limits the housing supply by forcing everyone to live in the city proper. There is a tradeoff to be made here, which I feel is being ignored.
As someone who has lived in places where you really don’t need a car, it’s hard to explain how fundamentally different they are.
I don’t live in one anymore, and it was awkward when friends visited (hardly any parking), but some aspects of it were profoundly pleasant in ways that I couldn’t have understood before I tried it.
Selling my car to live in London for a bit was a welcome relief! The downside is mile for mile it takes longer to get somewhere on public transport even in London where the services are regular enough you tend not to plan a trip.
There are very few routes in Switzerland that aren't faster by train. Likely it's all by design to some degree (and we'll our train network is just kinda brilliant)
1. National debt is USD denominated thus only requires repayment in nominal terms (eg you can always print, you can set arbitrary interest rates, etc). In fact, there is a lot of precedent for negative real returns on sovereign debt (see current US treasuries and multiple years in EU).
2. Social security is a pay as you go system. Current workers pay for current retirees. Future workers will pay for future retirees. Benefits can/will be scaled to cash flow. Just because there was surplus and that surplus was used for other purposes doesn’t really mean much. All government has to do is raise retirement age and the system will remain solvent.
>> All government has to do is raise retirement age and the system will remain solvent.
So the difference between a Ponzi scheme and SSI is that in a Ponzi scheme, the person who sets up the scheme is required to keep his promises to investors, but SSI is not?
To the young people out there in their 20s, what ivalm is saying is that for people like me who are nearing retirement age, the money is going to start coming out of your pocket and going into my pocket, but when you get to be my age, the government will just raise the retirement age and keep taking the money out of your pocket. But it is totally, totally, totally not a Ponzi scheme.
Part of my income will soon depend on you believing that. Godspeed, ivalm!
I mean that’s literally in the charter of SSI. It is a pay as you go system, that’s how it was setup. In the law, there is no promise of current money paying for future obligations and there are no “broken promises.” It’s not a piggy bank or a retirement account. Heck, I am a millennial many decades from retirement so I am one of the people who will be impacted. At the same time, expected lifespan in retirement has been steadily increasing since introduction of SSI so it’s not unreasonable for retirement age to increase.
The problem of Ponzi scheme is that it advertises itself as an investment instrument where return on investment generates the cash flow. SSI never advertised itself like that, it is a non-discretionary program where SSI taxes are used to pay current obligations. If you ever believed something else then that on you not familiarizing yourself with the law that governs this program.
"there is no promise of current money paying for future obligations and there are no broken promises"
Tell them, not me. I get my money, the 20 somethings lose their money, I spend their money. I'm 100% OK with that. And it's still a Ponzi scheme. As long as we are all on the same page as to what the kids are funding here.
But we don’t get 0? In the future there will be people working and paying social security taxes and those taxes will be used to fund social security payments. If the percentage of retirees is too large then that will lead to increase in retirement age until the percentage of retirees is balanced by the number of workers. With productivity gains due to automation hopefully we can increase number of retirees per worker. It is a very transparent system. Again, when you pay social security taxes you aren’t “saving for your retirement”, you are paying for current social security outflows. It’s how most government obligations work.
>> In the future there will be people working and paying social security taxes and those taxes will be used to fund social security payments
Is that a promise? You just said no promises.
Here's how the retirement system is set up, as far as I can tell. Few years from now, I start spending young people's money. They go to work, I don't go to work, they work their asses off, I don't work my ass off, they pay taxes, I get a cut of that. For many years, hopefully. Then I die. Then...I give zero fucks. It's not my problem. If it all collapses after that, who gives a shit? Not me.
As an old person, I like this system. I can't argue against it, it makes a lot of sense to me. Right on.
I don't see how it makes sense to a 20 year old but I guess that's your job. Go and convince them, we're counting on you.
> As an old person, I like this system. I can't argue against it, it makes a lot of sense to me. Right on.
It makes sense to anyone of any age because the alternative is to dig a hole, dump food into the hole, pay people to stand around and guard the hole, and then, 40 years later, the 60 year old will dig up what their 20 year old saved and eat it.
For each individual, there is am illusion that you can "save" wealth which you consume in your old age. But for society as a whole, it is only possible to transfer wealth from one generation to the next. Except when the individual is "saving" he is buying from someone else who sold, and when the individual sells his assets to consume, he is selling to someone younger. If you close your eyes and don't think about the other person on the side of the trade, you can pretend that you, as an individual, have stored wealth somewhere. But for the society as a whole, it is always transfers that are taking place, so neither the 20 year old nor the 40 year has any choice -- this is the only game in town. The only question is whether these transfers be centralized or distributed, or whether they be administered by governments or private entities. But neither the shift from centralized transfers to distributed transfers nor the shift from government to private is going to make this system any less dependent on promises and transfers. It's promises and transfers simply due the lack of an efficient consumption storage technology.
>> the alternative is to dig a hole, dump food into the hole, pay people to stand around and guard the hole, and then, 40 years later, the 60 year old will dig up what their 20 year old saved and eat it.
My grandparents' generation didn't do that. And they didn't have SSI either. Are you sure those are the only two alternatives?
You’re right. They invested (to get cash flow from younger people during retirement) or relied on their children (to get cash flow equivalents from younger people during retirement). Kind of same how social security works (current retirees get cash flow from current workers).
The mentioned scheme is kind of acquiring negative value assets with short term positive cash flow … without it actually being debt. Akin to the programmers “technical debt”
Strong Towns is a non-partisan non-profit that advocates for governments to build financially solvent towns. Many cities are perpetually broke because they owe more money in maintenance burden (fixing roads, pipes, etc) than they bring in through tax revenue.
This happens because towns in North America tend to build out large neighborhoods all at once (think: suburbia). At the start, the developers pay for all the infrastructure, and then “give” it to the city to maintain.
At first, everything seems fine. The city gets plenty of new tax revenue! But come 20 or 30 years later, it turns out that the tax revenue of the new development is not enough to replace the roads, fix the pipes, and so on.
And so to pay for the repairs, the city then builds yet another neighborhood in the same strategy to collect the initial tax revenue and use it to pay for the repairs of the previous neighborhood. It’s effectively a Ponzi scheme (as referenced in the article).
The gist is that many low-density spread-out suburban neighborhoods with expensive infrastructure are a huge cost center for a city. And since most North American cities build this way, we have a lot of cities that are “functionally bankrupt” or will be soon.
If you're a systems thinker who lives in a town that can't seem to fix it's potholes, you may want to check out the book they've published with the same name: "Strong Towns".
(Adapted from a previous Strong Towns post)