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Can't
Have it Both Ways
Pro-growth lobbyists
criticize smart growth proposals
for disrupting the efficient workings of a free
market. Yet they are masters of manipulating the
political system for private advantage.
Memo
to Barnie Day: You must think we are the wrong end
of the pony. It’s not “growth control
freaks” trying to have it both ways; it is
growth advocates. (See Day's column at "Just
Say 'No,'" Nov. 14, 2005.)
In
your paean to “builders” (I see that you are
careful not to use the term “developers” in
your polemic), you paint them as the victims of
unprincipled local governments driven by an
ignorant citizenry that seeks to have everything
but to pay for nothing.
That
makes for a good caricature; and it’s even
better when it comes rolling off your pen together
with all that “aw shucks, I’m just a
brilliant, self-effacing hayseed speaking the
truth” charm which is so often the most
memorable thing in your columns. (Barnie, a
further note on that: One hundred years after the
demise of the one and only Mark Twain, pretty well
everyone to whom you are speaking can figure out
when condescension is being repackaged by a cynic
as folk wisdom. And that dog don’t hunt
neither.)
Let’s
start at the end of your column, where you offer
up the farmer who does not want his land
developed. We all know that this particular straw
man is not the problem. By holding on to his
ground (even taking in some income by selling its
development rights to sophisticated jurisdictions
like Fauquier), he is not creating new social
costs. Cows don’t ride school buses, as the
saying goes, nor call the police nor use the
library.
Compare
him to the farmer choosing instead to sell his
ground to a developer, at a premium -- because the
farm is situated in a desirable community, with
good services for which neither of them has paid
much or anything -- and from which sale each will
profit handsomely because their respective gains
will be pocketed while the additional, newly
created, social costs (additional school seats,
roads, law enforcement, etc.) will be paid very
substantially by the citizens already there.
Now,
don’t pretend to be unaware that new homes are
overwhelmingly tax revenue negative and that their
“builders” soak up the rich local gravy, stick
the community with the tab and move on. This is
2005 (not 1965) and everyone has twigged to that
fact. Nor should you feign incomprehension at the
existing citizenry’s bitterness at paying for
this development a second time in the form of
school crowding, and increased noise, traffic and
pollution.
It
is growth advocates having it both ways because
while mouthing pieties about the level, free and
unfettered market, they play hardball dollar
politics in Richmond to tip the marketplace in
their favor. Come on, you know exactly how this
works as well as I do: Those same players in the
Assembly, whom you tell us bear no blame for the
problem, take the money and then prevent impact
fee and adequate facilities legislation from ever
seeing the light of day.
That,
in turn, prohibits Virginia localities from
passing along any of the substantial incremental
costs of new housing, either to those generating
the costs or to those profiting from the events
incurring them. This double preclusion forces
communities to fund what fairly can be called a
“government subsidy” of development. This
public welfare expense for a private economic
activity also distorts the cost/price interplay,
which is so central to a working, efficient
market, and thereby prevents it from doing what it
does best: allocate resources to their highest and
best use. And these days, in these parts, the
supreme resource being allocated is land.
"Internalizing
the externalities” is what the economists term
this process of tagging uncharged costs onto those
generating them, a process uniformly endorsed as
both efficient and fair. You could look it up
but, as a banker, you likely know exactly how this
works. It facilitates, for example, the market
assigning to the development of a farm the true
external costs that will be produced as a
consequence, thereby generating a (fee-escalated)
market price that better and more fairly reflects
those costs in a way that promotes optimal social
utility, while also providing some funds to pay
the costs.
When
the true consequential costs are better
“internalized”, it becomes clear that building
houses in some places where farms now stand makes
no economic (or social) sense. So, as your piece
explicitly promotes the virtue of a “free,
unfettered marketplace,” you need to ask
yourself why you defend public subsidies for
private development.
Along
with every method for truly allocating costs, the
tools for growth containment are withheld from
localities by a state legislature under the sway
of developer funds. This leaves only zoning to do
that which it was never intended to. And one
outcome of this hamstringing of local government
is the ugly bidding system we know as
“proffers.” In the big picture, these payments
turn out to be mostly minor, one-time,
unsuccessful efforts at community recovery of
recurring costs, and are only put in play when
avaricious developers seek even more
disadvantageous (i.e., socially costly) zoning
than they may already exploit “by right”.
Yet,
you breezily characterize these modest defraying
payments as “shakedowns” and claim that they
are used to “punish” the builders. You know
that’s not correct; why demonize the civic
victims for acting rationally?
You
say with a jaundiced wink that “if growth is
killing you, lack of it is killing us.” Well,
few up here would dispute that. More needs to be
done to channel development to localities --
perhaps yours -- where it makes good social and
economic sense.
But
your anger at Northern Virginia is misplaced; like
that of a man freezing in the Arctic who says that
those in the dessert ought to stop complaining
about the heat, and instead feel very fortunate to
be sweating. Well, you know, Barnie, at the
residential development equivalent of 118 degrees
in the shade, it is altogether possible that some
stretches up this way actually are uncomfortably
“hot”, even as your piece of frozen economic
tundra down there is truly too cold. Either way,
stop blaming us for the weather.
You
make one good point: creating jobs without housing
is poor policy. It unavoidably feeds the
conditions for our gridlocked commuter purgatories
and is among the biggest forces driving sprawl.
Jobs and homes need to be better matched in those
locations where there is an abundance of the
former and a shortage of the latter. Those
locations, however, turn out in general to not be
where the farms are.
Many
of us up here read you for amusement, and for your
occasional insights. So I don’t want to
discourage you. Still, I expect you will
appreciate our view that when even a neighbor whom
we enjoy comes peddling snake oil at the porch --
full of his aw shucks charm and acting like a good
friend -- well, we need to smile and just close
the door. You know, our mamas taught us a few
things too.
--
November 28, 2005
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