This was published in the Colorado Springs Independent 11/11/10 as A Broken Region. A letter to the editor on this column on 11/18/10 is appended below. The Growth Facts of Life is a more indepth explanation.
Another source that recognizes that "growth" is a prescription for regional failure.
GREATEST HITS: THE GROWTH PONZI SCHEME BY CHARLES MAROHN, Strong Towns, 6/20/16
Most American cities find themselves caught in the Growth Ponzi Scheme. We experience a modest, short-term illusion of wealth in exchange for enormous, long-term liabilities. We deprive our communities of prosperity, overload our families with debt and become trapped in a spiral of decline. This cannot continue.
How to Stop the Stadium Wars By Henry Grabar, 3/17/15, Slate
Cities and suburbs compete for the privilege of wasting millions on new sports complexes. Obama has an idea to end the madness.
... Extortion at the hands of our sporting oligarchs is, of course, a popular source of outrage. ...
Pres. Obama Calls For Ending Taxpayer-Funded Sports Stadiums
President Obama’s new budget proposes eliminating the longstanding practice by governments of forcing taxpayers to foot the bill for wealthy sports franchises to build, renovate, and maintain costly stadiums. For far too long, this shameless giveaway has left city budgets in ruins while showering the franchise owners with hundreds of millions in corporate welfare. ...
Colorado Springs: A Broken Region
While it's true that Colorado Springs government is broken, it's worse than that. The whole region is broken; its policies are structurally unsound. Here's why:
This picture is from a site with a series of articles on what it calls the Growth Ponzi Scheme. It characterizes policies that, as I describe it, are "selling a product at a loss and trying to make it up in volume."
When taxes fall short to provide the needed infrastructure once new growth is occupied, developer-controlled regions, which are practically all regions, call for even more growth that provides some, but inadequate, taxes to support past growth. And the cycle of addiction to growth continues.
As explained on the site:
Most American cities find themselves caught in the Growth Ponzi Scheme.
We experience a modest, short term illusion of wealth in exchange for enormous, long term liabilities.
We deprive our communities of prosperity, overload our families with debt and become trapped in a spiral of decline.
This cannot continue.
Sections of this column:
A Broken Region
What to Do?
Letter to CSIndy in Response
While this focuses on Colorado Springs, this is what's happening all through the nation.
A Broken Region
Literature on the Strong Mayor Project states: "Colorado Springs' government is clearly broken, And it's costing us dearly."
No. The region is broken, not just government. Our fiscal problems are a wake up call, one not to ignore. The Strong Mayor "solution" won, but it can put us back to sleep, making things worse.
Colorado Springs has two major problems: urban growth and economic development.
Growth: Colorado Springs sells its product at a loss and tries to make it up in volume. Here's how.
City Council members often make decisions that favor growth interests and approve new projects based on a sometimes-genuine belief that "growth is good." Growth does generate taxes, but doesn't cover all needed infrastructure once developments are occupied. Look around. It's obviously true.
Addiction is doing what feels good short-term, but hurts long-term. In this case, addiction to growth. When national economic collapse halts growth, it's cold-turkey painful.
When growth increases the load on infrastructure and government services beyond what's paid for by growth, there are moves to increase taxes on residents. Calls for higher taxes here have met a TABOR backlash. Does TABOR work? No. Fiscal problems are worse than ever.
That's because Council continues approving growth, generating even more infrastructure needs not covered by taxes. Efforts to circumvent tax limitations included the Stormwater Enterprise tax -- oops, I mean, "fee" -- for infrastructure that should already have been financed from taxes on those who profit from growth.
Here's a little-known truth that had me depressed for weeks after reading a paper in the System Dynamics Review that described The Attractiveness Principle: No business or region can be all things to all people. It's a reflection of the fact of life that there are no utopias in social systems.
Businesses know they can't have, all at once, lowest price, best service, and best quality. Actually, they decide how they'll be unattractive to keep some customers away to allow them to deliver their chosen value to their chosen customers. If they don't, the business fails from excess costs, overwhelming service capacity, or low product quality.
Here's how it affects regions: Given free migration, no place can long remain more attractive than any other place (where "attractive" is the composite of factors that attract). That is, people move here until Colorado Springs becomes as unattractive as any other place. Depressing, huh?
So we'll be unattractive how? Path 1: potholes, street lights off, degraded parks, less services (with low taxes). Path 2: impact fees and taxes (for quality of life). Clearly, we're on Path 1, killing the quality-of-life goose that lays golden eggs.
It's arithmetic, not rocket science. A region fails when more dollars go out than come in. Our economic decline is from losing export companies and gaining import companies.
Figuring out what should be accomplished is not rocket science. It's more like basic arithmetic. [Disclosure: I'm not an economist, though I do have an MBA, my Ph.D. is only in physics, not economics. Judge for yourself whether any of this makes sense.]
While arithmetic is enough to understand what's described here, systems thinking is necessary for understanding how to foster the feedbacks in the system to improve local and national economies; for example, how to foster economic clusters (see below). It's also necessary for understanding the "free trade" offshoring feedbacks destroying local and national economies. We'd better start using systems thinking because our individual, regional, and national futures depend on it.
So there are three things to work on:
- Increase dollars coming in.
- Increase circulation within the economy.
- Decrease dollars going out.
More at Economic Development Overview & Model
Exports: Since 2001, we've lost over 53 percent of manufacturing and information technology jobs, businesses that export products and import dollars.
Imports: Proliferating "big box" stores import products and export dollars.
The result: more money out than in. Two other factors reduce tax revenue. 1. Export companies pay more. 2. We've lost 17,800 non-farm jobs since November 2007 (that's 6.8 percent).
Why the job loss? Largely it's the same export/import problem at a national level. From 2000 through Aug 2010, the cumulative national trade deficit (trade debt) is $5.94 trillion; that's how much U.S. GDP has been reduced by "free trade" offshoring of jobs and technology. Hard hit Colorado Springs has lost 69 percent (9,300) of Computer and Electronics Products Manufacturing jobs since April 2001. It's been a high-tech, job-loss blood bath.
What to do?
Stop implicit subsidies for growth; make growth pay for itself with impact fees. Don't subsidize big box import stores like those at University Village. Subsidize, as necessary, export companies and companies that Buy Local; these bring dollars in and keep them here.
Raise the pay of council persons so those not backed by growth interests can afford to be on City Council and attend to the welfare of the whole community, not primarily growth interests.
Don't sell off hospitals, parks and other community assets. This would only provide temporary financial relief and feed addiction to growth.
Quick fixes don't work. Don't think a "Strong Mayor" can fix our broken region. Won't happen. It will only make it easier for the growth interests that funded the campaign to control government.
Note: This revised version adds ~150 words at the request of the Colorado Springs Independent. It is scheduled for inclusion in the Nov 11, 2010 edition.
Slightly edited version published: "A broken region," Your Turn, Nov. 11
Letter to CSIndy in response:
Export to import
Bob Powell's column ("A broken region," Your Turn, Nov. 11) was the most intelligent discussion on the region's problems that I have seen in years. Since moving to Colorado Springs as part of the 1980s high-tech wave, I have been blown away by how badly the city's leaders misunderstood business in general and high-tech specifically.
Our small software company made the decision to move here based not on low cost, but rather high value the "quality" aspect that Dr. Powell referred to. We were a classic example of "export" business, bringing money into the city through our worldwide sales of intellectual property (software). Unfortunately, I have watched the equation change from export to import and quality to low cost.
The city worked hard to court high-tech manufacturing by big companies that would never move their corporate [headquarters] here and would move jobs at will to save a few dollars. The city didn't understand intellectual-property companies, and had little interest in small companies that would grow and stay. We're now reaping the results of their misguided efforts. The big companies are gone, manufacturing has moved offshore, and the city has moved from a quality position to low cost: big-box stores, chain restaurants, call centers, military bases and nonprofit (mainly evangelical) groups.
Should it be reversed? Can it? These are discussions that the next City Council should get serious about. Our main industries are dependent on cheap land, cheap labor and cheap taxes. I much preferred the high-energy, high-quality potential of the city I experienced when I moved to this lovely location. It will be very hard to attract the kind of companies and talent to move from the low-cost value proposition that seems to be the city's main drawing card at the moment.