Yep, that's correct; the Colorado Springs economy is doomed. Why? Because it's dug itself a financial hole by subsidizing the kind of growth that creates enormous infrastructure backlogs. Doing what works for the near term and fails in the long term is called addiction; in this case, addiction to unsustainable growth.
Every business knows that it cannot be "all things to all people." If it tries to have the highest quality product, the lowest cost and the best service (e.g., delivery time), it will be overwhelmed on at least one of these dimensions. A business must choose among the factors relevant to its business and focus on the ones that characterize what it wants to be. For example, every restaurant knows it cannot at the same time have the lowest prices, the highest quality food, and the best service. McDonald's makes the low prices and good service choices (with food quality not as good), while Outback Steak House makes the "quality food at reasonable prices" choice (with waits that can be very long). No organization can be best at everything; each must make a choice.
The Attractiveness Principle is a systems thinking archetype that describes this dynamic. It shows price, service quality, and product quality as the determiners of attractiveness. Attractiveness is the extent to which the product or service "attracts" customers. Customer demand is a result of demand generating activities (such as a sales force or advertising, which create a reinforcing feedback R1) and "Overall Product/Service Attractiveness."
But for constant service or product development capacities, increased customer demand can lower service quality or product quality (B2 & B3). It requires investment in personnel to maintain service quality (B5); or it requires investment in plant, equipment and design staff to create more products of high quality (B6). These investments reduce the funds available for demand generating activities (B7 & B8). Another option is that prices can be lowered to again increase demand, but this also reduces the scarcity premium that can be charged and reduces funds available for demand-generating activities.
Just as no organization can be all things to all people, no region can be all things to all people. Applying this principle in the field of urban dynamics leads to the "theory of relative attractiveness" – Given free migration, no place can long remain more attractive in an overall sense than any other place. An attractive location attracts people from less attractive locations. Inmigration continues until negative pressures arise to counterbalance an area's underlying attractiveness.
This does not bode well for Colorado, because the region's underlying attractiveness is so high (e.g., mountain views). This means that other factors (traffic congestion, smog, housing prices, etc.) must get considerably more negative before people will stop emigrating from areas which they currently view as more undesirable than the Pikes Peak region.
It's important to understand that "attractive" does not mean "prettier." It means that there is a composite set of factors that attract. A location could be ugly and still "attractive," if other factors are favorable. The other factors could be the price of land, tax structure, cultural amenities, investment incentives or robust economic activity. In addition, attractiveness factors can be different for different industries. For example, once a critical mass of a given industry develops with a base of suppliers and customers, a region can be attractive for that economic cluster, even though it may not be attractive to other industries.
Low property taxes and relatively low housing prices have attracted a relatively low-wage population. This population, attracted over decades, cannot afford to pay for needed infrastructure. Because of this, it will be enormously difficult to get out of the growth addiction hole.
Here I explain the structures and dysfunctional beliefs that led to this.
The Attractiveness Principle
First, to appreciate what every region faces, here's a fact of life: No business or region can be all things to all people. This should be obvious, yet the implications for regions are little understood.
Businesses know this. They can't have, all at once, the lowest price, best service, and best quality. To succeed they must have a Value Proposition. This is The Attractiveness Principle, where "attractive" is the composite of factors that attract. Businesses must make a decision about what value, or combination of value, will be offered to attract customers.
A alternative way to look at this is: What factor will keep customers away to prevent the business from being overwhelmed? In other words: How will the business be unattractive? This is known as "strategic unattractiveness."
This applies to regions and growth: no region can be all things to all people. What follows from this is a fundamental truth of urban dynamics: Given free migration, no place can long remain more attractive than any other place. Oh, my. Read that again, please. It's the crux of the problems we face.
What it means is that people will move Colorado Springs until Colorado Springs becomes as unattractive as any other place. Yes, that's correct, the place to which you came because it was attractive, will become no more attractive than any other place. Dang!
This means that the only choice Colorado Springs has is: How will Colorado Springs become unattractive? It's a Growth Fact of Life. There is no utopia in social systems. Face it.
This choice can be made consciously or unconsciously. However it's made, the decision will be based on beliefs about growth and economics.
|What applies to a region is pretty much the same as for a family. When more money comes in than goes out, the family prospers financially. When the opposite, it's debt and financial hardship. When a family can pay junior to mow the lawn, that helps by circulating dollars within the family.
Determining what to do is not rocket science. It's more like basic arithmetic.
So there are three things to focus on:
Increase dollars coming in by encouraging export corporations.
Increase circulation within the economy by encouraging Buy Local.
Decrease dollars going out by not encouraging Import Corporations, i.e., Big Box stores.
Unfortunately, it seems that growth interests ignore arithmetic in order to get higher profits. |
Here's a model of Economic Development, an expanded version of what Rocky
What should be obvious from this is that, for an economy to prosper, more money must be coming in than going out. That's arithmetic.
So attract and foster export corporations to bring money in and encourage money recirculation. Do not attract or foster import corporations because they send money out.
Colorado Springs Belief: Growth is Good
The truth: some growth is good, but other growth is unsustainable. Colorado Springs doesn't seem to know the difference. It subsidizes both import and export corporations and does little to promote recirculation (Buy Local). Residential growth gives a short-term economic boost, but long term requires more infrastructure than taxes support.
The trap: Taxes cover short-term, but not long-term, costs. So we need even more growth for more taxes. But no one can sell at a loss and make it up in volume. Doing what feels better short-term, but makes things worse long-term, is called "addiction." Competition between regions is individually logical and collectively insane.
When pressure to provide infrastructure increases enough, we get Referendum C and a schizophrenic Republican Party with anti-taxers (who don't believe in public services) against developers (who'd rather increase everyone's taxes than pay impact fees for the infrastructure that allows them to sell their product).
Colorado Springs had made choices
- Subsidize import and export corporations
- Low property taxes
- Lower cost housing than in regions against which we compete
- High sales taxes
- No impact fees for off-site costs of growth
- Corporate Subsidies and Tax Increment Financing
- Attract military base presence and religious organizations that pay relatively low wages
Economic Development follies
Competition against other regions for growth
Those controling Colorado Springs' government believe that, or at least propagandize that, "Growth is Good." And they maintain that the way to achieve growth, the recipe for success, is competition against other regions based on low taxes and subsidies. This strategy is euphemistically called, "economic development."
The problem with this is that, while it is individually logical, it is collectively irrational. It's an example of the "Fallacy of Composition": the belief that what is true for a part is true for the whole.
This belief in "competition" is so powerful that it prevents most people from actually seeing what's happening. It's taken as a quasi-religous article of faith. It's a belief clouds understanding of the reality that's quite evident: It does not work!
For some people, however, promoting this false belief is cover for doing what will be profitable for their corporation and/or for political power. Those who object are charged with heresy. They are portrayed as not understanding either economics or business, when quite the opposite is true.
... subsidies for import corporations
Addiction to Growth
short term vs long term
getting out of addiction is painful
Lower Home prices,
They don't understand either .
that dooms the region.
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 dug its own grave thanks to "conservative", "free market", "growth is good" so subsidize it policies.
Low wage jobs in religious organizations, the military, big box stores and national chains.
Policy Update: Impact Fees by Eben Fodor1, April 2001
The Shortcomings of Rival Urban Theories by G. William Domhoff
The growth-coalition theory developed by Harvey Molotch and his colleagues (Logan & Molotch, 1987; Molotch, 1976; Molotch, 1979) is an exciting and relatively new way of thinking about local power structures and their relations with each other and national-level power. It is an extremely dynamic theory that deals with all the conflict that so dazzles pluralists. At the same time it remains true to the findings that we have on Atlanta, San Francisco, New Haven, and other communities. Although some recent critics claim that the theory is refuted by the rise of anti-growth coalitions, such neighborhood-based coalitions are precisely what the theory predicts.
The theory leaves me with a feeling of closure about the local power structure literature of the past. That literature now makes theoretical as well as empirical sense. The empirical studies also give me a little hope that some members of future generations of historians and social scientists will find these ideas worth trying out on new issues and research sites. This seems especially worthwhile when we consider the unsatisfactory alternatives offered by the pluralists, urban Marxists, and regime theorists.
... has graphs like mine.
Relationship between Growth and Prosperity in 100 Largest U.S. Metropolitan Areas By Eben Fodor, December 2010
This study examines the relationship between growth and economic prosperity in the 100 largest U.S. metropolitan areas to determine whether certain benefits commonly attributed to growth are supported by statistical data.
Flirting with Trump? No, the US will vote for a Boulder solution by Will Hutton, The Guardian, 5/21/16
Boulder, Colorado, has been voted the US's happiest city, thanks to its urban planning, high level of healthcare and burgeoning service jobs
Wal-Mart: It Came, It Conquered, Now It's Packing Up and Leaving by Shannon Pettypiece, Bloomberg, 1/25/16
Strategies for manipulation of the public
keep the public in ignorance and foolishness folly, "The bêtise of our human community is everywhere" (Thornton Wilder).
Create problems then offer "solutions"
Distract and redirect attention divert
Appeal to emotion rather than reflection
postpone information to lose coherence
If a business tries to be best at everything, it will be overwhelmed on one or more dimensions: cost, service, or quality.
This decision allows the business to keep enough customers away to permit it to deliver its chosen value to its chosen customers.
While many know the necessity for a business Value Proposition, many more don't understand it applies