Item — HN Reader

For those new to Strong Towns, I feel this article is most representative of what they’re about: https://www.strongtowns.org/the-growth-ponzi-scheme

3 comments

I'm skeptical that things are as bad as this article states.

Strong Towns has plenty of case studies of different places, to varying degrees, losing quite a bit of money on maintenance:

- Spokane: https://www.strongtowns.org/journal/2018/10/24/dispatches-fr...

- Kanas City: https://www.strongtowns.org/journal/2020/5/5/kansas-citys-fa...

- Cobb County: https://www.strongtowns.org/journal/2018/8/3/cobb-county-add...

- Collin County: https://www.strongtowns.org/journal/2018/9/27/a-texas-sized-...

- Baxter: https://www.strongtowns.org/journal/2015/1/18/the-classic-ca...

And then add to that the costs of climate change for car-centric development. And health effect costs of car-centric development.

That some cities get in trouble for any number of reasons isn't news and has been true throughout history, but to call America a Ponzi scheme is essentially meaningless. You might as well call civilization itself a Ponzi scheme that requires new members when they turn 18 to participate while old members at 65 cash out.

Outlining why civilization was a mistake is interesting, but not sure what good can come out of it: Sapiens: A Brief History of Humankind by Yuval Noah Harari

> but to call America a Ponzi scheme is essentially meaningless

Calling one specific economically advanced civilization a ponzi scheme because it has radically different and unsustainable development policy is far from meaningless given there are obvious models outside of the US that we could transition to.

> You might as well call civilization itself a Ponzi scheme that requires new members when they turn 18 to participate while old members at 65 cash out.

You might as well call all investments a ponzi scheme if our only requirement is that some people are buying in while others are exiting. The interesting aspect of an investment (or civilization/development policy) is how sustainable it is and how transparent it is about its sustainability.

> Outlining why civilization was a mistake is interesting, but not sure what good can come out of it

Strong Towns doesn't advocate that civilization was a mistake, and the good that can come of their work is not continuing to double down on unsustainable development practices.

> That some cities get in trouble for any number of reasons […]

Yes, but when you are told of specific reasons why cities can get into financial trouble it can allow you to avoid them.

As ex-urban planner in Europe and having lived in Houston, academic and professional knowledge of this wrong development in the US is widely known. He is just citing popular knowledge of the failed "American dream", suburban development for cars, not families.

Most of Europe has held a strong opposition to this development, and did fine.

Plenty of academic research/literature on this, as well as book:

> Chuck is not the first to point out the financial inefficiencies associated with sprawl. Robert Burchell of Rutgers[1] has led several important studies showing the substantially increased municipal costs associated with sprawl development; my then-colleague Matt Raimi devoted a well-researched chapter to it in our 1999 book Once There Were Greenfields.[2] At NRDC, we undertook a small empirical study[3] in Cleveland and Chicago that confirmed the additional operating and maintenance costs associated with suburban wastewater infrastructure when compared with that in the cities.

* https://www.smartcitiesdive.com/ex/sustainablecitiescollecti...

Strong Towns is only reporting what the literature is saying. You're free to be skeptical, but that's what they've concluded from the empirical evidence. The claim is falsifiable if you want to get into testing it.

It seems overbroad in that some cities are doing fine, while in other, less trendy places, there actually are dying towns that these arguments could very well apply to.

To quote Warren Buffet -- "Only when the tide goes out do you discover who's been swimming naked." That's one of the main points of Strong Towns; a focus on resiliency. Down turns in the economy, be it one oversized local sector (a local coal mine maybe) or all sectors (e.g. GFC), can be a trigger for a collapse; especially for a community that has focused all it's efficiency on that (those) sectors. If there's nothing left in the tank when the bad times come you only have one option left, collapse (and quite often a cascading collapse). Here's a term I just came up with; Sociological margin call.

That's a nice vivid metaphor for financial types. Although margin calls usually trigger liquidation, while Tainter's model of catabolic collapse starts more like an orderly wind-down. Or maybe a private vulture buyout. The real liquidation happens later.

Ponzi schemes run fine as long as the growth continues. The challenge is running at steady-state, or even weathering declines. That’s when you see if full-cycle costs reconcile.

The article says "most cities". The majority of municipalities in the US and elsewhere are those less trendy places. It’s a case of availability bias to think of NY or LA or Seattle or Austin as representative of "most cities". The "towns" in Strong Towns gives an idea of the size range of the municipalities they are talking about.

The Strong Towns thesis is that there are a lot of ways for things to "look" fine when things are not actually fine.

As an example, municipalities often count physical infrastructure like streets and water pipes as an asset on their books[1], even though it is illiquid and incurs large long-term liabilities.

[1]https://www.strongtowns.org/journal/2014/8/19/is-a-street-an...

Strongtowns is literal misinformation. The story about infrastructure costs killing municipalities is entirely false, and can be seen as such with only bare minimum of research. Infrastructure costs are typically around 10% of the budget of municipalities, and almost universally are under 20%. Look up your own city or town, and report back if you find otherwise.

Yes, when the political organization that would look bad if it bankrupted itself chooses how to do their accounting, they choose methods that make it look like they aren't bankrupt.

https://www.strongtowns.org/journal/2015/12/7/the-lies-we-ac...

> It may be easiest to think in terms of personal finance. Imagine you purchase a car for $20,000 in 2015, but under a special promotion no payments are due on your bill until 2018. In what year did you incur the $20,000 bill? Most people would say 2015, the year you acquired the car. That’s the answer mandated under accrual accounting, a method of financial reporting required of all public companies by the Financial Accounting Standards Board. But many state and city legislatures disagree. They operate with the conviction that a bill is not incurred until the money leaves your bank account to pay it. So if you choose not to pay the bill for your car until 2018, for accounting purposes the bill will only appear that year.

https://www.strongtowns.org/journal/2014/8/19/is-a-street-an...

> Current accounting practices do not bear any relation to the future cash flow or the actual financial health of the city. When cities take on obligations, they should be properly accounted for as liabilities, not assets. When the city uses debt to build new infrastructure, it is taking on the double liability of both the current debts payments and the future maintenance obligation. The tax base associated with these obligations needs to also be accounted for as a cash asset (think of it like an annuity) discounted over the useful life of the infrastructure. Then we would have an accurate account of the obligations (liabilities) of the community and how that compared to the tax base (assets) that needed to support them. In short, a true account.

There are plenty of suburban towns exhibiting exactly the same allegedly fiscally disastrous pattern of development, that are 50+ years old, and so the infrastructure debt should already catch up to them. Where are they?

Strongtowns tells very plausibly sounding stories, but is short of actual examples. Where are all the places getting bankrupt by infrastructure costs? Or is it always “half a century from now, the costs will totally catch up with you”?

1) We've more than doubled our population in the past 70 years which has allowed us to fund our current developments. This trend has slowed considerably and is likely to slow even more.

2) Massive federal government investment in specifically this type of development.

3) state bailouts of failing municipal infrastructure.

4) we are already seeing it happen in the form of chronic under-maintenance:

https://www.csis.org/analysis/united-states-broken-infrastru...

> In Wisconsin, farmers are struggling to safely use modern equipment on roads that were built over 50 years ago. In Arizona, a century-old bridge partially collapsed last summer after a train derailed. In Florida, old pipes are leaking millions of gallons of sewage.

https://www.cfr.org/backgrounder/state-us-infrastructure

> Civil engineers raise safety concerns as well, warning that many bridges are structurally deficient and that antiquated drinking water and wastewater systems pose risks to public health

https://css.umich.edu/factsheets/us-wastewater-treatment-fac...

> Although the lifetime of a sewer system (50 years) is longer than that of treatment equipment (15 to 20 years), renovation needs of a sewer system can be more costly. An EPA analysis estimated that if 600,000 miles of existing sewer systems were not renovated, the amount of deteriorated pipe would increase to 44% of the total network by 2020.

> Infrastructure costs are typically around 10% of the budget of municipalities, and almost universally are under 20%.

Today's infrastructure/capital spending is tomorrow's operating spending:

* https://www.dearwinnipeg.com/2020/02/24/accounting-101-for-c...

* https://www.strongtowns.org/journal/2021/11/8/holy-leaping-d...

If you don't believe this talk your local CPA.

It shouldn’t then be hard to point out to an old suburb, for which tomorrow already came. Where are they?

See another comment of mine:

* https://news.ycombinator.com/item?id=31548507

See also case studies on the net revenue and 'municipal ROI' of low- versus high-density development:

* https://news.ycombinator.com/item?id=31549334

Also add: - debt service related to infrastructure - higher transportation related costs, eg for school buses, fire fighting, parking related building costs But I agree Strongtown arguments tend to ignore other big cost categories.

> Infrastructure costs are typically around 10% of the budget of municipalities, and almost universally are under 20%. Look up your own city or town, and report back if you find otherwise.

Give the crater sized potholes I used to see when I lived there , I’d believe even less for cities in SCl.

all numbers rounded. I live in a city near Boston.

total budget: 300MM

school budget: 100MM

attributable to maintenance/keeping things running, including debt service: 92MM

fire and police: about 20MM each.

Interesting, which city is that?

The idea is that we just don't have enough productivity to sustain slightly longer roads, and live in the same houses we used to have on farms in 1920s is insulting to reader's intelligence.

This is just another piece of luddite alarmism.

Always Remember: the situation is SO DIRE, we had to exempt private jets from the fuel tax. Even billionaires simply can't afford to pay gas taxes, this is how bad things are /s: https://www.bloomberg.com/news/articles/2021-07-09/private-j...

Meanwhile the city of Austin debt service is 5% of its budget, and Austin's debt per capita is $1,287.

Some Ponzi.

Isn't Austin a city that is growing, continually attracting people? If so, it is not a valid example against their claim.

If you allow some pedantry:

The claim is that _cities that don't keep growing_ go broke: a->b

Showing ~b (Austin didn't go broke) only allows you to deduct ~a (Austin is growing) by modus tollens

Sure, we can just keep on increasing taxes until all the top earners leave for cheaper areas.

I prefer low taxes.

What's there to lose by building towns at a human scale? Personally, I can live without Fauxrari speeding past my door at 2 am.

Tax Flight Is a Myth: Higher State Taxes Bring More Revenue, Not More Migration:

https://www.cbpp.org/research/state-budget-and-tax/tax-fligh...

That’s a high quality study!

“It found that while the net out-migration rate of this income group accelerated after the tax increase went into effect, so did the net out-migration rate of filers with incomes between $200,000 and $500,000, and by virtually the same amount.”

That’s their argument high taxes don’t drive people elsewhere?

No it's not. I'm currently contemplating leaving my country of residence because absurd tax rates. I'm a productive member of society and high earner but I'm starting to loose faith in my institutions. If you keep on taxing, and fail your responsibilities, people get fed up and leave, that's what they do. Only the people that don't have the means to leave stay creating a particular nasty downward spiral of people without jobs and home ownership dependent on government subsidies.

>I prefer low taxes.

Texas is 32rd in terms of tax burden, you will prefer it.

>Personally, I can live without Fauxrari speeding past my door at 2 am.

That’s an enforcement problem. If you think this doesn’t happen in dense cities, with way more sports carts and way more bars, idk what to tell you.

I’ve literally moved to suburbia to escape the city noise. In my case it was fire engines passing by literally every 10 minutes. That’s normal in a dense “human-scale” city centre, but very rare in the suburbs.

> moved to suburbia to escape the city noise

City noise is almost all from automobiles https://www.youtube.com/watch?v=CTV-wwszGw8

Yes and California where I am just announced a 90 billion dollar tax surplus and I see road and bridges getting fixed all the time. Maybe the rest of the country is falling apart. I don't really know.

- California had the tax surplus, not the towns.

- All ponzis look good, until growth stops and the whole thing collapses.

- The towns are being bailed out by the state.

- The fact that you are seeing roads and bridges getting fixed does not mean that poorer cities are. And Strong Towns also shows that the suburbs (even if richer) get subsidized by the city centers.

> The idea is that we just don't have enough productivity to sustain slightly longer roads, and live in the same houses we used to have on farms in 1920s is insulting to reader's intelligence.

Plenty of academic research/literature on this, as well as books:

* https://www.smartcitiesdive.com/ex/sustainablecitiescollecti...

Measure the cost of services per acre/hectare of low-density and of high-density, then measure the revenues. You'll see which is net positive and which is net negative:

> Urban3 is a consulting company that helps cities better understand the economic impact of development. They have worked with many American cities to better understand and visualize the costs of development, and uncover which properties are productive, and which are not. Some municipalities have been willing to share that information, and it has provided a fascinating glimpse into the financial problems caused by sprawling car-centric suburban development.

* https://www.youtube.com/watch?v=7Nw6qyyrTeI

Lafayette, LA case study from the video:

* https://www.urbanthree.com/case-study/lafayette-la/

* https://www.strongtowns.org/journal/2017/1/9/the-real-reason...

This is an accounting and ROI issue. If you don't want to believe the numbers… ¯\_(ツ)_/¯

>Measure the cost of services per acre/hectare of low-density and of high-density, then measure the revenues. You'll see which is net positive and which is net negative

I have no interest in living in shoeboxes.

> This is an accounting and ROI issue.

Nope. Some just think quality of life isn’t about accounting and ROI. Do enjoy your shoebox though.

If you aren’t willing to look at the data, and are admitting you’re closed off to even considering the idea (“I have no interest”), how do you know your head isn’t fully in the sand, or that you’re not part of the problem?

> Some just think quality of life isn’t about accounting and ROI

By disregarding the ROI, the implication is that other people need to live in the "shoeboxes" generating a surplus in order to fund your life choices.

If you want to avoid being a freeloader feel free to calculate the long-term cost of your suburban lifestyle and donate it to your municipality, or move to a rural area on well-water, septic, solar, and dirt roads.

> I have no interest in living in shoeboxes.

No need. See the concept of "streetcar suburbs" and how things used to be built pre-WW2:

* https://www.google.com/maps/place/150+Geoffrey+St,+Toronto,+...

* https://www.google.com/maps/place/125+Hampton+Ave,+Toronto,+...

* https://en.wikipedia.org/wiki/Streetcar_suburb

* https://www.youtube.com/watch?v=MWsGBRdK2N0

High(er) density does not mean Manhattan and Hong Kong levels of density. 50-100 people per hectare (Hamburg, Paris, Stockholm, London, Brussels) is not crazy high:

* https://transportgeography.org/contents/chapter4/environment...

A video of what's available via a fifteen minute bicycle ride from Amsterdam:

* https://twitter.com/notjustbikes/status/1528394830086275075