[Pyxl101]

I read some of the articles on that site, such as the case study linked below. There are some interesting points and ideas there, but I'm not sure the methodology by which they argue that wealth is being destroyed is sound.

https://www.strongtowns.org/journal/2009/3/30/the-cost-of-de...

In particular, the analysis considers whether the cost of a road along some properties will be repaid by tax on those properties. However, this ignores the 'network effect' present in society, and various other taxes that residents contribute to.

Residences don't provide property tax revenue in isolation - the residents also generate tax revenue in a variety of other ways that depend on transportation. For example, residents commute to work, and work for corporations that pay a high amount of property tax. It's commonly understood that commercial districts contribute far more tax than residential districts do. That's often why cities want to zone for it. But the two zones depend on each other. Neither works without the other.

Residents consume from various other businesses in the area where they live, and those businesses pay tax and have employees, and so on. Residents also generate income and pay income tax and sales tax. Residents who are connected via top-notch infrastructure generate value in inter-state, national, and even internationale commerce through their consumption of mail-ordered goods and use of Internet, phone, and cable TV.

There are certainly some rural areas where infrastructure might be a loss. I'm not saying that's not possible. Just saying this rationale and analysis isn't convincing.

It's also not necessarily a problem if individual small areas run at a loss, as long as larger society is willing to subsidize or pay for them. For example, imagine a small dense city like San Francisco that generates incredible wealth. Some people might commute to that area from nearby cities. Those cities and the transportation in between might not earn enough in tax revenue from local residents to pay for the infrastructure at the local level, but it may be the case that higher-level structures above the city such as counties, states, or the federal government receive enough tax revenue from the region that they're willing to pay for the transit. Those larger political structures can look at the big picture, like how transportation within the region is impacting the regional economy.

For example, the federal government recently gave a multi-hundred-million dollar grant to develop rail infrastructure between Seattle and Portland. Is that worth it? I have no idea. That seems like a high price to me to transfer a few hundred people per train trip. But the point is that the model works as long as society is willing to pay for this infrastructure. The articles haven't made the case that people can't or won't pay for it; just that in some very narrow analysis, properties don't pay for streets along the property. But roads are never useful in isolation - it's the network that matters.

You could argue that infrastructure could be more efficiently designed if people lived closer together, and needed less infrastructure. That's probably true. But that's not saying wealth is being destroyed. It's saying that society is willing to pay the cost necessary for the quality of life people want. (Assuming that we do have the money for it - haven't seen the argument that we don't) You could argue that wealth is being destroyed every time people buy "organic foods" because they're so much more expensive and wasteful, for example. It's the same idea.

The fundamental premise of the articles seems to be that growth of suburbia is unsustainable because suburbia does not generate enough property tax to pay for itself. An accurate analysis needs to consider all of the ways that those residents contribute to the tax base, as employees and customers, and add the sum of the effects up, before argue that it's legitimately wealth-destroying. One needs to consider the effect of infrastructure on tourism and the ability of an area to attract residents and businesses. You can't evaluate the cost/benefit of infrastructure merely by looking at the property tax revenue of properties adjoining it.

[pja]

Given that your counter-argument is a trivially obvious one, a little further thought would have led to the conclusion that the StrongTowns bloggers might have thought of it too.

Since you just read until you thought of an objection to their thesis & then stopped, you failed to find the articles where they do the lifetime cost analysis over a whole town (i.e., both "suburban" and "business" districts) and find that this pattern of development means that the profits from the high tax business districts fail to make up for the costs from exurban / US style suburban development.

Have a trawl through the Best-Of lists. In particular: https://www.strongtowns.org/journal/2017/12/8/the-real-reaso... stands out.

[rocqua]

A large part of the argument behind the `suburban ponzi scheme' lies with the up-front profits made by municipalities when building these suburbs.

There are a few other things. Firstly, network effects could also be seen as requiring the `ponzi scheme' to keep growing. That is, in order for the suburb to pay for itself, it needs to attract other suburbs. Obviously, this does not immediately apply to network effects due to more business. It should be noted that commutes suck and that having large suburbs starts to require large commutes to get to work. Thus for sufficiently labor intensive business, there are inherent issues with the suburb network effects. It is hard to say where this threshold of `sufficently labor intensive' lies though.

Secondly, there is an issue of gradual density increases. In the suburbs, it is a lot harder to upgrade the house on a lot to say a three-story flat. Besides tough zoning laws, there are HOAs to content with. Even more troubling is parking. Because suburbs require a car, such flats require a lot of parking.

Finally, there is a simple argument that more gradual growth that works via a mix of density increases (i.e. building up, or just putting more houses on a lot) and a slower expansion of the city is plain better. This of-course no longer argues that suburbs are a `ponzi scheme' but if this model is more sustainable than suburbs, it is kind of a moot point whether suburbs are sustainbable.

The argument that this model is better than suburbia is more difficult, for it is inherently comparative. Notably though, this makes the argument `suburbs cost more than they bring in locally' relevant presuming that suburubs have the same network effects as the proposed model of growth. To a first approximation, this depends on the quality of life, and the ability to grow to match demand.