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Monday
Feb242014

Money Hall

“The problem we are trying to solve is that there are rich teams and there are poor teams, then there’s fifty feet of crap, and then there’s us.

It’s an unfair game.”

- Billy Beane in the movie Moneyball

Over Christmas break, I sat down and wrote a short book that had been spinning around in my head for a while. Money Hall: Building a strong city in an unfair time, will be released in April. Today I’m sharing the preface with you, not only to spark interest in the publication, but to identify a handful of volunteers who would like to do some light editing work to help me wrap this thing up. If you enjoy this blog, have a keen eye for the grammar, rhythm and syntax of the written word and are willing to devote a few hours over the next month to the effort, please submit your name. I can’t pay you cash, but I will publicly recognize your efforts, make sure you get some final copies and potentially some other things to compensate you for your time.

What do you do when conventional wisdom is wrong? Obviously wrong? And you have the data to prove it?

You change conventional wisdom, of course. But what happens when people are trapped in a system defined by conventional wisdom, where the risks and rewards are tilted in favor of those who hold to convention and against those who upset the status quo?

In trying to answer this question, I found inspiration in Michael Lewis’ story of Billy Beane in Moneyball, a book that later became a movie of the same name.

Billy Beane, a former major league baseball player turned general manager of the Oakland A’s, could have played it safe. He had plenty of money, a good resume and was coming off a season where his team dramatically overachieved. He had every personal incentive to stick to convention.

Except one: he knew if he played it safe, if he stuck to conventional wisdom, his team would lose. It would lose badly.

Beane also knew something critical from his years as a player: that the conventional approach to assembling a baseball team didn’t work, that the system was not as good at identifying talent as its proponents thought it was. He knew this in part because the system had identified him as a sure thing. A guaranteed future star.

But Billy Beane was never a star. Not even close. As it had with thousands of others before and since, conventional thinking got it wrong with Billy Beane. This insight was his edge.

In the decades following after World War II, new cities – largely America’s suburbs -- experienced rampant growth through infusions of federal and state subsidies, transportation spending and enormous levels of private sector investment. Older cities and small towns were held together, for better or worse, through similar means.

When everything was new, growth meant instant prosperity. For local governments, the up-front costs associated with new growth were minimal, but the added tax revenue was substantial. It was only after this illusion of wealth began to evaporate, when the long term maintenance costs for cities started to come due, that serious challenges began to mount.

Today’s local officials must contend with the enormous liabilities brought about by decades of horizontal expansion. They are asked to provide high levels of service to a widely dispersed population with a tax base that is in no way up to the task.

The federal and state assistance that helped induce this mess has now dwindled to a trickle. Transportation departments – for decades the primary funders of quick and cheap local growth – are vastly overcommitted financially. The mandates and limitations local governments assumed in exchange for their “investments” have yet to be unwound.

Cities, already encumbered with overwhelming debts, are pressured to take on more liabilities in order to avoid raising taxes, a move that only delays – and worsens -- the ultimate financial reckoning. New growth, the magic solution for decades, is hard to come by without ruinous subsidy or expensive build-it-and-they-will-come efforts, approaches that amount to little more than gambling.

Populations are more transient than ever. People move, quite frequently in fact, and that mobility puts pressure on local governments to take action, to avoid the appearance of stagnation. The local merchant class – historically the foundation and moderating influence of any city -- has been replaced by national franchise chains, organizations that are only lightly vested in the long term health of the community.

For local leaders today, it is truly an unfair time.

I have sat through countless public meetings, evaluating a wide range of projects, listening to professional experts spout conventional wisdom on how their recommended investments will create jobs, growth and prosperity.

Click for licensing.I used to be one of those professional experts. As an engineer, I recommended all the conventional investments to the cities I worked for. As a city planner, I deployed all the conventional approaches in the places I served. I was always confident knowing that my advice lay within the accepted approaches developed by my professional peers and associates. And if there ever was a doubt, I had the important initials from credentialing behind my name to secure my credibility.

But I was wrong, a fact I came to understand as time revealed many of the flaws in my own (conventional) thinking. Good fortune had placed me in a position professionally where I had the freedom of thought to explore these insights when I became aware of them.

To help me organize my thoughts, I started a blog in 2008. The ideas developed there have since grown into the Strong Towns movement, a growing nationwide challenge to the conventional wisdom of growth and development in America’s cities, towns and neighborhoods.

Conventional thinking is getting it wrong for cities. Using that conventional thinking in advising local governments, I got it wrong. That insight is my edge.

America’s local governments are being bankrupted by today’s conventional wisdom. Billions of taxpayer dollars are spent annually on roads, bridges, sewer and water systems, business subsidies, stadiums and other “investments” that have little or no payback.

Unlike baseball, municipal governance is not a game. When our cities lose, our people lose. Our nation is weakened. Many suffer in tragic and profound ways.

Bill James brought advanced statistical analysis to baseball and it changed the game. Our local governments need a similar revolution in how they understand and manage their finances.

Cities need to start doing the math. City Hall needs to start playing Money Hall.

 

If you are interested in being personally notified when Money Hall is released, you can sign up below. In the meantime, if you haven’t already read my first book, Thoughts on Building Strong Towns (Volume 1), you can get a copy here.

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Reader Comments (5)

Hey Chuck,

This looks great and I am looking forward to the whole book. One of the things that I find utterly fascinating is how this is true across many many things. Conventional wisdom is simply incorrect. That's not that interesting until you add in that where it is incorrect, someone is likely benefiting, but it's not you the individual payor.

Gary Taubes comes to mind doing the same thing in health and nutrition. But once you start going down that rabbit hole, there are entire segments of our medical industry that function this way.

And college education?

Best thing we can do is start thinking for ourselves in terms of dollars and cents-ible outcomes. I wish we could trust experts, but I think that the system might be at an inflection point, and the experts were beknighted on the other side of the curve.

February 24, 2014 | Unregistered Commentermike

I would love to help with some editing, Chuck.

In my own work, I often remember a saying which my father attributed to the Hippies, "If what you are doing doesn't work, try anything else."

I still think that saying is 100% true and good, but I am also exploring true small-c conservatism, which is much more of a "If it ain't broke..." I guess the two are not mutually exclusive, because if it is broke, then try anything else.

Probably the hardest part is trying to wrap my brain around welding my extremely progressive social beliefs to my conservative "real-world" beliefs.

February 24, 2014 | Unregistered CommenterRuben

I apologize for the pedestrian question, but how long is the book? Is it about the size of Thoughts on Strong Towns, Vol.1?

February 26, 2014 | Unregistered CommenterKit

Not sure yet, Kit, but likely around 100 pages or so.

February 26, 2014 | Registered CommenterCharles Marohn

Hi there. Thanks for the post. As a planner and "civic hacker", one comment I'd offer is this: let's encourage the standardized sharing of monetary accounts with descriptions of flows. A Business Model Logic for cities. If there are a few standards already let's go with those. Get these datasets up on the Open Data portals or websites of cities and at least create the conditions for smarter analysis: shared access to the data. We have stats on city expenditures but we don't always agree on the categories, often because one expenditure can be categorized multiple ways. Web experts came together years ago to create the Dublin Core, a shared way for describing Web resources. Do we need to something similar for the components and processes of local government?

February 28, 2014 | Unregistered Commenter@mpeers
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