Money and Good Intentions are Not Enough

As a graduate of the U of Minnesota's Humphrey Institute of Public Affairs and previously of St. John's University (MN), I had the good fortune of spending time with the late John Brandl. Brandl was an economist by education, a long-time legislator in Minnesota, a government bureaucrat and a professor who recently passed away after a battle with cancer.

I recently was able to read a book Brandl wrote in the late 1990s entitled "Money and Good Intentions are not Enough: or, Why a Liberal Democrat Thinks States Need Both Competition and Community". As its title implies, the book is focused more on state governance as opposed to local (small town) governance, but it is worth reading for anyone interested in public policy.

In this book, Brandl sets out to debunk some common misconceptions regarding how best to achieve public goals. These are:

1. That government bureacracies and policy makers "automatically embody the public interest" because they are not motivated by profit. The misconception is that government employees are automatically inclined to focus on doing whatever is best to achieve the public good. Rather, Brandl says that civil servants and elected officials are just as likely to act based on motivations other than the public interest - such as maintaining their job or increasing the budget with which their agency has to work.

2. That because civil servants are automatically motivated to accomplish the public good, providing more money to support their work results in positive results. Instead, Brandl says there is very little connection that can be shown between a government agencies' budget and the results of their work. More money simply does not guarantee results.

3. That the answer to the above two problems is always more free-market (competitive) provision of services. Fro Brandl, competitive forces can certainly be used more often than they are for public purposes, but it is essential to note that certain services do require altruistic behavior. He emphasizes focusing on which types of organizations are more likely to act in altruistic behavior (including families in some cases) and ensuring that perverse incentives are not created when providing them with public monies as a means of accomplishing public purposes.

In reading the book, what I found most compelling was the argument that the most important factor in determining whether public goals are accomplished is not whether the provider is a civil servant or an employee of a private company. Rather, it is the incentives they face. Arguably, Brandl suggests that no one acts for the public good as their first objective. They either act primarily to increase profit (in competitive markets), to increase prestige or personal job security, or primarily to serve family or sub-groups of society to which they feel deeply connected or responsible for (and no one, however altruistic, can rightly claim that they are deeply connected to "the public" at large).

I would recommend the book highly. As one reviewer stated "Brandl is a thoughtful observer and analyst, and his book is full of insights. There is neither new theory nor new empirical findings to be found in this manuscript, but he packages what we know and what he observes in such a clever way that the reader is forced to think in a different way about old ideas. The book is readable by economist and practitioner alike and will make would-be students of state and local finances - liberal or conservative - sharpen their arguments."

Amen.

Friday News Digest

This weekend is the Grand Nationals at the Brainerd International Raceway, just a couple of miles from my house. To the non-racing enthusiasts like myself, the influx of a couple hundred thousand people to the area this weekend means you either hunker down in the house or get out of town. With no air conditioning and this being the hottest weekend of the year, I am packing frantically, which is going to cut this edition of the news digest short.

Enjoy these few tidbits and enjoy your weekend.

• This article describes one town's discovery that their current zoning code is stifling development. This is something we see all over the place. This quote from the article encapsulates the prevailing reality of zoning throughout most of Small Town America.

"We realized....that there were more planning and zoning exceptions to our zoning regulations than straight applications," said Goldstein, whose agency is a special taxing district that promotes downtown businesses and services. "Developers were at a loss about what zoning was for the downtown."

• This is a short blub about a new book on the reuse of bog box stores. I've added it to my reading wish list on Amazon.

• This story about the future of shopping malls is also interesting. They quote from The Economist in a paragraph that sums up the article:

In the past half century ... [malls] have transformed shopping habits, urban economies and teenage speech. America now has some 1,100 enclosed shopping malls, according to the International Council of Shopping Centres. Clones have appeared from Chennai to Martinique. Yet the mall's story is far from triumphal. Invented by a European socialist who hated cars and came to deride his own creation, it has a murky future. While malls continue to multiply outside America, they are gradually dying in the country that pioneered them. 

• When I was in engineering school I was taught, and subsequently had reinforce in nearly every engineering manual since, you build roads safe by building them wide, flat and straight. A common sense intuition helps us know how wrong that is when you get to our local streets - wider, flatter and straighter means faster and more dangerous. Read this article to hear about how they have dealt with this more sensibly in the Netherlands. Another reason by Ruurd totally rocks! 

• I was once asked, if I were trapped on an island and could have only one album to listen to for the rest of my life, what would it be. My answer: Abbey Road. This article has nothing to do with planning, but everything to do with enjoying the soundtrack of life, especially as one prepares to head out of town this weekend and pitch a tent. Cheers to you all, and for those stuck at their computers, you can always watch people endlessly trying to recreate the famous album cover on the Abbey Road webcam.

The Reality of Brainerd's Parkway

This is a follow-up on yesterday's third edition to our Brainerd/Baxter Strong Town series, where we look at practical, real-life approaches to building Strong Towns using my hometowns as an example. In yesterday's entry, we examined one of the major streets in Brainerd - South 6th Street - and discussed ways to re-engineer it to: 

1. Lower the long-term cost of maintaining the street.
2. Improve the property values along the entire corridor and thus generate a return on the community's investment.
3. Improve safety for cars and pedestrians throughout the entire corridor.
4. Decrease the auto-dependency of residents that live along this corridor thereby allowing them a choice as to whether or not to walk to the downtown (mere blocks away) or take an auto trip to Baxter or some other place in the area. Today residents currently have no reasonable choice but to use their cars, which puts Brainerd at a near-term competitive disadvantage to neighboring Baxter in capturing both the resident's spending dollars and the capital investment chasing those dollars.

The promise for today was to step back and examine the development pattern induced by the current design of South 6th. I recommend you go back and read yesterday's post first, if you have not already.

Look back to the 1950's and 1960's when, like almost all small towns of this era, Brainerd was just beginning to transition to an auto oriented development approach. The roads into town - including South 6th Street - were "improved" to accommodate the now widely used automobile. These improvements, in turn, drove significant investment on the periphery of town, investments that were high-quality and - more than anything else - new. They used unique techniques for the time such as drive-up windows, they had more green space between buildings and generally gave an overall impression of growth and success.

In other words - for the time in which they were built, these places rocked.

Unfortunately, the technology (the automobile) that allowed this new development to take place, also allowed people to drive past it when the next best thing sprung up on the "periphery of the periphery". Some call this competition, and it would be if a few things were not going on concurrently: 

1. The roads to access both the "periphery" and the "periphery of the periphery" (and on and on) are all paid for by the government. In other words, there is a massive subsidy taking place.
2. As the roads through the "periphery" are expanded to provide access to the "newer" and "more competitive" things going on at the "periphery of the periphery", the expanded roads devalue the development they pass through. See yesterday's posting.
3. As the initial periphery development is being passed by and devalued, those property owners are frequently having their taxes increased at the same time to both provide the subsidy for the new development and maintenance of the existing infrastructure.

So while we may call this competition, what actually is happening is that the government - at every level - is choosing to subsidize greenfield development on the periphery at the expense of existing development closer in. In terms of macro public policy, it is anything but competitive.

While we could write endlessly about how massively expensive and wasteful of public resources this approach is, that is not what I want to focus on. What I want to focus on is one, very specific feature unique to this approach to development: building reuse. Or more correctly, the lack thereof.

Ponder for a second the decline we all know and understand that has taken place in the first ring suburbs surrounding the country's major metropolitan areas. We can all visualize that, on a large scale, immediately following WW II the suburbs were the place to be. As development expanded beyond the first ring, second ring suburbs became the "place to be" and the first ring declined and stagnated. Same effect the third ring had on the second, and on and on. This same thing happens in our small towns, just on a more limited scale.

Take a minute and look at the following pictures of unoccupied or underused space along South 6th Street. 

While the current market is depressed and that is certainly making these warts more visible, this is a pattern we see in every small town, regardless of market conditions. On the periphery there is, as Jane Jacobs described, a cycle of growth, stagnation and decline. Once-new buildings now sit empty or are used in a low-value manner while new buildings go up in the next-best-place. This happens for three easy to understand reasons.

First, each building in this style of development is its own monument to the original use. They were designed on an undeveloped site for a single, original use. The buildings are very difficult to transform into something new. Look at those pictures again. What is the reuse along this corridor for a drive-thru bank with 8,000 square feet of space? It doesn't exist, so the building sits empty even though it is of good, quality construction. This is in sharp contrast to the historic development pattern that exists just a few blocks away, which facilitates widespread reuse of existing structures, even those of low quality.

Second, each building stands independent of one another. When the medical center goes in, there is no coffee shop or bookstore located next door that caters to people who have to wait for their loved ones. If you have to drop someone off and wait at the chiropractor, you either bring a book and go in or you are forced to drive somewhere to kill time. No building in this corridor benefits any other building in a positive way - they all stand alone. That is, until they are blighted. Then they negatively impact all their neighbors.

Third and finally, the buildings are not robustly reused because doing so is more expensive, and generates less return, than building your own monument in the subsidized greenfield on the new periphery. For the local government, this feeds the Small Town Ponzi Scheme and drives "less competitive" businesses to the wayside, which is why the approach is broadly supported as a win:win.

But could anything be more ridiculous? In small towns across America we spend vast sums of money and shackle ourselves with an impossible amount of future maintenance commitments building unsafe roads that depress property values, cause economic stagnation in areas where we have sizable public investments, create places void of any socially beneficial qualities and, ultimately, induce the "solution" of big government regulation and over-taxation. 

A Strong Town solution is the competitive approach for small cities that want to survive and thrive in the post-automobile era.

Notes

(I am aware that we have some new readers from the Brainerd city government. You are very welcome here. Please understand that the critiques we make and the strategies we outline use your city - which is also my city - as an example of what is going on in nearly every small town in the country. You'll notice that we never personally malign anyone but deal with general policies and philosophies of growth in the current era. These are not Brainerd's policies, but the policies of every level of government and nearly every small town we have visited in the United States. For better or for worse, it is easier for me to snap pictures of my home town while I drive around than for me to drive to another town where I would be more anonymous.

Our goal here is not to change policy in Brainerd, but to change the approach of small towns all across the United States. We know there are many difficult personal, political and financial considerations that make an ideal world impossible to achieve and your jobs extremely difficult. We hope you will take this blog and this series for what it is - a thoughtful look at small town growth policy in the United States - and not as a personal criticism of any public official in Brainerd.

Either way, your comments and feedback, along with those of any of our readers, are always welcome.)