Saturday, December 6th, 2008
Blogger Paul Ogden casts stones at Carmel Mayor Jim Brainard about the cost overruns on the Keystone Ave. interchange project in Carmel, Indiana. Not only did Mayor Brainard lie about the costs, he says, but the city’s big spending ways finally caught up with it. Since I’ve lauded Carmel before (see this three part series, one, two, and three) and have generally endorsed Brainard’s vision, I thought I would offer my response.
Ogden is mixing three unrelated points: honesty, efficiency, and service levels. On the honesty point, it is a no brainer. If Mayor Brainard deceived the voters, then he deserves a pie in the face for it. But that is orthogonal to spending. On that front, I’ve long said we must separate efficient delivery of services at low costs, which I think we can all agree on, from what level of service you want to buy in the first place. First decide on the car that fits your general budget, then go dicker with the dealer. It is clear that Ogden thinks Carmel is purchasing too high a service level.
While one can certainly quibble with many of their projects, I think that Ogden’s attitude typifies the Midwestern mindset. Whatever it is the government is doing, it’s always too much and the price too high. In short, the implicit advocacy is for a least common denominator, el-cheapo approach.
That might have worked back in the days when the Midwest dominated a commodity marketing like manufacturing. But now it is in competition with China, Mexico, etc. In an era of competition against labor making pennies per hour, the Midwest will never be a low cost place to do business, on a global basis, again, no matter how low its states and cities cut taxes.
The driver of the 21st century economy in a high cost locale like the United States is clearly something else. Many states, including most of the Midwest and Indiana, are hanging their hat on industries like life sciences. But you can’t have a life sciences industry without life scientists. The skills that drive these industries are in demand. The people who have them have choices about where to live. The marginal cost difference in taxes saved in a least common denominator town is not going to overcome the poor quality of life and the sparse amenities these places offer. There’s a new ante in the game. Government services aren’t static. They change over time as the times progress. Sometimes services need to be added. Sometime they need to be retired. I can only imagine the howls of protest back in the 1800’s when forward thinking cities decided they needed to pay for “luxuries” like police and fire departments, which for centuries did not exist in many cities.
Beyond that, when you take the low cost uber alles approach, you’re building an environment that has no staying power. All you have to do to see where the Ogden approach leads is to drive around the formerly booming suburban areas of Marion County and see what they look like now. Take a look at the places that were the Fishers of their day back in the 60’s or 70’s. Or if you live elsewhere, go to the same places in your town. You’ll see rampant suburban decay, vacant commercial parcels, struggling retail, empty big boxes, and unmaintained homes. This is the future of the American suburb that doesn’t take care to build something with staying power.
As long as you are on the edge of growth, that growth wave powers as if by magic new subdivisions, strip malls, shiny new schools, fire stations, and so on. These seem so wonderful because not only are they new, but they are better than what came before in older generation places. But what happens in 25-40 years? When today’s boomburgs are full, with no more land to develop, when they are competing with newer sprawl on the fringe, with developments that represent the next generation of design, what will happen? If today’s sprawlburbs think their fate is any different than yesterdays’, they are in for a rude shock.
That’s why it is imperative for suburbs on the edge of growth to take advantage of their day in the sun to build an environment that will be sustainable, thinking not just about today, but about the long term. Lifestyle centers, like enclosed malls before them, will be an obsolete format at some point. Will your town’s commercial districts be able to handle the transition? And so on, and so on.
That’s why what Carmel is doing is so smart. Again, the specifics are up for debate, and there is no guarantee that their strategy will succeed, but they are doing their best to create a unique, differentiated environment that will hopefully, once the town has matured, remain relevant in the future. It’s a lessson well worth heeding.
Another point is also relevant not just locally but nationally. Other than the City Center/PAC and Central Park, both investments that can certainly be challenged as to their merits, the majority of Carmel’s spending and debt has gone towards roads. We’re talking 50 roundabouts, 5% of the entire US total, and many, many miles of arterial street improvements, including this Keystone project. With infrastructure like the road network, there is no question that you are paying one way or the other. The only debate is in what currency. Will you pay in dollars or will you pay in congestion, pollution, and reduced quality of life and attractiveness of your town? That’s the choice at hand. I’m very confident that any economic analysis of the Keystone Ave. project would show that, even at $140 million, the project will generate strong net positive benefits in user costs alone.
Some people say we can’t afford to upgrade our transportation infrastructure. The fact is, we can’t afford not to. Every year that goes by the price only goes up, up, up. While with the recession on, construction inflation may even go into reverse this year, the long run trend is clear. The price of civic sector construction projects is increasing at a rate in excess of consumer price inflation. This means every year you don’t fix the problem, there’s not just another year of congestion and suffering, but the price tag for fixing it only grows further and further out of reach. Just ask Hendricks County as they struggle to figure out how to pay for a Ronald Reagan Parkway project that has spiraled out of control on costs over the decade plus the county didn’t build it. Ask Louisville, Kentucky which spent 40 years debating where to build a bridge, only to discover they now face a $4.1 billion price tag to do it.
So with this, as with other things, Carmel is ahead of the game. One can enjoy the pain they are going through now to get the project done. But when you fast forward and see what Fishers and Noblesville are going to go through because SR 37 is not getting fixed, I think you’ll see Carmel is probably making the right move by holding their nose and paying the $140 million to fix their problems today rather than punting them down the road to the next generation. Other places across America should be paying attention.
I want to stress that I’m not someone who is any fan of high government spending. My tax bills are beyond unbelievable, and I’m not eager to see them go up. There’s plenty of government spending out there I’d love the opportunity to take the scalpel too. I think this economy creates a golden opportunity to attack the fat in government, such as eliminating Indiana’s 1008 townships. But I think we need to take a long term view and not a short term one. Think about the staying power and long run competitiveness of the communities we are building. Look at the ruins of formerly prosperous places that did not do this, and the immense costs that we pay as a society today for that. The best way to keep taxes and spending low in the long term is to make sure we build healthy, growing, prosperous communities for the future, not engaging in the save a buck at any cost today mentality or passing the buck on dealing with critical problems to the next generation.