Comments on: Principles of Privatization – Part 3: Uses of Funds

By: Alon Levy

Alon Levy — Wed, 11 Nov 2009 05:22:09 +0000

New York has outstanding sprawl, if you go to North Jersey or Staten Island; San Francisco has outstanding sprawl on the Peninsula and in Contra Costa County. This sprawl is already full so you can’t build a house there, but if you can buy existing houses. You’ll get your minority-free, poverty-free enclave, while still living close to a good city. The problem is that those characteristics together make an area fairly desirable, and then zoning restrictions reduce housing supply, which interact to make housing unaffordable.

By: AmericanDirt

AmericanDirt — Wed, 11 Nov 2009 01:42:21 +0000

Why is the suburban sprawl so indefensible? San Francisco, NYC, Chicago may be great cities for people who read this blog regularly, but they aren’t usually among the fastest growing–and they are out of the question for people who are seeking a certain way of life that can only be fulfilled in suburbs. Is the problem that what those suburbanites value is indefensible? Why can a metropolitan region be great for offering outstanding urbanism as well as outstanding sprawl? I largely agree with Aaron’s point–which is why we continue to see people flock to anti-urban cities (you know which ones I mean) that have a financing scheme that completely devalues or inverts public assets; they move there because that’s the way they like it.

By: Alon Levy

Alon Levy — Mon, 09 Nov 2009 17:26:49 +0000

The public’s ability to spend money depends on circumstances. In general, the public knows how to spend money better than the government. In times of growth, this creates a crowding out effect for extra spending. But in times of recession, people hoard money, so spending provides an extra stimulus. Both rebate checks and public spending will give the money back to the city, but spending will create a multiplier effect, whereas tax cuts will largely be saved. Of those, rebate checks are the worst – in 2008, most Americans just saved the entire rebate check they got. Tax cuts that are less visible, such as the current stimulus’s payroll tax reductions, generate some multiplier, though still a lower one than spending.

By: the urban politician

the urban politician — Mon, 09 Nov 2009 15:03:32 +0000

Aaron, what makes urban cities like San Francisco, NY, Chicago etc so great (as compared to all the suburban sprawl out there not worth defending) is the collective pooling of resources that both made these built environments possible and continue to sustain them.

While I don’t completely disagree with you that a check to taxpayers would at least in part be beneficial to the local economy, at large I think the money would be far better used to benefit the public good in the form of paying down the city’s debt, infrastructure, preventing tax increases during a rainy day, etc

By: The Urbanophile

The Urbanophile — Sun, 08 Nov 2009 22:08:36 +0000

Thanks for the comments.

TUP, I think that public assets belong to the public, so it is ultimately the people’s money. While I’d generally support infrastructure projects or generally back into the public sector rather than rebate checks, I certainly have a higher opinion of the public’s ability to spend their own money than you do. One man’s trash is another man’s treasure. What’s valuable is mostly a matter of personal taste in my view.

By: Sid Burgess

Sid Burgess — Sun, 08 Nov 2009 01:45:31 +0000

Urban Politician,

I would agree for the most part, however, that is a cynical position that doesn’t always play out that way. Many communities enjoy a great deal of retail sales. Also, as in the case of Oklahoma, retail sales tax is the largest contributor of revenue. Property taxes go the county or state. So dumping a large sum of money into a small economy can be a great way to build up a small economy and return a small portion of those funds directly back to the municipality.

I did though recommend quality of life improvements in this specific instance because there was too much leakage for the rebate option to make as much fiscal sense.

Great topic though. In general I believe our communities spend far too little so I would tend to agree with you because of the current crisis our cities face. In a more perfect world, returning the money to the local people should stabilize and build local markets.

By: the urban politician

the urban politician — Sat, 07 Nov 2009 23:50:01 +0000

^ Edit: last paragraph I meant “purpose”, not “surface”

By: the urban politician

the urban politician — Sat, 07 Nov 2009 23:48:24 +0000

Good post.

I would say spending it on paying down debt, rainy day funds, and public goods (ie infrastructure) are the best use of money.

Actually using the money to send out cash to taxpayers? It sounds attractive, but in the end I think that would be the worst use of such monies because you’re potentially 1) diverting money away from the city’s economy (ie a guy gets a $1,000 check and spends it on a Caribbean cruise) instead of spending it on the direct betterment of the city itself, and 2) cashing out on an asset that could accumulate value much better in a giant growth fund.

Selling off assets should be for the surface of the public good, not personal profit. Americans as a whole have no sense what’s good for them, and putting cash directly in their hands is quite possibly the worst thing you could ever do for your city when it comes to the sale of public assets.

By: Sid Burgess

Sid Burgess — Sat, 07 Nov 2009 22:28:50 +0000

Great post. I love your last idea. I have been working with a community that was contemplating selling of their gas system. The offer they had received was no small sum of money. I wish I had your post a couple months ago. You did a great job of explaining the options.

(in the end they decided to raise rates and keep the system)

Sid