Consumption and Urban Sprawl

In 1951, the home building firm, Levitt and Sons, designed a method to mass produce homes at a rate of around 30 homes daily. Other residential construction firms of the day were making around 4 or 5 unique homes a year! Each of the manufactured homes were around 750 square feet and sat on a 1/7 acre patch of grass. They had an unfinished second floor, no basement, and no garage (Read More Here). On average, each house sheltered 5 people.

As World War II and overseas reconstruction efforts came to a close, American servicemen (16 million) began to pour back into the country and start families. But, they came home to a major housing shortage and were often unable to afford homes to their liking (around 5 million homes short). Levittown and other similarly mass manufactured developments were affordable options for many of those servicemen (but minorities were often unjustly turned down).

These early suburbs were almost always close to the compact business districts of a large city (Within 20-30 minutes by train). They were smaller homes (less than 1,000 square feet) on smaller plots. Families usually owned one car. Wives would drop their husbands off at the train station if they lived too far away (10 minutes) to walk.

Since blacks were barred from these new, cheap developments they lived in the older central city. During this era, blacks were also migrating from the rural South to the North and West to find jobs. As blacks and other minorities became the majorities in the urban centers, many whites became anxious and moved out to the suburbs. The suburbs became the ideal "white" utopic vision of the American dream that was buttressed by popular culture and media depictions.

During this time, single-use zoning also became a fad. Areas were zoned for commercial, industrial, or residential only. This also forced people often from their urban homes due to zoning changes. As a result of all these factors, by the late '50s early '60s suburbia was perceived as the appropriate and normal place for middle-class whites.

Suburbs have now overgrown their dense urban centers. The average American home is now over 2,500 square feet, has a two car garage, and sits on 1/5 of an acre. On top of this only 2.5 people inhabit the average home and the population has risen dramatically. Every decade the average one way commute to work goes up about 5 minutes and is currently around 27 minutes. That means that every year, the average American loses around 225 hours just driving to work not even counting the continuously stretched distances to the gas station, grocery store, school, etc.

This exponentially expanding urban sprawl poses serious threats to the environment and economic sustainability. The extent of low-density sprawl from urban centers now means that suburbs are totally car dependent. We own 2.3 cars per household. Traffic is continually a worse and worse problem. Infrastructure costs such as road building and maintenance, water pipes, electric grid, etc. are increasing exponentially as the sprawl expands from the commercial and industrial center.

Source: US Census Bureau

Peak oil theory predicts that the rate of oil extraction will eventually plateau and decline. The most reliable studies believe the extraction capacity will peak sometime between 2020 and 2100. If this is the case, the decline in oil energy would likely outpace our ability to develop new energy solutions and cause a spike in demand and price greater than anything we've seen. While I don't think this is cause for panic, I think we ought to be developing more sustainable, efficient, and eco-friendly energy and a land-use plan that is conducive to less oil dependence. At least some countries are taking this risk very seriously (Germany, France, and Denmark). The United States Department of Energy in a 2005 study found that peak oil was a real threat, particularly for the low-density and oil-dependent United States. It further found that "[v]iable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking." (Peaking of World Oil Production: Impact, Mitigation, and Risk Management)

Urban sprawl also contributes to pollution and climate change. Studies show that Americans in particular think they require more space and more stuff to be comfortable and happy raising a family than they actually do. In 1947, the average American space per person was around 210 sq. ft, now it is over 950 sq. ft. per person: same happiness levels. We fill our trash cans with 2 times the weight of trash bins in Western Europe. Although I don't think we should be frantic about the situation, we should react intelligently to the fact that at least three quarters of scientists support the idea that human activity contributes significantly to the global climate change. (For more information, click here)

Other than avoiding exponentially increasing costs of urban sprawl and the limited future affordability of oil, there are other benefits to living in higher-density closer-to-downtown areas. People that live in higher-density, mixed zoning locations walk more and are more healthy. Suburb dwellers have higher obesity levels and anti-social behavior. Higher-density dwellers have much more social interaction than the average suburbanite. City dwellers enjoy the social capital benefits of closer and more numerous personal relationships and increased informedness of current events. Urbanites eat healthier and fresher food. Living in diverse and beautiful places that tell stories make places worth living in. Suburban homogeneity has a lower aesthetic quality in the eyes of the majority. People living in attractive places may have more pride in their homes and schools. Small-businesses tend to be more competitive with corporations in urban zones too. Even if the oil crisis was to be decades away, it is most likely that the quality of life would increase with a large percentage of people either moving to rural areas or closer to the dense-urban centers.

Although I don't think these issues are causes for immediate panic; I do think it means that we need to start making serious changes now. We need to provide incentives for people to live closer to the urban center and in smaller spaces. Perhaps concentric property tax zones that increase away from the urban center. Perhaps invest less in adding lanes and more into public transportation options and toll roads. We need to divorce a car or two, not our spouses! We need to deregulate zoning by a lot. More mixed-use zoning is a must. We need to make small-business and pedestrian friendly neighborhoods.

These policies should only affect suburbia around major urban centers. Rural, farming, and small town America, for me, is another issue. Rural areas have often developed in sustainable ways and their industry requires a different infrastructure. It would be apples and oranges to compare rural areas and very small towns with the big city sprawl problem that I am addressing here.

Some fire back at these suggestions saying that it is people's preference to live in suburbs. While suburbs may well have a permanent place in America, they need a certain population density to function sustainably like they were originally designed. Before lower-density developments are allowed, a dense-enough center should be developed first. Consumers have also preferred cigarettes. Similarly, young people today are slowly abandoning the cultural status quo for greater sensibility.

Now, on an individual level, I do not think it is morally reprehensible or stupid to live in the suburbs or to move out to cheaper housing. It may be the best thing for a particular family. But, on a social level it is both irresponsible and shortsighted to incentivize it. We need to make the incentives for living closer to the urban center line up with the needs of the society to overcome the cooperative action problem. Eventually, the more compact lifestyle would likely overtake suburbia as the majority's preference as it has elsewhere in the world for working-age citizens. Developing alternative energy and fuel sources should also be part of the solution. We need efficient public transportation. We need to be able to walk to the store, to work, to school, etc. Mixed-use planning can do a lot on that front.

The real American Dream is the intense hope and promise of freedom and prosperity. Providing incentives to move away from exponential urban sprawl will allow for a more sustainable economy. In the long run, this would be an investment allowing future generations to pursue the American Dream. Let's act now and invest rather than react later to an abrupt change in conditions later.

The Tax Code and Algebraic Functions

Currently, taxes and income redistribution are often based on income cut-offs. When graphed, it looks like discontinuous stair steps. If you make under some amount, you qualify for all benefits. If you make under another you get some smaller block of benefits. Then, it starts working in the other direction. If you make x amount you pay this % in taxes. If you make y amount you pay a dramatically higher % in taxes. In other words, if you made $174,400 in 2011, then you pay 28% ($48,832). But, if you make $174,401 you pay 33% ($57,552) Although the second instance made only $1 more in income, they paid 5% more of their income in taxes. Ouch! This occurs in all 6 income tax levels and with government funded social programs and benefits. The IRS calls this broken system tax brackets.

The problem is that this primitive approach often gives incentives for people to work less or not at all. This is the case because most of the time, people's income lies in the space between the steps. For many, if they work they are not eligible for food stamps, healthcare, grants, etc, by just a bit. But, if they were to work less or not at all they are eligible for more benefits than they could afford with hard work. For others, they will lose thousands of dollars to taxes if they work too much or too well.

My question is why don't we use algebraic curve functions in our tax codes to eliminate this rather arbitrary and unfair stair step system? Rather than having tax brackets have a tax function. What if you plugged in your income for x and out pops your total benefits or taxes for y (rounded to the nearest cent of course)? It would not decrease revenue, would be just as easy to administer, and is much more just.

As I recognize that there may be some degree of luck in a person's prosperity, I am fine with a slightly curving function that takes into account that good fortune and is progressive to a degree. But, as accounting for "luck" is clearly an inexact science, the curve should be rather conservative. Better to err on the side of too little redistribution than too much. It is better to let fate distribute prosperity in mysterious ways than to allow government to redistribute wealth by force and without reliable indication that the redistribution is fairer in the first place, meets its stated goals, or are morally justified. The left sometimes depicts poverty and affluence as a byproduct of power. However, studies show that income-level is most highly correlated not with "power" or social class, but long-term efficiency.

On a side note, Benjamin Franklin asserted, "It would be thought a hard government, that should tax its people one-tenth part of their time, to be employed in its service." I don't know if that is the right cut off or not (10%); but, surely, current taxes are far too high. Nearly half of Americans don't pay a dime. But only less than 20% of Americans are below the poverty line, which, given the benefits they receive, is a much higher standard of living than most Americans think.

It shouldn't be about who shoulders the tax burden; there shouldn't be a burden to shoulder. Cut bureaucracy. Streamline government. Government must stick to its original charter to protect essential rights, obligations, and property, not to furnish us with comforts and entitlements lulling us into a soft despotism and dulling our aspirations. We need fewer paternalistic government programs and more personal responsibility. Sometimes, we have to work at a job we don't prefer. Sometimes, we have to live in a place we don't prefer. Sometimes, we have to live on a tight budget. The government shouldn't use my hard-earned tax money to let others avoid those sacrifices when I had to wade through such trials myself!

Conservatives, Compassion, and Income Redistribution

Many young and idealistic people, who commence their determined study of economics, come into the field with utopic notions of equality and prosperity. They believe that government and public policy can viably cure the ails of the sick and needy. However, they soon come to a greater understanding and appreciation of a few proven principles that often dissuade them from such inexperience. Firstly, they learn that fiscal theory is laced with tradeoffs. Pupils discover that there is a major (proven) tradeoff between equality and efficiency. Secondly, they gain an increased appreciation in the free market’s surprising aptitude to coordinate societies efficiently and decently. Thirdly, through a study of the past, they see more clearly the difference that often exist in a public policy’s intended outcome and its actual effects. (Greg Mankiw commented on this here).

If ever a person expressed pithily how I feel about the economic tradeoff between income equality and overall efficiency and profit in recent history, it would be the Right Honourable Margaret Thatcher. In response to an opposing MP’s attempt to shame her for supposedly causing a wider income gap than existed in the administration before her own, she said, “All levels of income are better off than they were in 1979. But, what the honorable member is saying is that he would rather the poor were poorer, provided the rich were less rich.” To see her whole response, see below.

The fact is, free market economics have been empirically proven to increase overall efficiency and economic prosperity over and over again. Overall efficiency is what we most need, especially in a tough economy. Evidence for Keynesian economic policy success is hoary at best. Big spending "stimulus" packages may jumpstart the economy in the short term, but they incur more costs to the economy in the long run than in the short run. Liberals often propose major spending to create jobs. And, I think it works in the short term. But, then it ends in inflation, citizens that are addicted to new entitlements, and costs that we can't afford, especially if the economy hits a rocky moment. Giving entitlements may score political points, but it is like drinking too much coffee or a sugar high: the short burst and then the crash. Spending on new government projects and programs, like caffeine, only gives an illusion of heightened vigor followed by an addiction and a sapping of the economic vitality of our nation.

Most thoughtful conservatives accept and lament the fact that some people are greatly disadvantaged. Studies show that conservatives actually give more money to charity (as a percentage of their income and in total amount), volunteer more of their time, and give more blood than do their liberal counterparts (Arthur C. Brooks: "Who Really Cares: The Surprising Truth about Compassionate Conservatism" and others). To characterize liberals as compassionate and conservatives as stingy is a fraudulent claim. Conservatives and assenting moderates want to end poverty too. We just think that liberal use of the national treasury to give, give, give (money we don't have) is not the way to do it.

Give a man a fish and you feed him for a day (liberal approach). Teach a man to fish and you feed him for a lifetime (conservative approach).

Government spending on welfare should be all about self-sufficiency. When it comes to providing for the poor, liberals have good intentions; but, the test of time has shown that the intent of their policies fails to represent the reality of those policies' affects. For example, income redistribution often goes to those with power at the voting booths rather than those who need it most. Also, those locations and groups that get the most by way of income redistribution tend to get out of poverty the slowest.

Ben Franklin noticed this same phenomenon two centuries ago. He said, "I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I traveled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer."

Thomas Jefferson said, "I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them."

Government should only give to those who are mentally or physically disabled. All its other spending should be longterm oriented investments. Such investments would provide incentives designed to foster self-reliance and a longterm return on the investment.

In a previous role, I went house to house and visited with many people on unemployment and other government benefits. The truth of the matter is that most of these people enjoy much higher quality of living than the public believes. This majority makes token attempts to find an "acceptable" job, but refuse to be "underemployed." Unemployment should be given for no more than 1 month for individuals and 3 months for those supporting a family.

Rather than making poverty easier, make it easier to start and maintain small businesses (lower taxes and simplify regulations). Attack relativistic and lazy complacency by condemning pre-marital sex, no-fault divorce, co-habitation, and other poverty propagating behavior. Make unemployment conditionality stricter. Offer entry-level positions to anyone who applies for unemployment. Offer additional tax incentives to companies that add more jobs to the economy. Don't update subsidized housing except to maintain acceptable safety and keep them small. People only need between 35 and 150 square feet of living space to be abundantly healthy and happy (Subsidized housing provides more square feet than the median income household in London, Paris, Vienna, Tokyo, Beijing, and many other places). Perhaps, require a minimum of 20 hours/week of work or job hunting at an on-site career center to live in subsidized housing. Don't allow food stamps for filet mignon and lobster tails. Make work-for-welfare-to-work programs mandatory. These are just ideas off the top of my head; but, we need driving and leading policies, not policies that increase complacency and feelings of entitlement and dessert.