By Leslee Kulba-The Asheville Downtown Association invited Chuck Marohn, cofounder and president of Strong Towns, to the Orange Peel Thursday to discuss a new wave in planning. Marohn, who has degrees in both engineering and planning, is promoting a paradigm in many ways is the antithesis to urban planning.
Marohn didn’t want to pass himself off as advocating for truly free markets, because that shuts communication down. Instead, he talked about supply and demand and right-sized growth as if they were a new, progressive revelation.
Marohn made light of the “Build It and They Will Come” argument used to push massive investments of public dollars into projects of questionable public benefit. Memphis, Tennessee made a good poster child. The city built a huge sports stadium in the form of a pyramid to woo a professional basketball team. When the Grizzlies expressed an interest, it was discovered the cost of making the structure NBA-ready exceeded the cost of building a new stadium. FedEx ended up building another stadium for the team, and now Pro Bass is working on repurposing the monument to profligacy. This is just one example of trying to build Ancient Rome in a Day with modern Greek financing.
To strengthen his argument, Marohn discussed his hometown of Brainerd, Minnesota. He showed photos of the town as it was developing. In the old days, the town was right-sized and functional. People lumbered local trees and imported glass and metals to start a small town. It was shanty-like at first, but it soon turned into a bustling turn-of-the-century town. As productive efforts continued to satisfy roaring market demand, downtown was retrofitted with handsome facades of granite.
Some towns didn’t do so well. Mines dried up and other ventures failed. Back in the day, nobody clamored for bailouts on the grounds that towns were too big to fail. People simply packed up the glass and other valuable building materials and moved somewhere where the going was better.
Marohn next showed slides of Brainerd today. He cracked jokes about the city investing in a big lot for a taco joint with all the latest New Urbanist stylings in its parking lot. The audience, however, gasped when they saw the vast vacant lots. The handsome granite block had been demolished to “create” one such wasteland. Marohn said one time a planner from South America told him he had always wondered why cities in the United States were characterized by big, vacant lots on prime urban real estate. It hadn’t occurred to him that the cause was faulty or insufficient reasoning.
Boiled down to a retweetable sound bite, Marohn’s thesis would be, “Top-down innovation tends to be orderly but dumb. Bottom-up innovation tends to be chaotic but smart.”
It doesn’t take much time or intelligence to do the math, but Marohn had the courage to make himself unpopular by shattering the pipes dreams are made of. He made some charts to illustrate costs and benefits of leveraging, a concept perhaps best defined by Johan Norberg in his book, Financial Fiasco.
“Investors now started falling over one another to find more exciting bets to make and more adventurous markets to enter, and if the return was too small, they did not mind borrowing a lot to make sure their tiny return would at least be multiplied many times over.”
The problem is, government entities do not include liabilities for maintaining investments on their balance sheets. Marohn estimates all those economic multipliers of government revenue hypothesized to sell projects in reality amount to only ten or twenty percent of the liabilities that will be incurred over a project’s lifetime.
It’s like a Ponzi scheme, where the returns are great for the brand, spankin’ new buildings. When things are booming, the onset of decay can hide behind myriad glossy curtains. But about thirty-five years down the road, the upward curve of the prosperity boom becomes a cliff.
“Unfunded liabilities” could be the catch phrase of 2013. The federal government has trillions in promised pensions it cannot afford. Detroit went under after being warned about its. Obamacare is supposed to remediate all the unfulfillable promises of Medicaid. To the list, strongtowns.org adds,
“In America, we have a ticking time bomb of unfunded liability for infrastructure maintenance. The American Society of Civil Engineers (ASCE) estimates the cost at $5 trillion – but that’s just for major infrastructure, not the minor streets, curbs, walks, and pipes that serve our homes.”
What’s to be done? Marohn said somebody in the audience usually asks that, but what they really want to know is, “’What can someone else do so that I don’t have to change.’” Marohn understands the importance of productivity and innovation in a strong economy. Rather than waiting for government to risk a pot of public funds on the next harebrained colossus, he recommends each person getting to work to make things better.
He told another story of another Memphis, a slummy street where one wouldn’t want to take their children. With a small amount of help from the city, some plain folks got some paint and started restriping the roads. They picked up trash. Soon the place was pretty and people wanted to go there again. He then added that in most places, if anybody tried to do that, the city engineer and city attorney would be out there the next morning . . . .