The Local Government Growth Treadmill

I can't imagine someone standing up at a Town or County Board meeting in the US and saying "I think we should stop growing, stop developing!" But, I have actually seen it. Typically, the questioner gets a polite but firm tongue lashing from someone who is good at that on the Council. Representatives who are in the pocket of some developer seldom stand up and say or admit it. So, it's easy to blame rampant corruption or political personalities or Right Wing ideology. Maybe? But I want to argue that it's the System!

The graphic above (click to enlarge) is a simplified model of the more complex path diagram floating around in my head. It really isn't substantially different from Jay Wright Forrester's (1969) Urban Dynamics model (which actually has some academic and real-world support here, here, and here). Follow the arrows:

• Local population growth leads to an increase in consumer spending, construction spending and the tax base.
• Local economic growth leads to more employment which, in turn, leads to an influx of job seekers and increase population growth

This is a very strong positive feedback loop. Break out "Local Economic Growth" and you find banks, realtors, developers, builders, retail businesses, and local government--a coalition of powerful interests.

All systems have negative feedback loops that try to control overdevelopment, but the question is "how strong are the negative loops":

• Economic growth and local population growth have environmental impacts: (1) Depletion and contamination of local water supplies, (2) Loss of areas to handle water runoff, (3) Increased pollution, (4) Loss of farmland, etc. etc.
• Environmental degradation decreases the Quality of Life in a community, making it less attractive for in-migration.

Except for a small number of very concerned communities, this negative feedback loop is slow acting with long time delays. Typically, when a community finds out it has degraded the environment, it's too late (Dallas, TX is a good example here).

The interesting thing about feedback loops is that they can be reversed by external shocks.

• A large, negative shock to Local Economic Growth from the National Economy can reverse the entire process as happened during the Subprime Mortgage Crisis in the US.
• Tinkering with the housing market at the national level negatively impacted the banking system, the construction industry, and the entire economy. As incomes fell, the tax base fell and local governments found it difficult to provide even their base functions. Developers abandoned entire tracks creating a new kind of ghost town in States such as Arizona and Nevada.

Cities and Counties could not wait to get back on the positive feedback cycle and some communities were surprised by how rapidly large tracks of land were zoned and platted for new subdivisions well ahead of any improvement in the local economy (here).

EXERCISES

1. How was your local community affected by the Subprime Mortgage Crisis. Check your on-line newspaper archive. How were banks, retail business, construction and government finance affected? Are you still feeling any of the effects today?
2. Go to a meeting of the local Planning Commission, get a flavor for how new developments are approved. If there is a Town or City Master Plan, get a copy and read it. What things surprised you about how the Planning Commission operated?
3. Modify and expand the path diagram above to fit your local community. How good is the theory?